Would you pay for your kid’s graduate school?

I always thought it was ridiculous that some parents would pay for their kids’ law school or med school tuition.  Those tuitions are high but the salaries after are also quite high (at least they were for lawyers before the recession) and having to live on less than a fortune in order to pay off loans helps people keep their fixed expenses low.  So you don’t end up having to make a 300K/year salary to pay your required monthly expenses.  If the cost-benefit ratio isn’t high enough (ex. There’s a glut of lawyers or the business school isn’t very good) then nobody should be paying for the degree.

College seems less of a problem because a high salary straight out isn’t guaranteed (and certainly not an MD or JD-level salary) and there’s so much besides student loans that a person has to save for when just starting out.

My thinking was probably also shaped by the fact that my parents took care of my (subsidized) student loans and neither DH nor I got parental help during graduate school.

I still believe that people shouldn’t get a PhD without being fully funded.

However, as our income has gone up, I’ve been feeling more ambivalent about the need for kids to pay for their own professional school.  If DH and I have saved a lot, why not pass it on in the form of tuition assistance rather than as an inheritance that our children will hopefully never need?  If that’s something they want to do.  (Both DCs, however, seem very much like they’ll become engineers, so this may be a moot thought.  We’ll see what the future brings.)

This type of thinking leads to a slippery slope.  When I read The Millionaire Next Door I thought that the the plight of the next generation of millionaires who spent down their parents’ wealth was pretty awful.  But is it really awful?  Wouldn’t we all like to be parts of aristocratic dynasties living beyond our incomes from the benefit of family wealth?  If the money runs out, doesn’t that just put the third generation back where it started, in which case, why worry about dynastic wealth at all?  Why does wealth need to grow with each successive generation?

I’m still against helping kids out with a downpayment– people shouldn’t be able to take on a mortgage they can’t afford.  And I’m firmly against taking money from my own parents (I try to encourage them to spend it themselves!)  But will I give my adult children monetary assistance?  I don’t know.  They probably won’t need it.  They may not want it.  But who knows, we may end up being ok with funding graduate school.  We’ll see what happens when the time comes.

Do you believe in funding children’s graduate education?  How about their house downpayments?  What kind of monetary assistance would you provide to your adult children?  What kind would you not?

35 Responses to “Would you pay for your kid’s graduate school?”

  1. yuppiemillennial Says:

    Right now our plan is to save maybe ~200k/kid, to be spent how they choose. They can use it for trade school, cc, undergrad, grad school, a house, to start a business, save it, spend it, etc. If they want to do med school, maybe go to our state’s flagship on scholarship for undergrad. Or maybe choose the less expensive school and instead have a downpayment for a home or rental property.

    In any case, whether or not we actually implement the plan will depend on how mature snd capable of long term goal setting our kid is by high school. But I’d like to do some variation of it if possible.

    • nicoleandmaggie Says:

      200k is a lot! I guess that’s what 4 years at a private school costs these days without or with minimal scholarship.

      • yuppiemillennial Says:

        I figured we’d save slightly less than 4 years of private school (when including room and board) but more than 4 years at our state flagship. If they are able to get merit or need based aid (which will mostly depend on if we actually RE), all the better for them!

    • Solitary Diner Says:

      Do you want to adopt me?

  2. scantee Says:

    I have no intention of paying for my kids’ graduate educations should they choose to go that route. I see greatly diminishing “returns” on investments in adult children. College? Sure, that makes sense to me: it’s their transition to adulthood and it launches them into the working world without the burden of excessive debt. But grad school and mortgage down payments? No. They need to stand on their own at some point and I think after college is an appropriate time to turn off the spigot. I also feel like a lot of familial investments come to better use when a generation is skipped. That is, I think it would be more beneficial to everyone to pay for my grandchildren’s college than my own children’s graduate school.

    • nicoleandmaggie Says:

      That’s an inteinteresting idea. So far my parents have been wanting to give me money (I’ve declined, my sister has accepted) but weren’t interested in funding a 529 for our kids instead when I suggested.

      I wonder if my kids will have kids…

  3. grrlpup Says:

    My parents let my sister and me pay for everything post-college ourselves with the exception of retirement- they helped me set up an IRA when I was 21 and have been sending me money for it for my birthday ever since. (I’m 46.) It’s not something I would have necessarily taken care of myself in the early years of low-paying jobs post-college, and they can send money at a steady rate instead of all at once. And they can stop whenever they want. I think it gives them more peace of mind that they’re helping to set me up for later, than help with a house or degree would. I continue to be very grateful.

  4. Nutmeg Says:

    As I was growing up, my parents told me that they would pay for college but not graduate school. I think that establishing a clear expectation of what was going to happen helped a lot, and I am planning to raise my kids (who are now quite young) the same way. In my case, my parents did pay for me to go to college, and I worked a modest amount during school terms and full-time during summers to pay for my books, school supplies and whatever other stuff I wanted or needed to buy for myself. I then got a masters degree as a funded student and teaching assistant and later got another masters degree that my husband and I paid for ourselves, with help from scholarships and TA stipends.

    I don’t like the idea of paying for professional school tuition for my kids, but I can’t rule out the possibility of getting to a point in life when it seems more reasonable, as you apparently have. Perhaps we would at some point feel comfortable paying for part of it, but it seems to me that the kids should at least be responsible for some significant part of it. Really my feeling is that professional school is so expensive that I would hope they wouldn’t pursue it. My impression is that many people go to law school or medical school because they don’t know what else to do and they will get a “good” job at the end. Often they go right out of college, without having any understanding of what it is like to be paying off the debt from such things for years and years. Anyway, I am completely with you on the idea that PhDs should be funded.

    Because of the expectations that my parents set, I feel completely opposed to asking them for money, and I would never expect them to give me any money. I think it helps kids a lot to know that they HAVE to start supporting themselves at some point; without that expectation, they don’t feel enough of a sense of urgency to learn to take full responsibility, because they know their parents will help them out if they “need” it. I see this with my spouse’s siblings: in their 30s and 40s they are STILL whining to their mother that they need money. They and their spouses and partners make good incomes, with good prospects of income growth in the future, and spend a lot on fun travel and going out, while their mother has a limited income, with no prospect of income growth in the future, and has a more modest lifestyle.

    That said, my parents have decided to give us a significant gift of money to put toward a house. We don’t need the money to get the house that we want, but we can reduce the amount of interest that we pay to the bank this way. Their thinking is along the lines of what you seem to be thinking about possibly helping your kids with professional school tuition. They are thinking, why keep excess money that we are not using and pass it along to our kids when we die, when our kids are retired, instead of passing some of it along now when it can perhaps do more good? I think the key thing is that we did not expect this money from them, so we saved plenty ourselves and established expectations for what type of house we were going to buy based on our own income and assets.

    • Rosa Says:

      I think it depends a lot on what your family considers “need”. If we had a real catastrophe, like sudden-onset disability or severe illness or something, my family would help us out. But not day-to-day needs/”emergencies”. Nothing you could insure against, for sure.

      Of course they intend to leave us money, despite me saying whenever I’m asked, “go ahead and spend it! We’re going to have our own retirement savings fully funded by the time you die anyway”. So I have no idea how much my siblings are banking on that.

      My grandparents had a set amount of money they gave each of us, which was kind of skewed by our age range ($1 in the ’80s when some of my cousins married was worth more than $1 in the 2000s when we bought our house) but had the nice effect of not making the family wealth available to grandkids be dependent on the kids varying levels of ability. It wouldn’t have been an issue for my cousins and us, because our parents & their siblings were all about the same with money, but in a lot of families the grandparents could give equal money to their grown kids and the grandkids would see wildly varying amounts of it because some of their parents would have spent it all and some would pass it on.

