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Financial Planning and Your Child’s College Education

College GirlWhen you visit a Fee-Only financial planner, one of your concerns may be finding a way to afford your child’s college tuition. In a previous post, we asked,  “Should Parents Put Retirement Planning Before a Child’s College Education?” because we know sometimes it is hard to strike a balance between your future and your child’s future.

While we are not endorsing the position taken in “Why parents shouldn’t pay for college,” we are going to discuss some of the ideas presented.

Author Liz Weston spoke with Professor Laura Hamilton, co-author of the book Paying for the Party, about what Hamilton discovered while researching this topic and interviewing disgruntled parents who felt they had misspent money on their children’s college educations. While students who are working through college may drop out because they are under a lot of pressure, according to Hamilton: “Parental help is associated with lower GPAs — but higher graduation rates. In other words, students who get family help paying for college may not study as hard…but they’re more likely to get degrees.”

As the article observes, having ‘skin the game’ can make students more dedicated to their studies and parents can give financial support strategically. Hamilton advised:

Do your homework. Check graduation rates and make sure the school is a good fit. Hamilton found that schools with many wealthy students may not invest do as much to guide and retain students whose families are new to higher education.

Don’t pay for everything. If your child has some stake in things, he or she has more incentive. Working part time in something that won’t take away from school is a good idea.

Be forthright about your expectations. Hamilton gives the example of a family who told a child to keep up her grades or be transferred to college closer to home and the daughter complied. We know of families that set time limits, telling a child he or she needs to graduate within certain number of years or begin paying his or her own tuition.