One of the biggest financial worries on the mind of most parents is the cost of university education for their children. Imagine parents having three or four kids with earnings barely meeting the monthly expenses. The anticipation for that day can terrify and overwhelm. But, should the burden just solely be on parents? Let’s look at four different opinions from parents

All parents wish for the best for their children, especially on things they could not experience during their own youth. Getting a good education is one of the top must-have’s. But, for how long should parents keep paying?

As a parent, do you believe you need to or feel obligated to pay for your child’s tertiary education? Or, do you believe your child should pay for their own tertiary education? Opinions differ among parents and children, in fact even between parents. Since no views are right or wrong, and each has its own advantages, let’s explore some real opinions by parents.

Opinion #1: Parents Pay the Full Costs of Tertiary Education

According to an independent consumer research report in 2017, most parents (93%) surveyed in Malaysia contributed towards their children’s university education.

Are there benefits or advantages of parents taking full responsibility for the costs of their child tertiary education?

Here are 8 reasons favoring paying for your children’s university education:

  1. Parents do not want their kids to start adulthood carrying heavy student debt on their shoulders. Student debt is a big deal and may likely take your child a long time clear their student debt.
  2. Your child can focus on studies instead of worrying about mounting debt. For example, students who split their focus on working part-time to earn a salary to offset the debt, or students who worry about how many subjects to cram into a semester due to costs. Which also leads to the next point.
  3. Uninterrupted course of study. Provided your child’s grades are good, they can take on as many subjects as they like and graduate on-time or even earlier if they can. No need to worry about how many subjects they can afford or whether they need to split time with working.
  4. Show the importance of getting a tertiary education. This strong monetary commitment shown by parents sends an important message to the child about getting oneself an education. This is an inspiration for the child to study hard and avoid disappointment.
  5. Chances of dropping out or failing exams are much lower. A 2013 study on “Parental Financial Investments during College” by American Sociological Review found that “Parental aid decreases student GPA, but it increases the odds of graduating”. If your children have to support themselves during college, it may compel them to drop out of college because they can no longer afford to pay the expenses.
  6. It allows the parents a tax deduction on the fees paid up to RM7,000.
  7. You view it as your parenting responsibility to set your child up for success, by giving them the opportunity to get a degree for a basic professional career before “releasing” them into the adult world.
  8. You can view it as an investment in your child’s future so that they have greater career opportunities and options.

Though all these are solid reasons to fund your child’s higher education, it is only relevant for those parents with adequate savings.

On the flip side,  there are views that parents should not pay for their children’s education.

Opinion #2: Parents Do NOT Pay The Full Costs of Tertiary Education

Which parents do not want the best for their children? All parents want to see their children succeed in all their endeavors. That includes getting the best education in the best school/college/university... if the parents can afford it. Taking a loan would be a financial disaster if the parents are still struggling to manage daily expenses while saving for retirement.

Here are 5 advantages of having children pay for their own tertiary education:

  1. Parents who are already financially struggling need not resort to desperate measures. For example, dipping into your retirement fund (remember that your child is not to be viewed as a reliable alternative retirement plan as they may not be financially secure themselves when you need their help. ), emergency savings, having to cut down on basic daily expenses, etc.
  2. Student loans are easily available in Malaysia. On the other hand, a retirement loan is not.
  3. Your child learns to value their tertiary education more. Rather than taking it for granted, your child will realize the value of working hard to fund their education or studying hard to get a scholarship. This is a wise option if you have a child who is mature enough to see value and have determination to complete their tertiary studies.
  4. Your child learns to multi-task and divide their focus. They may need to pick up side jobs, spend time looking for scholarships, and balance their own budget to determine what they can afford to study/eat. With parental guidance and emotional support, this could better prepare your child for adult life.
  5. Grow financially responsible kids. Students who have to deal with their own expenses in university would be better prepared for adult life.

However, a note of caution. A 2013 study on “Parental Financial Investments during College” by American Sociological Review found that “Parental aid decreases student GPA, but it increases the odds of graduating”. Does this matter to you and your child? 

Opinion #3: Meet Me Halfway – Can Parent and Child Share the Costs?

As you can see from Opinions #1 and #2, whether a full parental sponsorship or otherwise, both have valid reasons for and against who pays. No view is right nor wrong. It all depends on your personal take on the matter and your child’s.

The parents and child should discuss and negotiate. In this third opinion, responsibility of paying college fees should not be an “either/or” decision but a “and” decision. Instead, both parent and child work together to decide the fair amount and proportion, leveraging on both the pros and cons hashed out in the previous two Opinions.

One important point to note. If the parent truly cannot afford it, then they should not be doing this. Please discuss it early on with your children to manage expectations and plan ahead to get alternative financing.

Opinion #4: Conditional Payment – Parents Pay Only If Child Graduates

There are two ways to go about this interesting opinion.

  1. You tell your child your conditions. Then, they know what to expect and they need to live with the consequences whether they do well or otherwise.
  2. You do not tell your child your plan. Aha, the trickster method! Utilizing advantages from Opinion #2 (Parents Do NOT Pay The Full Costs of Tertiary Education), you let your child fund their own education while you quietly put aside money for them. Then, when they graduate, you can gift the money to them.

Either way, you are rewarding your child for succeeding in their education. Sounds good, right? 

Conclusion

Deciding to pay for your children’s college education is not an easy task for most parents especially with the question of affordability. Your decision may depend on:

  • How is your current financial health?
  • What is the state of your education fund for your children?
  • How many children do you have?
  • What are your child’s career plans?
  • How is your child’s readiness for college life – academically and emotionally?
  • What is the availability of alternative ways of paying? Do you or your child qualify?

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So, are you paying for your children’s higher education?