Why Is Paying for Your Kid's College Dumb?

Why Is Paying for Your Kid's College Dumb? ...

Mom and Dad arent as upset as you might expect to be about taking on debt to get Junior through college. That's a wager worth making, according to parents.

It's also not a straightforward decision, particularly when the cost of attending college remains high, as Credit Summit releases some new data on the total cost of college this week.

Parents in the United States are ponying up the money to cover rising college expenses, and are slapping their shoulders over the household financial burden.

According to the WalletHubs 2022 Back to School Shopping Survey, approximately seven out of ten parents believe their kids' college education is worth paying for.

According to a recent College Ave Student Loans survey, half of families intend to borrow student or parent loans to help them cover the costs.

Parents also pay their children's personal expenses, such as a phone plan (96%), auto insurance (75%), transportation costs (74%) and car purchase (44%), according to the survey. One-third of families give their children a monthly monetary reward ranging from $101 to $250 per month.

Is he noble yet misguided?

The notion that so many parents are recouping their college costs is a heartfelt sentiment, but is it a good household business? Personal finance experts aren't exactly sure.

Leslie Tayne, the founder and head attorney of Tayne Law Group in New York, N.Y., believes it's noble to provide your children with a head start in life. Down the road, you may be short on cash in your golden years and dependent on your children for financial help. That scenario might erode the wealth you earned decades ago.

The good news is that paying for college does not have to result in hefty household debt.

TheStreet Recommends It

The Date of the Hostilities is Known between Twitter and Elon Musk

The well-known Disney World dining option is making a comeback.

The Best Stock Bet in Las Vegas Has Good News for the Las Vegas Strip

Kimberly Foss, president and founder of Empyrion Wealth Management in Roseville, Calif., believes that it is never an either-or situation. Because of the power of compounding, you may achieve both.

Foss advises against using tax-advantaged accounts, such as 529 plans for educational expenses, and IRAs and 401Ks for retirement savings, to give you valuable leverage, because the growth in these plans is not taxed and can also provide tax-free income in many situations.

Even if you start small at the beginning, putting aside a regular amount for savings and investment can make a huge difference when it comes time for your child to go off to college, according to the author. Many states now offer tuition prepayment plans that lock in tuition for future years at a discounted present rate when your student enters an in-state college or university.

Young families struggle to keep consistent budgets for their college expenses, and a few years later, they realize that college is nearing the corner and they have very little left in the education kitty.

At a certain point in life, your main concern must shift to adequately funding your retirement, which is ultimately in your child's best interest, too, she said.

College costs can be lowered.

Is there a critical juncture in which parents must choose between their children's college costs and their own retirement?

Not necessarily, according to collegiate specialists.

Amanda Stern, the director of fiscal affairs at Western New Mexico University, advised students to take on internships rather than loans. I would also encourage families to consider attending institutions that are closer to home or in areas that have affordable housing options.

You may also like: