The affordability of college education has long been a budding concern among parents. Since the costs of higher education are rapidly increasing compared to most other goods and services, the argument on whether parents should pay for their children's college tuition have intensified.
Colleges and universities are no strangers to being the subject of ridicule and scorn of parents with children going to college. The reason? Parents often blamed these educational institutions for making education unaffordable.
Due to the increasing concerns over the affordability of college education, it spawned to one debatable question: Should parents pay for their kid's children tuition? According to NBC News, parents with college-bound children are torn between risking their retirement and risking their children's future.
Based on statistical records, an average graduate leaves school with almost $30,000 in student debt, which will reduce their future retirement savings by over $300,000. Parents, on the other hand, are forced to make a risky choice of using their 401(k) plan to save their children's college education.
Tapping retirement funds for college, however, is not quite a brilliant idea for most people. It should be avoided in almost every case. One reason why parents should not use their retirement accounts to finance college is the possibility of getting hit with penalties and taxes, The Motley Fool notes.
In addition, tapping retirement funds would mean falling behind on retirement savings. Lastly, while there are loans to help pay for college, there are no loans available to help pay the living expenditures in retirement.
John Wasik of Forbes, however, said that Individual Retirement Account (IRA) could be a "secret weapon" for college savings. While using retirement funds for college is not a good idea for most people, Wasik stressed that this can be a "palatable" choice if parents have saved enough for retirement and wanted to avoid college debt.
Meanwhile, since the pursuit of higher education has become a financially stressful plan, there's one important thing that parents should do. According to Lazetta Rainey Braxton, a certified financial planner and founder of the wealth advisory firm Financial Fountains, middle income parents should ensure their own financial stability first before budgeting any contributions to their children's college funds.
