Reply to Why pay all of kids' college?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I have zero problems if people don't pay for their kids college and tell them to take loans.

I will continue to pay for my kids and give them all advantages that I can.  Others not paying for their kids makes my kids more competitive in the long run. [/quote]

DP. +1. And I see this touched a nerve. But, it is true. Paying for your kid's college gives them a huge leg up in life. Having your education funded doesn't mean you'll have less grit and determination - it means you can come out of school ready to conquer the world, free of the noose of debt around your neck. Less debt can mean more income to do things that can contribute to your success - like...living in a nicer place. Driving a nicer car. Joining a club and networking there. And on and on. Do not fool yourself. Those who fully fund their children's education are giving them a tremendous advantage.[/quote]

I am paying for my kids education because I can…but I don’t think it gives them any real advantages on its own.  Nobody cares what car you drive as a 21 year old…and honestly, if your kid is actually getting a decent first job they are likely in a metro where you wouldn’t even have a car.  I also am not aware of any “clubs” to which you refer…curious as an example.

Being wealthy and connected will give your kids advantages…but let’s say you are just a mid level govt employee or worker bee that inherited $500k and can pay for college…just paying for college doesn’t much confer many advantages.

I think you are conflating wealth and connections (which always help) with the act of paying for college.

The noose of loans may strangle some…but it also drives others to rip your kid’s head off…so I tell my kid to stay sharp.[/quote]

Not having loans or a car payment is HUGE right out of college!

My kid is maxing their Roth and 401k at 22+ and saving.  Those with loans and car payments are paying $800+ towards that instead.  My kid will have he equivalent of $2m for retirement by time they are 30.  Their friends won’t have saved much at all as they pay off $20-30k in loans and pay for their first cars [/quote]

The job your kid gets out of college is way more important than having loans or not.  Also, where did the car payments come from? This is DCUM where many kids are living in an urban environment and nobody owns a car.  Now you also have to give your kid a car? I mean...this is now the equivalent of saying not having any expenses and a trust fund is HUGE...no s**t it's HUGE.

I still don't get your math.  So, I gather you are saying if you are able to save $9600 per year starting at 22, that will grow to $2MM at 60?  How do you know your kid is saving that $800/month vs. taking nice vacations or eating at nice places several times per week?

It's hard to have conversations where your ambitions for your kids are so modest.  I am paying 100% for my kids, but it's really not difficult for a 22 year old that works a professional job at any number of companies to repay $20k-$30k in loans fairly quickly.  For many kids, the first-year bonus can nearly wipe that out.

[/quote]

My kid is not chasing IB jobs.  Most kids are not getting a $20K signup bonus.  They have a good job in a MCOL area, however a vehicle is required.  They earn a good salary and get a 10%+ raise yearly (good for the industry especially now when many companies are laying off and not hiring).

Here's the math.  They have been contributing max yearly to Roth since they had a job at 18.  Continue that along with 8-10K yearly to their 401K.  So by all estimates by age 30 they will have enough in "retirement accounts" to grow to over $2M by age 65, even if they stop contributing at age 30.  Obviously they won't stop, but it's a huge leg up to have that. Versus their friends who have $30K+ in student/parent loans and who need a car but have to purchase one themselves.

How do I know?  Because we still talk weekly and they discuss finances with us.  They are a saver and don't waste money. And who would take those fancy trips with them???? majority of their friends are broke and paying off loans[/quote]

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