  5. nicoleandmaggie Says:

    My dad paid for a lot of my college (at a state flagship), due to the divorce settlement my mom’s lawyer worked out when I was 8. I took out subsidized loans for the rest of it, and paid them all off myself (see https://nicoleandmaggie.wordpress.com/2013/07/15/why-i-paid-off-my-student-loans-early/ ). They were never going to pay for even part of my PhD, but that was funded by the school I went to, so no loans for grad school.

    My dad did set expectations. When I was in my teens he said, “When you turn 18 you have several choices. You can go to college, go to the military, or go to work. I hope you’ll go to college. You’re always welcome here. Whatever choice you make, if you live in this house after you graduate high school you’ll be paying rent.”

  6. SP Says:

    I fall more on the side of “why not, if it is not a hardship?” If the child is a generally responsible person and has a reasonable life plan, I’d consider it. However, I don’t expect to be in a situation where we’d have the mans to pay for professional school.

    I’m also in that camp for down payments – if my kid was going to buy a house but needed to save up for 2+ years for a downpayment, I’d consider giving them a boost to let them buy sooner. Or even topping off a downpayment to give them more buying power. That doesn’t mean them getting a mortgage they can’t afford – the mortgage is based on the amount borrowed, not the amount the house cost originally. It just would accelerate a process to give them an advantage. They obviously would have to be good with money and haves sensible financial plans. Again, I don’t expect to be in a position to do much here, but you never know.

    For reference, my parents didn’t pay for undergrad, grad school, nor give me anything for a home, and neither did T’s. We did get wedding help. I think that is fine too – and they don’t have a lot of excess money, so I wouldn’t have been likely to accept. I do hope to set the expectation that our kids are largely “on their own” after college, but we will do everything we can to help with college costs (which will likely not be everything). Any deviations from the expectation will be a surprise, not an entitlement.

    • accm Says:

      My parents topped up my downpayment when I moved to my second home. I live in a Crazy Expensive City, and while I could have afforded the full mortgage I would have had without the top-up, this way I can pay off the place in less than 20 rather than 25 years. I gratefully accepted the cut to my eventual (and hopefully still-distant) inheritance. So I guess I agree that the adult kid’s situation can make a difference. My own plan is for my kids to take advantage of the essentially free tuition at the very good school that employs me. Grad school (if that is the plan) definitely should be fully funded. Anything else depends on my own financial state down the road.

    • Rosa Says:

      I am judgy enough about other people’s grad school plans when they’re not my kids. I feel like I see a lot of people do grad school because they can’t think what else to do, or feel like it’s expected, or before they’re ready. I can’t imagine I’d be detached enough from my own kid’s decision making process to know if it was a good idea to help them or not.

      Not that we’ll have that kind of money anyway. Plus grandma may subvert the whole thing by leaving our child his own money. I have no idea how much she’s squirreled away or what her plan is for it.

      • SP Says:

        Yeah, any money will come with opinions – so my hypothetical kids would likely be best off if they can make a plan without it.

        I feel slightly different about wedding funds – I would give a modest amount no-strings-attached. (Which is kind of weird, and I’m not sure why this seems so sensible to me.)

        I do think I could be detached – I’m extremely pragmatic (hello engineering). Then again, I don’t have kids, so maybe it is easy to say that now!

      • nicoleandmaggie Says:

        A wedding is just a big party, not an investment. And it only lasts a day, not years.

  7. chacha1 Says:

    My parents offered my sister and me the same deal: go to the home-town school (an inexpensive state college) and we would get the new car of our choice for graduation. I believe this was mostly Dad’s idea since he is a car nut. :-) In any event, we both had offers of National Merit scholarships; mine would have taken me to Cornell but still with a lot to pay. My sister’s took her to Converse College in South Carolina. I ended up accepting a full academic scholarship to the hometown school, and lived at home till my senior year. Dad gave me my car at the end of my junior year and they moved me out into a town apartment for my senior year, ostensibly so they could remodel my bedroom, but really I think so they could maintain a blissful ignorance about my sex life. :-) My sister did get a car, but not a brand-new one; we each got a summer trip to Europe. I think we both got a lot out of that – both trips were university-based for language acquisition. My sister also studied art and I studied history. So I am not in favor of funding the old-fashioned “21 countries in 7 days” student trip, but I would favor funding a semester abroad to study.

