Qualitative question about student loans
I posted this on Bogleheads. Also wanted to get AF’s opinion on it.
In the very recent past, I have met with multiple clients who all say some variation of the same thing. The details differ somewhat, but the basic message is the same.
“I bought my daughter a car and financed it. Later my daughter bought a house and she financed it. But when she went to college, I paid 100% of the costs out of my own pocket. I even stopped contributing to 401k and started a side gig so that she could get out of college debt-free. I wanted her to graduate college without the burden of student loan debt.”
I fundamentally do not understand this, and I wish that I could change my clients’ attitude toward it.
First, why do you feel that your child (who has 25-30 more years than you have to accumulate assets) deserves your money more than you do?
Second, if you feel like they are more entitled to your assets than you are, then why do you feel they are entitled to it now? From a strictly economic point of view, wouldn’t you be better off earning 7-8% on your money for the next ten years (until she is old enough to be out of the party stage), and then pay the student loans that are accumulating at 3.4%? Instead of giving several small “gifts” from age 18-22, why not just give her one big “gift” on her 30th birthday?
Third, why is student loan debt somehow more evil or oppressive than automobile debt or mortgage debt? Yes, the state can garnish wages. But cars and houses can also be repossessed. And when you die, student loan debt dies with you. Car debt and mortgage debt lives on.
Fourth, since when is teaching your kids financial discipline a bad thing? Why do you think that forcing your daughter to choose between beer & cigarettes and paying your student loan payment is a bad thing? I was young and stupid once. I had to make that decision. Sometimes I chose poorly. But I learned from it, and now that I’m almost 40, I can definitely see how that hardship helped shape character.
* * *
So my question to the BH community is this: Am I 100% wrong on this? It seems that so many people want to “snowplow parent” their kid through college. I just don’t think that’s a good idea.
Or are there a lot of parents like me? I just don’t notice them because the subject never comes up?
82 > 87
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