One of the biggest assumptions I read about in books and articles about financial planning for your children is the outright assumption that your child must attend a college or university of some sort after graduating from high school, so you’d better financially plan for it. To me, this assumption is one that needs to be seriously re-evaluated.
First of all, what percentage of students actually manage to complete high school? According to the National Center for Higher Education Management Systems (NCHEMS), the public high school graduation rate in 2005 was a surprisingly low 68.8%. What about homeschooled and privately schooled kids? The National Center for Education Statistics estimate that 2.2% of all students nationwide are homeschooled, whereas the percentage of private school attendees is 9%. This means that 89% of students nationwide (roughly) are educated in public schools. Even if we assume all private and homeschooled students graduate, the high school graduation rate is still only 72.2%.
What about the percentage of high school graduates that actually earn a degree? According to NCHEMS, 24.1% of high school graduates receive an associate degree three years later, while 52.1% of high school graduates receive a bachelor’s degree within six years. This means that a student in school in the United States has only a 37.6% chance of getting a bachelor’s degree within six years after high school graduation and a 17.4% chance of receiving an associate degree. Note that these numbers are not exclusive – many people receiving an associate degree actually go on to complete a bachelor’s degree. Also note that this number is actually a bit high – it assumes all students in homeschooling and private school situations actually complete their secondary education.
What Opportunities Are Available to the Other 62.4%?
Many people assume that if you don’t go to college and earn a degree, you’re destined for some miserable, failed life, earning minimum wage on a factory floor somewhere. That’s simply not true. There are many opportunities available to those who do not attend a post-secondary institution. Here are four of them.
Trade school Carpenters, electricians, plumbers, and other tradesmen do not have the need to earn a four year degree to ply their craft, and they’re always in demand.
The military Military careers give you the opportunity to see the world, offer tons of advancement opportunity, and open the doors to further education if you so choose.
Entrepreneurship Many big entrepreneurs never completed college – just ask Bill Gates. If you have an idea and a strong work ethic, you’re often making a strong choice chasing that dream instead of stopping and following a degree path.
Service corps Some high school graduates may choose to work for a service organization for a few years in order to figure out what they want to do with their life (and also spend that time benefitting others).
Shouldn’t a Good Parent Expect/Demand Their Child Attend College?
This question troubled me for a long while, because I know from my own experience how beneficial college can be. You can learn critical thinking skills and also get the preparation you need for certain career paths. I spent six years earning two separate bachelor’s degrees and I thoroughly enjoyed the experience.
After I graduated at age twenty three, I spent six years working at two different jobs directly related to my degrees, both of which I enjoyed quite a lot and both of which paid well. But the itch inside me told me that I needed to forge a different path, and now I find myself in a self-defined career as a writer focusing on personal finance topics. I’m not trained in English nor in finance, yet this is the path I’m following.
The point is that college itself does not define the path that your life will follow. When you enter college after high school, you’re moving from thirteen years spent in the educational system directly into another number of years in the educational system. If you’re one of the lucky ones, you’ve already figured out your internal talents and passions and – even luckier – your parents have supported and fostered those talents and passions.
But most incoming college students aren’t there yet. Most of them (like myself and almost everyone I hung out with in college) are either majoring in something that seemed vaguely interesting in high school, haven’t declared a major at all, or are majoring in something that someone told them would earn them good money. And these were those kids in the minority that were even in college at all.
My Alternative College Savings Plan
Given all of this, my primary concern for my children’s educational growth is no longer pushing them to go to college. That’s a secondary concern – one that might be an outgrowth of other things.
Instead, my primary concern is helping them find their natural talents and their natural passions. I intend to encourage their critical thinking skills as much as I can and try to expose them to as many areas as possible while still at home. They’ll try musical instruments, various art forms, sciences of all kinds, and so on, and we’ll see where their natural magnet leads them.
I’m also going to strongly encourage them to be entrepreneurs in their spare time, from selling lemonade to mowing lawns. Or maybe even starting their own blogs – I’ve discovered some amazingly successful bloggers early in their teen years.
So how do I save for this? I still have a 529 plan for them, but that’s only part of my financial preparation. I’m also planning on many expenses earlier on, engaging them in activities and experiences of all kinds to help them find their passion.
If they find their talent and passion and it doesn’t guide them towards college, no big loss. I’ll just convert their 529 into an ordinary mutual fund and hand it over to them as seed money for whatever great things their lives hold for them. For one child, the 529 might actually be for college; for another, it might be seed money for a business or tuition at a trade school or even a house down payment.
The point is that college isn’t the only answer, and to force your children down that path can deny them the opportunity to spread their wings.