Financing Your Child’s Education: How Much Help is Enough, How Much is Too Much?

As a financial planner, I see parents wrestling with this question. Many parents want to help their kids financially while also wanting their kids to develop a strong character, healthy work ethic, and both independence and responsibility for themselves.

On one hand, parents fear that if they were to contribute too much, their kids will grow up spoiled and feeling entitled. On the other hand, if parents don’t contribute enough, they fear that the kids will start out of the gate in a “negative” position (e.g. burdened with student debt, less than stellar academic pedigree, etc.).

I propose that we take a step back and re-examine what it is that we hope to achieve. None of us can foretell the future and, try as we might, we cannot guarantee any outcomes with our kids either. At the end of the day, all we can do is decide the values that we want to pass onto our kids and do our best to provide an environment that cultivates those values. We want to feel that we’ve done our part.

As an example...

I worked with a client couple who can fully fund their son’s college education, but opted to cap the amount they will pay each year. As a result, the son really had to think about whether a private liberal arts college education is worth the student debt that he will need to accept. Meanwhile, the parents retain the possibility, but not the expectation, to help their son pay off his student loan later.

As another example, my wife and I struggled whether to send our kids to private school. We asked our financial planner to calculate what we can realistically afford, which she did. However, instead of focusing on the numbers, our planner led us on a discussion of our values and what we want for our kids. At the end of the discussion, we decided that a private school education would not contribute toward the outcome we want to achieve, regardless of the financials. We never did get around to looking at the numbers.

As an advisor, one of our goals is to work with parents to clarify their values and collaboratively design a variety of options to meet different people’s unique perspectives.