    Neither of us got help with our graduate school, but my parents are now helping my sister to pay off her loans. They have also contributed to her home-buying activities. She went into teaching, in the South, and has consequently been broke most of her life.

    If I had kids, I think I would offer a similar deal to what Dad offered. Maybe not a new car, but some teenager-friendly incentive to stay home and keep costs down. I don’t believe there is anything to gain by going to a Big Expensive University vs a state college unless there is a specific program that is only offered in one place, and in the age of online learning I don’t believe that is often an issue. (If you are obsessed by marine biology, then you really need to be near an ocean.) I would definitely provide the best tools I could – a good laptop, for starters.

    When it comes to home-buying, I am sufficiently jaded by my 50 years (including 20 years of living in L.A.) that I would discourage a child from even considering buying a house until they were in their 30s, by which time they should be established in a career. I would also discourage them from getting married before they were 30. That third decade is IMO when the most substantive changes happen in the adult mind, and what seems great at 21 often looks like a big mistake at 35.

    And that is also why I would not support a graduate-school program *unless* the child had been obsessed by one thing all its life, was a devoted and successful student, and would contribute at least part of the cost by working. Even then, if the program were something that an intelligent person can study on her own, and that did not have a high likelihood of gainful employment at the end of it, I would probably discourage it.

    Me going to grad school for an M.A. in History was a pure ego move because there are No Jobs. It didn’t cost me much and I’m not sorry I did it, but there was no “lifetime earnings” justification for it. My sister’s M.A. in distance learning/online education should have led to gainful employment but she’s in the wrong place (i.e. there are no jobs in the field in her area). You have to consider both aspects. If you want a Ph.D. in Medieval History but you want to live in Mississippi, you are f**ked.

    tl;dr version: I would contribute to an adult child’s education, healthcare, and housing if that child were more likely to succeed in life as a result of my help *and* if that child had a history of using help wisely.

  8. gasstationwithoutpumps Says:

    We saved enough in a 529 plan to send my son to a private college, but he ended up at UCSB, so we have more in the 529 plan than needed. He’s decided to take an extra two quarters to get an MS, so we’ll pay for that out of the 529 plan. If there is anything left, then we’d be glad to use it towards a PhD for him, since otherwise we’ll have to either find another beneficiary or pay a penalty to get the excess money back.

    My parents did not pay for grad school (couldn’t afford to), but me and my siblings all managed to finish college without debt (it was easier in the 1970s than it is now, before the state schools got effectively privatized).

    My father’s family has a tradition of giving away their wealth (mainly to relatives) before they die (“giving with a warm hand”), so I am not averse to accepting a gift from my Dad, as long as he has enough to cover all his expenses—my brother is now in charge of my Dad’s finances, and makes sure that he is not exploited by con men or does not give away more than he can afford to. I expect that when I get to be 90 I’ll be looking for ways to give away much of what is left of my money to people or institutions that I love also.

    • gasstationwithoutpumps Says:

      I probably should have said that my son’s BS (and MS) will be in computer science, that he is very frugal, and that he already is co-owner of a startup company that is making money (though not enough yet to pay themselves—just sweat equity).

  9. hush Says:

    My data points: My parents were of average means and paid for my undergrad only, and I completely self-funded grad school and all 3 of the homes I’ve owned. Now I’m an extremely privileged 1%-er who helps supports my parents financially, including paying for part of their house when they retired and relocated to live near me.

    I agree with “The Millionaire Next Door” about the many foreseeable downsides of Economic Outpatient Support. I have a friend who was raised rich, but struggles now financially, and her parents’ financial story is like a cautionary tale straight out of that book. In her case, her folks didn’t just give her a downpayment, they bought her entire home. Twice! She has never had any debt at all, and she and her husband have always been employed. And yet they still struggle with money because they live in an expensive city and don’t have super high paying careers. So her narrative informs my thinking on this, and I may be wrong.

