Paying For College: A Guilt-Free Decision?

Dear Jill,

Our daughter is 20 and is a junior at MSU.  We are in our 50's and hope to retire within the next 10 years.  Our daughter went on a Study-Abroad trip to Australia for one semester last summer.  She worked 2 internships (2 days a week each). She came back having had the time of her life, and now wants to go back for a year this time The Study-Abroad trip was financed by a Unsubsidized Stafford loan and an educational loan through a bank (for approximately $6000, which we co-signed).  She's had to accept a Stafford loan for each semester of college so far.  If she goes to Australia for a year, as she so desperately wants to, it will mean adding another private loan through a bank to her growing amount of loan debt. 

We do not feel this trip is in her best interest at this time - mainly for financial reasons.  We do not want to sign for another loan - such a risk so close to our retirement.  Our biggest concern is the amount of debt she will incur when she is through with college.  It's bad enough now, but adding another Stafford loan plus another bank loan to this is in our estimation a grave mistake.  We have used a loan calculator to estimate what she would owe after college and what her payments would be - it just breaks our hearts to think that she would have to pay back around $500 a month for the next 10-20 years. 

Thank you so much for you time and consideration.

Sincerely, Pat

Hi Pat,

  Thank you for such an interesting question.  Here's a general rule that I advise ALL of my clients:  NEVER compromise your retirement funds for your children's college.  NEVER.  They will not support you through retirement (nor should they!).  It is very admirable that your daughter is ambitious and adventurous, and you are great parents to encourage this journey.  You should encourage her to follow her dreams on her dime.  If she really wants to go, she'll find a way.  You need to draw a line somewhere and this is a good place to start.  It is time for her to grow up; and it's time to show her how you make decisions as a couple.

   Most parents have a hard time being selfish; however, you really need to put your retirement planning first and not feel guilty about your decision.  Your daughter will thank you later when you are supporting yourself and not asking her for money 20 years from now.  Your daughter has the ability to earn money for the rest of her life, whereas you will be living off of your assets soon.  If she is forced to make a decision based on her income, she may think differently!  Your decision is practical, hers is emotional.  If she wants to be an independent young lady, let her.  Give her credit for listening to your point of view, and hopefully she will make a sound financial decision based on her finances, not yours.  This is your money; you have every right to decide how you want to spend it.  Let your daughter go if she decides to go on her dime; even if it means she will take another loan.  (Most people regret what they HAVEN'T done in life, not what they have done).

P.S. It is tough to make a decision of the best college for your son or daughter. Be careful. Everyone has different values and what they are willing to pay. You need to decide as parents what amount you can afford for school, explore all of your options regarding scholarships, loans, grants, etc. , then let your son/daughter know what you can afford. Remember, it is your money, and this is a personal decision that you make as parents. In general, no child should be making a parent’s financial decision.

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