A new study from Bank of America reports that 47% of Americans with more than $250,000 in assets won’t pick up the full cost of their kids’ college degrees.
Twenty-nine percent of respondents said that limiting their financial support for their kids’ educational expenses would teach them responsibility.
This is an important issue and, since I wrote a book called Debt-Free U: How I Paid For An Outstanding College Education Without Loans, Scholarships, or Mooching Off My Parents, I thought I’d give you my take on this question: If you have the means, should you give your kids a full ride for college?
Here’s my answer: There is considerable research that suggests that working during college will not hurt academic performance and may actually improve it. And, it can give students valuable work experience that will help them land jobs later on.
But there are also unwise ways to make your kids help pay for college. I recently talked to one recent grad whose affluent parents decided that he should take out about $30,000 in student loans because it would make him feel more invested in his education, and teach him about financial responsibility. That’s a mistake: Debt is too abstract to really impact a student’s approach to college. You’re not helping your kid by making him borrow a bunch of money for college; in fact, you may be pushing him into a debt load that will leave his career options deeply constrained when he graduates — forcing him to take the first thing that comes along (to make payments) rather than being able to plot a long-term career based on abilities and interests.
If you want to teach your kid responsibility, do it with work, budgeting, and short-term sacrifices — not debt.