Personal Finance FAQ

Start ‘Em Young With Entitlement

Economists report that a college education adds many thousands of dollars to a man’s lifetime income – which he then spends sending his son to college.
–Bill Vaughn

I recently saw a series of advertisements for a Virginia 529 savings plan for children’s education. The advertisements showed a sequence of children asking off camera parents if they were saving for the kids’ college education. “Are you saving for my education?” they would inquire, with an implicit message that parents who do not save for the college educations of their children are failing as parents.

While I believe that parents who can should save for their kids’ college education, I do not believe in simply handing kids this money as an entitlement. I remember when I was a cocky high school senior, I had received a ROTC scholarship to a prestigious university, and thought that I was getting a full ride. My father called me into his bedroom and gave me a stark wake-up call. Pretty much any college costs I incurred were also going to be paid for by me. My parents would give me a small stipend, but that was it. Since my father was a state trooper and my mother was an elementary school teacher, this shouldn’t have been surprising, but I was deflated and then driven into a sense of fear-based action. I didn’t want to have to pay for school either! Fortunately, I was able to go to West Point, so I traded five years of military service for paying for college. However, the lesson was clear: I was responsible for my own way in life, and I wasn’t going to be able to call on the Bank of Mom and Dad for much of anything.

As research has shown, most rich Americans are first generation wealthy, and wealth which is passed down tends to get squandered away. Children who are required to pitch in around the house generally end up more responsible than those who don’t. Finally, children who earn money are more likely to save that money than are those who receive the money as a gift.

If you are a parent, I believe you should save for your kids’ college education if you can afford it. However, that money which you have saved up should not be handed over with no strings attached. Having children learn the value of working for something, even if what they contribute is a small fraction of their overall college educational costs. Education is very important, and will be increasingly required to be competitive in a global marketplace. So, too, though, is the ability to work hard and not expect everything to be handed to you. If you are a parent who cannot afford to send your child to college, it is not the end of the world. Work, community colleges, and co-op programs can help ease the financial burden while giving your child an appreciation of what he or she is working towards.

College savings is not an entitlement, no matter what the kids on TV say.


Jason Hull, CFP®, was the co-founder of Broadtree Partners, a firm that acquires $1-5MM EBITDA companies. He also was the co-founder of open source search consultancy OpenSource Connections, a premier Solr and ElasticSearch firm. He and his wife FIREd (financial independence retire early) at 46 and 45, respectively. He has a BS from the United States Military Academy at West Point and a MBA from the University of Virginia Darden Graduate School of Business.

You can read more about him in the About Page.

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