<p>The higher education system is very different now than it was when our generation was in college–particularly financially. As all of us here are keenly aware. But you cannot expect your parents or your friends without children or with younger children to really comprehend this. All of the conventional wisdom we grew up with (“work hard and you’ll get scholarships to pay your way” or “it’s possible to work your way through college”) is just no longer applicable. </p>
<p>Things are changing so rapidly that it’s difficult to make decisions. On top of that, you have to wade through a lot of noise disguised as well-meaning advice. Just this weekend I mentioned to my mother that we were planning to use retirement savings to pay off unsubsidized Stafford loans (you know, the 6.8% ones where the interest keeps growing). She told me not to do it. “It will be good for them to have this debt.” “They will find a way to do it if you don’t coddle them.” (Note: we are not paying off the subsidized loans, just the high-interest ones.)</p>
<p>My parents didn’t have to pay for my education at a school that now costs $62K/year. Because the cost was much lower, I had scholarships, I had very low-interest loans, and I was able to make up the rest with summer jobs and work-study. This arrangement is simply no longer possible. And after going through the loan end-counseling with my two daughters who graduated this spring I realized the folly of having taken those Stafford loans because the interest has caused them to blimp up alarmingly. If we didn’t have the retirement savings (which we will need to pay a 10% penalty on, in addition to taxes) we’d have to help them with monthly payments, but that would be much more expensive. </p>
<p>In retrospect I realize that we should have withdrawn retirement savings earlier and used to pay tuition directly because we could have then avoided the 10% penalty. Why didn’t we? Our parents advised us strongly not to touch our nest egg. Coming from their perspective, not understanding the costs our family faces, they gave poor advice. </p>
<p>When my own kids are my age and grappling with whatever now-unimaginable issues life brings their generation, I’ll think first before dispensing my wisdom. And for our youngest, who still has 2 years of undergrad, we will go to the retirement savings (without the penalty because you are allowed to withdraw for educational expenses, although to to pay back edu loans).</p>