Why We Don’t Have College Funds for our Kids

posted by Andrea | 03/31/2014

college funds

Almost immediately after Nora was born, I started getting asked if Dave and I would or would not set up a college fund for her and for future children.

Now, with the recent birth of Simon, I’m getting asked the same question again :)

The short answer:

No, probably not.

The longer answer:

Our kids are still really young and it will be 16+ years before any of our kids will be going to college. We have LOTS of financial goals to reach before then, and we feel those goals are more important than setting up a college fund for our kids.

Obviously, we will continue to evaluate this decision year after year, and we might very-well decide to start college funds for our children, but at this point, we just don’t feel like it’s a great use of our money.

Oh, and I should mention that although we aren’t planning to set up a formal college fund, we DO plan to help our children with at least a portion of their college tuition if/when that time comes.

The “WHYS” to our answer:

I realize many of you probably think we’re crazy for not setting up college funds for our kids — but we’ve actually given the topic a decent amount of thought and we have some pretty specific reasons WHY we’re not currently setting up college funds for our kids.

1. We want to pay off our mortgage.

One of our goals is to pay off our mortgage in the next 2.5 years (before Nora starts school) and the amount of interest we’ll save will be ridiculous — WAY more than the interest we’d make by keeping our money tied up in a college fund for our kids.

Plus, since we’ll be living without a mortgage payment, we’ll be able to put a lot more money aside for saving and investing (see next point).

2. We want to invest our money to make more money.

Once we have more disposable income and aren’t “tied down” to a mortgage payment, we want to get a little more aggressive with our investing and work with our financial guy to help us make money from our money.

At this point, we have absolutely NO idea what we’re doing when it comes to investments — we just have a few relatively safe mutual funds — but it’s one of our goals to learn more about this (once we have the money to actually invest!)

3. We want to send our kids to a Christian school.

In another 2 years, Nora will be gearing up for preschool which means we’ll be paying for Christian education for multiple children for the next 14-20+ years. Tuition is very expensive — but it’s something we WANT to pay for. And since Dave teaches at a Christian school, we actually HAVE to send our kids to a Christian school whether we want to or not (no, he doesn’t get a discount on tuition either).

4. We want to have plenty saved up for retirement.

At this point, Dave and I have been fully-funding our Roth IRA’s each year since we’ve been married. We plan to continue doing this every year until we retire as we feel this is a very important use of our money. We don’t want to be working when we’re 75 — and since the life expectancy is getting longer and longer, we want to try to be as prepared as possible for our retirement days.

5. We want our kids to EARN their education.

Dave and I went to a relatively expensive liberal arts college (about  $25,000 per year for tuition + room and board). Our parents did help us out SOME, but we also worked multiple jobs to help pay for our tuition. We also applied for TONS of scholarships, grants, and special funds to help off-set the cost of our tuition and we took out student loans each year.

As I mentioned above, we DO anticipate helping our children to fund PART of their college education; however, even if we have the means to fully pay for their entire college education, we probably won’t do it.

I saw WAY too many college students who slacked off because they didn’t have anything invested in their education. They got a “free ride” from mom and dad (who sometimes took out a 2nd mortgage to pay for the tuition). Meanwhile, Dave and I worked our butts off to keep our grades up and keep our scholarships.

6. We’re not against student loans.

I know loans aren’t ideal, but the fact that Dave and I had student loans (and then paid them off really quickly) actually did a lot of good for our credit score!

Also, although we were both initially stressed out about how we would pay off our student loans, the whole process taught us a lot of financial responsibility — something we would not have necessarily learned if our parents had simply paid for all our college tuition.

We don’t think it’s bad if our kids also have to take out a few student loans.

7. We just don’t want our money tied up.

Dave and I are the type of people who would MUCH rather save money than spend it — and because of this, we don’t feel it’s necessary for us to have our money tied up for so many years just to make sure there is something left when our kids get to college.

By not having college funds, we can use and invest that money for the next 14-20 years, all while keeping college tuition costs in the back of our minds… and then deal with them when the time comes.

I fully realize this method would NOT work for everyone — especially if you aren’t naturally a saver — but that’s how Dave and I view the situation at this point.

These are just a few of the major reasons why we’ve chosen NOT to set up college funds for our kids at this point in our lives.  But like I mentioned above, we will continue to evaluate this decision as time goes on.

College funds are a great way of setting aside money for your kids — and I definitely have no issue with anyone who DOES have college funds set up for their kids. It’s just not something Dave and I want to do right now, and since I get asked so often, I thought it might be time to explain our reasonings in a blog post.

