Dad Wants His Parents To Use Their $3 Million Retirement To Pay Daughter’s Tuition But She Chose A College That’s $90K A Year
BearFotos | Shutterstock Paying for college is something most parents worry about, given that tuition costs will only continue to rise. Between tuition, housing, meal plans, books, and all the extra fees that tend to accumulate, college has become a fast way to take on debt.
In one family's case, though, they decided to turn to their retired parents for help, who had an extensive amount of money stowed away. In a question submitted to personal finance publication Kiplinger, the grandparents admitted that they're hesitant to pay for their granddaughter's tuition because of how expensive it actually is. And despite having decent retirement savings, it's still a fixed income.
Dad wants his parents to use their $3 million in retirement savings to pay his daughter's tuition, but she chose a college that costs $90K per year.
"We're 75-year-old retirees with $3.2 million. Our son's pressuring us to help pay for our granddaughter's college so she can avoid loans. It's not our fault she picked a school that's $90k a year! What should we do?" the grandparents shared in their submission.
In response to their dilemma, the grandparents were told that their granddaughter needing help with college was understandable. In fact, the average cost of college is around $38,270 per student per year, which includes books, supplies, and living expenses, according to the Education Data Initiative. And the average borrower with federal student loans today owes $39,547.
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But even with $3 million in retirement savings, paying their granddaughter's tuition of $90k per year will quickly deplete it. As grandparents, even though they may want to help, it's not their job to pay for her tuition, since they aren't her parents and don't have the parental obligations that come with it.
"Having $3.2 million at age 75 is a great position, but that doesn't mean you should automatically write a big check for a $90,000-a-year school tuition," explained Mike McCracken, president and founder of Wealth Guide Financial.
Before giving their granddaughter money, the grandparents should ask if doing so would leave them financially vulnerable.
"The first thing the grandparents need to do is build a financial plan to ensure that they can maintain their current lifestyle and see how much they can financially help their grandchildren," added Brett Bernstein, CEO and Co-Founder of XML Financial Group. "Once they have an understanding of the actual number they can contribute, then they have to decide how much of that they want to gift."
Considering 80%, or 47 million households, are financially struggling today or are at risk of falling into economic insecurity as they age, it's worth thinking about whether or not paying for this tuition would put them in that boat. Aside from genuinely wanting to help their granddaughter, the pressure to help shouldn't be the driving factor either.
"You can say something like, 'We love you and want to help, but we also must protect our own retirement and want to keep our inheritance planning even among the heirs,'" McCracken suggested. "Helping the next generation is one of the most rewarding things you can do. But it should never come at the cost of your own financial peace of mind."
At the end of the day, an honest conversation needs to be had before any funds are dispersed. But it does shed light on the fact that even with a $3 million nest egg, a family is still grappling with how they can even afford to pay college tuition for all four years.
Nia Tipton is a staff writer with a bachelor's degree in creative writing and journalism who covers news and lifestyle topics that focus on psychology, relationships, and the human experience.
