Ron Lieber’s Opposite of Spoiled is an insightful read, and so is his new book, The Price You Pay for College. Rather than analyzing how much to save for college, Lieber asks an essential question: what is the purpose of college?
The question is fundamental because the cost of college has increased dramatically in recent years. We read news stories of students graduating with hundreds of thousands of dollars in student loan debt, and we understand the financial impact of that debt on their future. Student loan debt may impact the timing of getting married, buying a house, having children, paying for college for those children, and, eventually, becoming financially independent.
To start the conversation with your children about the purpose of college, Lieber encourages parents and children to discuss questions like:
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What did your parents say (or not say) about paying for college?
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How did you decide to go to college?
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If you did not go to college, how did you make that decision?
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Do you have any regrets about going to college or not going to college?
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What did you like most about college?
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Is there anything you would like to be different for your children?
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Through these conversations, it may come out that you put yourself through college and anticipate your child will do the same. But what if there is still a shortfall between what your child can earn and how much they can borrow and receive in scholarships? How will that gap be filled? Would your child live at home to save money? Will you loan money to your child to make up any shortfall? What would be the terms of that loan? Is attending community college for two years and then transferring to a four-year college an option? Two years of community college could potentially cost $0 if President Biden’s proposal is enacted.
Conversely, perhaps you put yourself through college and want to do all you can to make sure your child does not have to borrow any money or work through college. Do you intend to pay for public college? Private college? Ivy League? Can you save enough to fund education while also saving for your own retirement? If not, what tradeoffs are you willing to make? Would you be willing to reduce spending in other areas? Work longer?
You likely had a different college experience than your spouse and may also have different expectations than your spouse about how to pay for education for your children. So, these conversations may be uncomfortable. As a financial planner, Carl Richards says, “money = feelings.” However, these conversations are critical to beginning the process of aligning your money with your goals and values, like educating your children and other objectives that are most important to you.
The Price You Pay for College does not have a simple answer to what is the purpose of college or how much to pay for it. Instead, Ron Lieber asks thoughtful questions for you and your family to discuss to come to your own conclusions to these critical questions.