So now, when I get the emails and questions, I can just send the inquirers to this post :)

What are your thoughts on college funds?

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Filed under: BudgetingChildrenFamilyLife



  1. Jenni/Life from the Roof


    Thanks for posting about this – I think it is good to challenge people’s assumptions that they have to save for college. We simply cannot afford to save too much at this point because my husband chose to go back to law school and we will have loans of our own to pay off first!

    Some other points to consider:
    * college could cost much more than it did for you 18 years from now, so this would make me want to save at least a little if I had the money; I, for one, was fortunate to go to a good school for a very affordable price, and my parents paid for it all on a middle-class income, but when I tried working I had a hard time staying on top of my classes as well; that same school is now at least double if not triple the price to attend
    * college could also not be what your kids want to do, at least right away, so why lock it into a fund that can only be used for education?

    Because of that, if and when we have money to set aside, we will probably consider investing money for our kids, but not necessarily in a “college fund.” Although, having a tax break on the savings is also important.


    Andrea Reply:

    I think this is a really good plan Jenni — and honestly, I wouldn’t worry too much about the tax saving benefits of a college fund. People tend to freak out about tax breaks, but what they don’t realize is how LITTLE the tax break actually is. Yes, you might get a VERY SMALL tax break right now, but then you’re money is tied up for years and if your kids don’t go to college, you could have issues getting the money out.

    I think your plan is a great “happy medium”!


  2. Ellen


    I think your plan is great, and it’s similar to my plan for the future (even if I don’t have kids or mortgage yet, and the plan will probably change)!

    I just have to ask, why do you have to send your kids to a christian school? (I’m not American, so I’m probably missing something, but I don’t really see a connection between working at a special school and having to send your children to a similar one…)

    I’m going to save this post for the future, it reminds me of everything I’m planning to do, that I never actually remember I want to do… :)


  3. Lydia @ The Thrifty Frugal Mom


    The more I read your blog, the more I really, really like you and the way you think. :) Seriously, your reasons for not having a college fund are totally the reasons that we don’t have them for our kids either. But I’ve met very few people who think this way. It seems like so many people think that you just HAVE to fund your child’s college. But like you, while we may help, we think it’s so beneficial for them to actually have to put something towards it too.

    And I agree that it makes so much more sense to get your mortgage paid off and save that interest. In the long run, that will get you so much farther ahead. And it’s an incredible feeling to get it done early! We’ve also been blessed with an awesome place to invest our money (basically a private business that uses it to offer loans to people.) We get an incredible rate and at this point we can save up so much more that way than by doing anything else. In fact, my husband did the math and ended up taking out student loans for his college this year because we can do better investing the money and then using it to pay off the loans immediately when they come due. Anyway, I’m kind of getting off the subject, am I not? :)


    Andrea Reply:

    Thanks for sharing Lydia — I have also been amazed with how many people think they absolutely MUST fund their children’s entire tuition. I even know many people who have borrowed from their retirement funds or taken out 2nd mortgages on their house just so their kids don’t have student loans. Seriously!

    Even if we can afford to fully cover the cost of their college tuition, I’m almost positive we won’t. Our parents could have paid for all our tuition but they didn’t, and I’m positive we’re better off because of it.


  4. Kathryn


    Hi Andrea,
    Just chiming in to say that my husband and I are in almost the exact same situation as you and Dave, and it’s great to hear others are in the same boat! I teach at a Christian school as well, and we are also required to send our kids to Christian school. (We would send them to a Christian school even if we didn’t have to!) Love reading your blog – keep up the great work! :-)


  5. Katie T


    Just wanted to say, that as a financial aid/scholarship counselor at a major university, the kids in my office that are the most financially savvy/aware, are the ones who are contributing to their college education in some way, shape, or form. Kudos to you and your hubby for your thoughts/decisions on this issue! I really like them. I’m all about moderation… for some kids, taking out a reasonable amount of student loans is what works for them (and is sometimes the difference between finishing a college education and not finishing one). For others, financial aid and scholarships are covering their costs. And yet for other even still, there are other combinations of options out there (paid co-ops, work-study, student worker jobs, working off-campus, etc.) that assist students with paying for school. There is no one-size-fits-all approach, as each family’s situation is different, but as someone working with students and parents in a college (financial!) setting, I applaud your comments on this issue. I think you’ve got a great perspective! :)


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