Thanks, Mom and Dad

Reporters Erica Snow and Douglas Belkin note that tuition increases have outpaced household incomes just as parents are facing multiple financial responsibilities, including supporting their own parents, saving for retirement, health-care costs, and sometimes their adult children’s living expenses.

Part of the tension stems from the difference between who is legally obligated to repay student loans, and who each member of the family believes is actually responsible for it.

Problems often arise when financial circumstances change and one party can’t—or won’t—make the payments, or says they never promised to make payments in the first place.

There is also a discrepancy between what parents think they are saving towards their children’s college costs versus the reality.

Parents who are currently saving for their children’s college believe they will be able to cover 37% of the cost from savings, but parents who are paying for children already in college actually cover just 10% from savings, according to a 2018 survey conducted by Sallie Mae.

Rick Kahler, a financial therapist in South Dakota, said many families are dealing with what he calls outdated expectations that parents will pay for college because their own parents paid for them. But because household incomes haven’t kept up with the cost of college, those expectations may no longer be realistic.

And so that’s where my Mom and Dad come in.

They completely paid for both my bachelor’s and master’s degree, using their personal savings and loans to do so.

Graduating with no debt to burden me was a wonderful gift, and I am forever grateful for their generosity.

I wanted to do the same for my children, and fortunately, my wife and I were able to do so because of the nature of my job as a college professor and the existence of a tuition exchange program with hundreds of colleges, as well as utilizing the low-costs of the local community college.

I realize that every family’s financial situation is different, and that ours offered a particular advantage when it came to paying for college.

College is an expensive proposition, and its costs will likely continue to outpace the growth in incomes. I show my students what college will cost in 25 years, about the time they might have children of their own ready to go to college.

Using Villanova as an example – if we start with the current estimate of one year at Nova costing $67,000, and assuming college costs increase by 5% per year, then one year at Villanova will cost over $225,000 per year in 25 years.

I do this exercise to get them thinking about the cost of college, both now and in the future, and to encourage them to take full advantage of their college experience.

So thank you once again, Mom and Dad, for the wonderful opportunity you gave me 40 years ago; I am still reaping the benefits of your generosity to this day.

*image from CollegeXpress

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