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I have been having a lot of conversations lately with clients about funding college education for their kids.  I thought I would walk you through my inquiries to these folks to help them clarify their thinking and reasoning behind paying for a college education.

Ask yourself these questions

* Do you want your children to go to college?  Why?  Some people say, “Because I want them out of the house.”  Well, if they’re out on their own, making money and paying rent, does that count as “out of the house”?  If so, then maybe going to college isn’t that important to you.  There’s no shame in a vocational degree.  We need welders and plumbers.  Some of them make very good money.

Do you think it’s important for your children to go to college?  I usually get a resounding “yes” on this one, mostly because it leads to better jobs and better pay.  In the Bay Area, where I live and work, most of my clients’ kids are going to have to get advanced degrees to live and work nearby (and/or work themselves to death at several start-ups until one of them goes public).  After all, we want the grandchildren to be close-by.  This is why I often look at a Bachelor’s degree as a second “preschool” experience.  It’s a chance for kids to mature, build networking skills, learn a little, gain more independent living skills, and figure out what they want to do in life.  Most of us don’t have that figured out by 18 years of age.  An “Ivy league” education will achieve that.  So will a private, smaller, lesser-known liberal arts school.

Do you want to pay for college?  This is where it gets fuzzy.  Most people will say yes because they believe that they have to, or that it’s the only way a kid can go to college, or that they don’t want their kid to come out of school in debt, or that they don’t know what else to say.  But there’s a difference between wanting your kid to go to college and wanting to pay for it.  So then, I ask….

If you could find a way for your kid to go to college and get someone else to pay for it and not have to pay that person back, would that be okay with you?   To which I almost always get the answer, “Of course!  That would be great!”  Then, stop putting money in your child’s name, stop saving money in brokerage accounts for this purposes, and stop funding 529 plans.  The leaner you can look on the Free Application for Federal Student Aid (FAFSA), the standard form for applying for college financing, the better.  The baby boomer generation is going to transfer an enormous amount of money to higher education institutions in the next 20 years.  That money, which will likely end up in endowments, may be available to you and your kid for college and it often does not need to be paid back.  You’ve got to fill out that FAFSA form to start that process.  Save for retirement first, and if you have to access those funds to pay for school, then do so.

Are you attached to being able to go to a cocktail party and talk about how much it’s costing you to send your kid to college?   Some people are committed to paying for college because they believe it’s part of parenthood.  No shame in that, either.  Just expensive.  Start saving.

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