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Does College Saving Drive College Going?
Recently, I attended a session hosted by the New America Foundation, in which panelists opined that a family’s act of saving for college leads to a change in behavior causing the beneficiary of that saving to want to go to college. I come down on the opposite side of this chicken and egg question. I believe that if a family wants their child to go to college, then they are more likely to save in order to meet that goal. For me it all starts with a desire to pursue a higher education. What do you think? Please share your views.
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on Monday, November 9th, 2009 at 8:57 am and is filed under College, College Costs, General.
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November 11th, 2009 at 3:57 pm
As a 1st generation college student, my mom and grandparents had us open college savings accounts at our local bank… probably around 3rd or 4th grade. We had no real idea what it meant… but the IDEA was planted firmly. We were to “save for college.” Upon graduation from HS in 1982, I had around $300… almost enough to pay tuition for one quarter. But the amount didn’t matter. By then, the concept was ingrained. College was not an option! Their vision and encouragement opened doors I could not have imagined.
November 16th, 2009 at 1:38 pm
Psychological research suggests that individuals who are more hopeful are more likely to accomplish their goals. A fundamental aspect of hopefulness according to psychologist Rick Snyder is seeing a pathway to the goal. As parents contribute ongoingly, the pathway is clearer to the goal of college and hopefulness increases.
November 16th, 2009 at 3:42 pm
College attendance is more a matter of expectations than resources. If a family expects that a child will go to college, the family attitude towards the importance of education is likely to be backed up by encouragement along the way, and some savings, if at all possible. Savings and expectations are strongly correlated, but the expectations are more likely to lead to the savings, than that the mere presence of the savings will make someone pursue higher education.
In fact, my experience is that saving for college actually makes it more difficult to go. As soon as the colleges see that you have any money put aside, they feel completely entitled to take all of it, and deny aid. They claim that they will take no more than 5% a year from parents savings, but have bled us completely dry, and forced a second mortgage despite having sacrificed to save thousands of dollars over the years for our children’s educations. So the reward for saving is to get less (or no) financial aid, while a family with no savings is deemed to have greater need, which qualitfies them for aid. As a result, there is actually no net benefit of saving, and a very discouraging penalty awaiting those families who have sacrificed to put money aside. Anyone who thinks that savings will help pay for college is actually deluding themselves about how aid policies work.
November 17th, 2009 at 1:58 am
I was first a generation college student in my family, but survived on parent-pay (this was in 1966-1971). My father adamantly refused to complete a FAFSA because he did not want anyone to know his business. I have no idea if I would have been eligible for financial aid to this day.
When it came to my own family, we started saving when the first child was an infant (1983), investing in what were then “zero coupon bonds.” Until Congress changed the rules two years later, we invested for two years. The bonds matured in 18 years, just in time for child #1’s freshman and sophomore years’ tuition, etc. It was a fortuitous decision. $1000 invested each year yielded a return of $20,000 for each of those two years. Yes, we paid taxes on the interest for 18 years (at parents’ rate) and the money was counted against us in the financial aid calculations, but we were eligible for student loans if needed. The net return was worth it. We were blessed with intelligent, talented children who competed for and won a number of scholarships which helped tremendously. They also held a number of campus jobs including being a resident advisor, working in a lab, tutoring, or grading problem sets. The end result was that child #1 tapped the returns of only the first bond over 4 and 1/2 years. The returns of the second bond helped to finance child #2’s college education. It made paying for seven consecutive (and one concurrent) years of college costs bearable. No doubt if it had been any different, we would have had to refinance our home to pay the tuition bills. We had been warned by our college classmates that some colleges (one of the Ivy League schools) consider up to 50% of a family’s income accessible to pay for a student’s tuition. True enough, when that school’s financial aid package came through, there it was in black-and-white, that fully 50 % of our household income was our expected family contribution. The child chose not to attend the Ivy League school, selecting an out-of-state State University instead at half the cost of the Ivy. If we were to do this all over again, I would still save for college, but would do so with the knowledge that it would help defray the cost and there would still be much sacrifice in order to afford the bills.
November 19th, 2009 at 2:09 pm
College savings in our family’s experience does not drive the importance of attending. We have a freshman in college now and saved a little towards it but watched it evaporate in Jan of this year when the stock market took over half of it from her 529 account. But from the very beginning of pre-school we have told all of our 3 children that they will attend college after high school. We did tell them that they will have loans to pay for this but that they will start out at the local community college to keep the costs down and if they live at home they won’t have room and board charges.
We have 2 more yet to get to college. One is about 4 years away and the other 6 years out. Both of these kids we have now started to encourage them even more to do well in school and to strive for scholarships to assist with the finances as we realize we cannot contribute anymore to the college savings. We are barely keeping our heads above water now with todays economic conditions especially here in Michigan.