Here at Virtus Wealth Management we love our families, our clients, and our clients’ families. It’s a happy time of year with various levels of graduation happening across the board … kindergarten, 5th Grade, High School, and College. Woohoo!!!
I, myself, have a high school senior this year! How did that happen!?!?
That said, I thought it might be fun to discuss a tricky, high school graduation topic. Should parents pay for their children’s college education or tell them to get student loans? I don’t want my child to be entitled, but I don’t want him graduating under a mound of student debt either.
Eileen Gallo, a psychotherapist, along with her husband, Jon Gallo, co-authored two books on childhood and money. Eileen Gallo says, “In a vacuum, the issues surrounding how parents choose to finance their children’s education would seem to be entirely financial in nature. In reality, the choices are modeling values, and sending important messages to college-age children,” says Eileen Gallo.
As parents of three adult children, the Gallos have strong feelings in this area, and those feelings have evolved. “We originally believed that parents should pay 100% of their children’s undergraduate college expenses. Over time, we have reached the conclusion the problem isn’t giving children money for college, it’s failing to involve them in the money process. College-age children who are involved in the economics of their education and pay part – even a small percentage – of their college expenses are less likely to develop a sense of entitlement, and (more likely to) learn valuable life lessons that help them cope with adult life,” she says.
Many families have no alternative but to rely on student loans, part-time college jobs, and student and parental savings. What about those who can afford to pay for college? Does paying the bill really produce entitled children? Eileen Gallo offers the following advice.
Meet periodically with your adult child to establish a clear understanding – preferably in writing – of the economic arrangement. Some of the issues that should be covered include: Will the parents require a minimum grade point average? What is the student’s financial contribution to his/her education and how will the student earn money? The Gallos strongly recommend the student work part-time, but no longer than 15 hours per week. Alternatively, the student could work full-time during the summer.
Very interesting! The important thing to remember here is to be aware of the messages and values that your parental decisions are sending. Kids are smart! They know what’s going on, and they are watching you every step of the way.