Richie and Cari Cheney have a ninth-grade son. According to Cari, “We’d really like him to go to the small private school where we met, but it’s kind of expensive.”
“Yeah,” Richie adds, “No way in the next three years we can save enough, so what’s the best way to borrow for college?”
What would you tell Richie and Cari?
I’d want to tell them that few things are as expensive as unexamined assumptions.
Here’s what I mean.
It sounds like Richie and Cari don’t have the money to send their son to their alma mater, so first I’d want to ask them a bunch of questions:
“Why this school? You do realize that the magical college experience you had there in the late 1990s isn’t guaranteed to your son in the late 2020s, right? Does this school have an acclaimed degree program not offered elsewhere? Or, are you thinking he’ll be able to network there better than elsewhere? What’s driving this desire?”
Then I’d want to remind them (i.e., warn them) to be careful about what they’re teaching their son. Too many parents inadvertently teach their kids that money is no object when it comes to education…or that the best time to think about a massive purchase is AFTER you’ve made it.
I’d want to give Richie and Cari four college savings guidelines to consider:
- Set limits beforehand.
Determine what you are willing to spend on college before you or your child sets foot on any campus.
- Involve your child now.
Communicate this spending limit to your child ideally BEFORE high school so that he or she knows “what I do/don’t do in high school will determine my future opportunities.”
- Commit to no debt for at least two years.
If your child doesn’t have the grades or test scores to earn a scholarship to an expensive private school, why are you spending money you don’t have (or taking money from your own retirement savings) to send them there?
State schools and community colleges are wonderful alternatives for many students. After two years of getting “the basics,” if your child has shown initiative and has solid direction, some borrowing may be permissible.
But what I like even better is…
- Emphasize work as education and motivation.
If they don’t have scholarships and you don’t have the money to send them to school, what should they do? Get a J-O-B.
Imagine if your child worked full-time each summer during high school, earning $10-15 an hour. At that rate, they could easily have $20K in the bank by the fall of their freshman year.
More and more kids are opting for a learn-work plan (i.e., taking classes full-time in the fall, working full-time each spring). With this schedule, they’re able to graduate in six to eight years with zero debt and excellent grades (working students are usually much more motivated).
You think this won’t be impressive to an employer reviewing a resume?
Right now, student debt is disastrously high in America (As of January 2025, it stands at $1.74 trillion. That’s not a typo. I said “trillion, with a “t”).
The average college student walks out of graduation with a bachelor’s degree and $29,550 in student loans debt. (This doesn’t include credit card debt.)
I’d want to say to Richie and Cari, “Do NOT put your own retirement in jeopardy just so Junior can go off and load himself down with student loan debt.”
Let me shift gears. I mentioned retirement. So, let me ask: How is your nest egg growing? Or is it? Have you given thought to how you’ll eventually turn those retirement savings into monthly retirement income?”
If that something you’re starting to think about, I’ve got a free tool you’re going to love. It’s called the RISA (i.e., Retirement Income Strategy Assessment). In less than 10 minutes, it can show you what kind of retirement income plan best aligns with your personality, goals, and lifestyle. There’s no obligation, and you can access it by emailing me (bmoore@argentadvisors.com).
Then if you want to discuss your results further, give me a call!
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