    If my future adult child were seriously considering, say, joining the US armed forces in order to fund their medical, dental, business, or legal education, I would probably go to extreme lengths to do whatever I could to convince them not to join the dreaded US military. In that case, I could see myself offering to pay for it outright in the case of medicine or dentistry (because even the worst performing students in these disciplines will likely make 6 figures and can find a job somewhere), but I’d try to exhaust all other options first. In the case of wanting an MBA, I would suggest they work for one of the large US corporations out there who will pay for them to get an MBA. I would try to convince them not to attend law school at all (because: reasons)– unless an employer is paying for it as a dual JD/MBA.

    I honestly can’t see myself giving money for house downpayments, ever. Though perhaps I’d make an exception for a kid with a track record of fiscal responsibility who becomes a tenured academic in some city where their job sort of forces them to live, and where regular folks generally can’t afford to buy a home, such as parts of the Bay Area.

    “Wouldn’t we all like to be parts of aristocratic dynasties living beyond our incomes from the benefit of family wealth?”

    Nah. Depends on the family name though. No, I would not enjoy being a Trump or a Hilton. I like the bragging rights of being a self-made* woman, and the first of my name.

    (*…. buuuuut I’ve had and have loads of privilege boosting my overall chances at life, so, in truth, I cannot truly say I am “self made” at all if you really think about it.)

  10. jjiraffe Says:

    I would, although it would depend upon the degree (and school). It would probably need to be something that would prove to be a good investment – eg: masters in computer science. I see this as investing in my kids’ future, not handing something to them (like cash). And they would need to get good grades or investment pulled.

  11. undine Says:

    I suppose if you were wealthy you could do that. It took us so long to pay off all the parent PLUS loans for undergrad that it wasn’t really an option.

    • jjiraffe Says:

      Yeah, I should have noted this was a purely hypothetical answer based on if I had the money. Reality? Whole other story.

    • nicoleandmaggie Says:

      To be clear, the reason my parents were able to pay full tuition for both of us even though much of my life mom’s regional state humanities salary was the only income for our family of four is because 1. Low income+high grades/test scores= financial aid and 2. Extreme frugality. Like Jacob from early retirement extreme levels of frugality. With the difference invested.

      My sister and I probably chose lucrative professions because we want dryers and dishwashers and a/c and microwaves and all those middle class luxuries that our friends with student loans took for granted. Not to mention the not having to worry about every penny thing.

      In any case the question isn’t could you do it but should/would you do it. At the moment we can’t but we may be able to by the time it is an issue.

      • Rosa Says:

        it’s kind of weird to suddenly consider it, given that I never thought we might have the money (I still don’t think we would, but I guess it depends on what kinds of self-funding kiddo does. His dad worked full time and eventually declined to cash the tuition checks his parents sent. I got a scholarship that covered my last semester fully plus some spending money. Things happen!)

  12. Rented Life Says:

    I’m still paying my undergrad student loans so this is a bitter topic for me. But I don’t see myself paying for Cs grad school. Mine was funded.

    Mom and dad have helped in other situations though. When I was unemployed and husband hit a deer, mom paid for the deductible in getting the car fixed because she knew we couldn’t do it without using the credit card. I used to not want their help because I worried about “owing”‘l them but now I don’t care. If I need help and they offer I’ll take it. It’s how they show love, and I know they are secure enough for their own futures. (Mom and I talk a lot about money and decisions. It’s nice to have each other to share ideas.) I’ll likely take the same approach–offer help and if C wants it or not is up to hir, but not at the expense of hurting my own finances.

  13. Leah Says:

    I think the answer depends on how much money the parents have. If they have already saved well for retirement and have the means, then I think it is okay to help kids who show themselves to be responsible and appreciative. I don’t think all kids can be treated the exact same; some will goof around, but many will take advantage of the opportunity. My parents paid for undergrad, and it was a huge blessing for me. I didn’t take extra years or fail classes just because they paid. If anything, I knew how much they were sacrificing and worked extra hard.

