The debate over not saving for college

Laila Goodman with her son Reeve Moir. Rather than save money for college, Goodman and her husband worked part-time so they could spend more time as a family when the kids were young. Reeve started at Ithaca College this year.

Celestin Webb at home eating dinner with her family in Perry, Ga. She believes her four daughters should pay their own way through college. She and her husband did, and she says they valued their education more because of it.

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Tess Vigeland: So Energy Awareness Month started just as College Savings Month drew to a close. If you're a parent and you just haven't gotten around to starting that 529 plan... Well, I guess it's too late.

I joke! I kid! Relax. You're actually in good company. Plenty of people don't save a dime for their kids' college -- intentionally.

From the Marketplace Education Desk at WYPR in Baltimore, Amy Scott reports.


Amy Scott: Another school day has ended in Perry, Ga., south of Macon. Celestin Webb pulls a long yellow school bus past pecan farms and into her driveway. She parks on the lawn.

Webb calls driving the bus her get-out-of-debt job.

Celestin Webb: Our goal was to get out of debt before Tesla started college. We started out $58,000 in credit card and car debt, and we're down to $14,600.

Tesla, the oldest of four daughters, starts college next year. The Webbs may be debt-free by then. But they haven't saved a cent to pay for college.

Webb: Nope. Absolutely nothing.

Webb says she and her husband had to pay their way through school. She worked one, two, sometimes three jobs at once.

Webb: We painted, we cleaned out a refrigerator at a fraternity one summer 'cause it had gotten the power cut and all the meat was rotted. We just did whatever we could do to make extra money. And I believe that I valued my education very highly because of that.

She wants the same for her kids.

Webb: I think one of the gifts we give our children is work. I felt like I was a good success as a parent when my little girl came to me and said, 'Mommy, mommy, can I have a dollar job because it's Tesla's birthday and I want to buy her a present.' And she didn't ask me for money. She asked me for a job.

But odd jobs don't go as far as they used to. Tesla will need some financial aid.

Lynn O'Shaughnessy writes the College Solution blog. She's all for kids paying a share of their education. But she says the problem with letting them go it completely alone is that the people who give out financial aid still see those kids as part of a family.

Lynn O'Shaughnessy: Any financial aid awards are based on what their parents make. So that puts kids in a very tough bind, because they can't just go and declare themselves independent from their parents.

Which brings us to another reason some parents don't save for college. They worry if they do put money away, their kids will get less financial aid.

Not likely, O'Shaughnessy says. The federal formula most colleges use to calculate aid ignores assets up to a certain, pretty high level. Say you manage to save $100,000 for your kid's education. O'Shaughnessy says your tuition bill is only going to be a few thousand dollars more than if you had no savings at all.

O'Shaughnessy: So obviously someone who saved $100,000 is going to be so much better off than someone who didn't save a penny.

Of course, some parents don't save for college because they simply can't afford to. Or they can't afford to save for college and retirement.

Toni Woods: I think I had been worrying a lot more about saving for college than I was about re[tirement] -- well, I was worrying about both.

Toni Woods works for a utility company in Jacksonville, Fla. She'd been setting aside money for most of her 8-year-old daughter's life. Then she got some advice.

Woods: Remember your children when they graduate are entering their highest-earning years. When you're retiring, you're entering your lowest earning years. So it was more important to save for retirement. We still save modestly for college, but the bulk of our savings go toward retirement.

That way, Woods figures she won't be a burden on her daughter. Plus, students can take out low-interest loans to pay for school -- not so easy with retirement.

In Gloucester, Mass., Laila Goodman had a different strategy. She didn't save money for retirement or her kids' college. When the children were young, she and her husband worked part-time so they could be around more.

Laila Goodman: And I think we got these really healthy kids who have a good sense of the world, and I feel like we invested in children, not in retirement accounts and college accounts.

They're paying the price now. With two kids in college, about half the family income is going toward tuition and room and board.

In Perry, Ga., Celestin Webb checks on her daughters' after-school plans. When Tesla starts college next year, Webb plans to help out now and then. And maybe it's just because her mom is in the room, but Tesla seems O.K. with the arrangement.

Tesla Webb: College is a stepping stone to real life. And my parents told me if I start to starve to death, they'll jump in. But other than that, I need to learn how to fend for myself. And I'm getting older now; I don't need to be babied anymore.

As for how she's going to pull it off, Tesla's got a plan. She's applying to a low-cost school in Idaho, she's counting on getting scholarships and she's taking advanced placement classes in high school to get a jump on college credits while they're cheap. She wants to stay as far away from debt as she can.

I'm Amy Scott for Marketplace Money.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.

Celestin Webb at home eating dinner with her family in Perry, Ga. She believes her four daughters should pay their own way through college. She and her husband did, and she says they valued their education more because of it.

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