More Parents Are Putting Limits On College Aid

Tyler Luker from Plano, Texas is a high school student who already knows which college he wants to attend (University of Missouri), how much it costs ($ 43,300 for out-of-state residents), and how much he can expect his single mother to contribute : nothing.

“It protects my retirement,” says chartered financial planner Sharon Luker, 64. “I don’t want to work at 70. “

“As a parent, you want to do what’s best for your children,” says Sallie Mae spokesperson Rick Castellano. But “parents want their students to have some skin in the game.”

The 2018 survey of 2,003 parents of children under 18, conducted by pollster Ipsos, found:

  • More and more parents are saying their children should help pay for their own education, with 59% saying tuition fees should be a shared responsibility, up from 51% in 2016. The proportion saying the burden should be the full burden of parents has dropped from 30% to 26%.

  • Sixty-nine percent have pledged not to touch their retirement funds for tuition, up from 60% in 2016. An improved economy appears to have convinced more parents that they will be able to pay for their education with their income and savings. , rather than tapping retirement, says Castellano.

  • Yet more parents were saving for college (56%) than for their own retirement (54%). Ideally, people would be on the right track with Pension saving before saving for their children’s education.

As the costs of a university education continue to climb, parents tempted to overspend on educating their children need to think twice. Here’s why:

Exhausting retirement savings are expensive. You can’t get back lost business matches, tax breaks, and very large compound returns if you don’t contribute.

You can overdose on debt. Federal PLUS loans, which can help parents pay for their education, don’t require extensive credit checks or proof you can repay, which means it’s easy to borrow more than you can afford. to repay.

Student debt can follow you to the grave. Student loans are difficult to wipe out in bankruptcy court, and the US government may even take some of your Social Security checks, normally prohibited from creditors, if you don’t pay back the federal loans.

Certified financial planner Monica L. Dwyer of West Chester, Ohio, whose three children attend the University of Cincinnati, was candid with them about the help they could expect. Each child had about $ 25,000 in 529 college savings plans, plus Dwyer and her husband, Sean, pay for food, health insurance, cell service, and car insurance if the child lives at home.

“I think if you put limits on the kids and explain what they have available to them… they’ll probably make the right decisions,” she says. “Or maybe I was lucky.”

The Dwyers refuse to co-sign private loans or contract parental loans. The children got jobs and federal student loans, limited to $ 5,500 in the first year, to cover tuition and books. Sean Dwyer recently accepted a position as an academic advisor at the university, so the annual tuition fee of $ 11,000 is now waived for the three children and “this is a huge relief for our family,” Dwyer said. .

PSC Martisha Patterson of Nutley, New Jersey, also placed conditions on her college aid. If her daughter had attended a state public school, she could have lived on campus. Because she switched to City University of New York, where she is now in her sophomore year, she travels the approximately 15 miles from home to offset the higher cost for out-of-state students. Patterson says her daughter is also working, looking for scholarships, and looking for other ways to help.

“She meets with a college advisor every semester to make sure she applies to courses that meet graduation requirements so that we don’t waste money,” says Patterson.

And while Sharon Luker will not contribute financially, she also plans to limit her income during the years when her children apply for financial assistance. This is important because need-based financial assistance is largely determined by the income of the parents.

Tyler, 16, and his twin sister, Timarie, each have about $ 60,000 in 529 education savings plans funded by their grandfather and they are looking for scholarships (Timarie previously got one of $ 2,500 from Girl Scouts). Timmarie is ready to take on “some” student loan debt, but Tyler is convinced he wants to avoid it.

“I just don’t want to pay for stuff in the future. It just adds more problems, ”he says.

About Lucille Thompson

Check Also

Marlette launches the Best Egg loan purchase program for the BancAlliance network

Extends access to loans to network of community banks WILMINGTON, Del., May 5, 2022 /PRNewswire/ …

Leave a Reply

Your email address will not be published.