When Thing One, The Elder was born, The Missus and I resolved to fund a 529 account for her and any other kids who were so incredibly unfortunate to be my direct descendents we had. For me, the decision was based on my experience of having racked up about $85,000 of law school debt, which I did not like, Sam I am. I did not like it from a bank. I did not like it while I sank. I did not like it in my mind. I did not like it trailing behind. I did not like it here or there. I did not like it anywhere.
Our goal was to fund the accounts to a point where they’d respectively cover the cost of tuition, room, and board for four years at our state’s flagship university at the projected sticker price. Whether we’d reach the number(s) was unknown. But we’d try.
And so we diligently saved. Not huge amounts, but also not insignificant sums. Automatic deposits were made monthly. The funds grew by way of deposits, dividends, and appreciation. And all was goodish.
Fundy business
Then I discovered FIRE, and my thoughts on college funding were called into question. Were we inadvertently enabling our kids to too long live a life of ease? Would we be depriving the kids of hard, but invaluable financial learning experiences? After all, the experience of accumulating and having to pay off my law school debt (on a “meh” salary for a good portion of the time) fundamentally informed how I approached debt — and money in general — thereafter. And by taking on work opportunities to fund college, one might gain valuable work experience and connections that could pay otherwise unobtainable dividends down the road.
Add to this my learning (better late than never), that the sticker price for college generally is not the actual price paid and that scholarships may not be as hard to get as I once thought they might be. And if the kid has gotten AP or other credits transferrable to college, the time in, and cost of, college can drop accordingly. I benefited from that myself back in the Stone Age day. This potential combination of factors, as well as some other considerations and my being open to new ideas since discovering FIRE, eventually led me to cease our monthly payments to the 529 accounts.
Decisions, decisions
Here’s what went into the decision: (1) even with stopping the funding, the accounts should cover about three years of college expenses for each kid; (2) the cost of the flagship university in the state we’ve since moved to is lower than that of the state we moved from; (3) both kids are likely to have credits going into college, and maybe a lot of them; (4) scholarships are a possibility; (5) I now believe that the kids having some skin in the game (some debt, but far from crippling) will teach invaluable lifelong lessons; (6) if we overfund the accounts, it may be difficult to use the overage without incurring a penalty; and (7) should an emergency happen and we need to fund any remainder of the costs for either or both kids, we can.
This decision was not taken lightly. But it’s the right one for us, I think.
That said, I think the School of Life is one of the best institutions of higher learning. And one is always going back to (that) school.
I completely, completely agree. Of course, whether to help with college costs and how much is an individual choice, but I hate that the prevailing assumption in our society is that all parents should help pay for as much as they can possibly afford. Why is that the default? It’s like this weird groupthink mentality, and if you don’t fall in line people look at you like you’re the worst parent in the world. Like you said, there are other ways to help with the costs, and there is nothing wrong with the kids having a hefty chunk of skin in the game. Even if they have to take out some loans, they have many decades of working years in which they can repay them. You don’t. Anyways, I respect what you’re doing!
Thanks! My experience paying off debt absolutely suuuuuucked. But boy, was it a massively valuable educational experience.