    Grad school: I had one MS funded and paid for the other with a loan that I paid off almost immediately upon getting a job (and I only took out what I knew I could pay back with half of my first year of work’s salary). Their only help was giving me $1k when I started my second grad school so that I could afford to rent an apartment without roommates. This was mostly in their own self-interest so they didn’t have to ever listen to me complain about a bad roommate.

    It is our intention to pay for our kids’ undergrad, but I am concerned about our ability to do so given the skyrocketing of tuition. We are saving modestly in a 529 but likely will only have a year or two of expenses saved up in there by the time college comes around. I have toyed with the idea of trying to get a job at a college when our kids are teens to get the tuition remission benefits, but I don’t really want to limit their scope of where they can go. Having a choice was so nice for me.

    re: a house, I don’t think it’s a horrible thing to help a kid with a down payment, but I don’t know if I’ll ever have enough money to do so, as I did not choose a lucrative career. I have friends who live in areas where rent is crazy expensive and thus are living at the parents’ home with their husband and a kid to save a down payment. If rent and mortgage cost about the same, less the down payment, then I think it would be wise to help out with a down payment (or a top up) to help propel the kid into their own space.

  14. First Gen American Says:

    Having several “adult children” in my family that never let go of their parent’s purse strings, I think it really depends on the child on how much you should pay and if it’s a good use of the money.

    I do think it would be hard to say no to a kid you love if you had the means to bail them out. It’s so much easier when your parents don’t have a lot and the decision is made for you.

    I think like anything else, the wisest thing to do is create a budget you feel comfortable with and stick to it. I don’t want to be miserly to my children, but I do want them to learn how to support themselves. It’s such a slippery slope.

  15. Sara Says:

    When I was in high school, one of my friend’s parents offered him a “match” on his IRA contributions. For every dollar he would contribute, they would match, up to the total limit he could contribute in a given calendar year. They continued while he was in college, so he graduated with a great start on his retirement accounts and plenty of time to compound. If I’m in a financial position to do so, I’d love to help my (hypothetical) kids the same way. Unlike down payment help, it wouldn’t feel like a handout or encourage them to live beyond their means.

  16. omdg Says:

    Plenty of my med school classmates’ parents paid not only for med school, but also bought them condos, and continue to bankroll their childcare expenses (if they have kids during training) through residency. Presumably after they become attendings the faucet is turned off? I sometimes I feel like I’m in the minority that I paid for myself. Given that there’s such a discrepancy in pay between different kinds of physician, it makes some sense to me to fund med school if you’re able to so that your kid can feel free to go into something comparatively low paying yet rewarding (peds, psychiatry, anything non-procedure based, research). I can’t imagine having that much disposable income that it is something I could do with my own child.

    • Rosa Says:

      that is one way to speed up how fast you have grandkids, given that lots of people wait (or have fewer than otherwise) because they can’t afford childcare or a larger living space.

  17. eemusings Says:

    Situation is basically reversed here in NZ – student loans are interest free from the govt, but the housing market is out of control. So I’d rather help with a house than education, particularly as renting is actually a health issue for many people and not just a financial one here. (I have a post coming up on how owning my house has improved my health….)

  18. Revanche @ A Gai Shan Life Says:

    We’re still debating this. I’m still undecided about paying for undergrad college, even. I think I lean toward yes if we have saved and invested well enough but it goes against my instincts. You know where I come from, I’m lucky to have graduated high school before I had to start paying for everything. I paid for all my optional stuff in the last two years of high school, but room and board were covered. PiC had everything covered through grad school.

    Obviously I think my path produced a lot of character that was hidden under the surface and I’d want to bring out the tough and resilience in JuggerBaby but I don’t want to put hir through undue hardship either. Still, there has to be some adversity to temper hir character and I feel like part of that is taking responsibility for your life decisions made as you enter adulthood. It’s hard (for me) to see college students as adults sometimes but I know they are, and it’s as good a place as any to start learning the hows and whys to conduct an adult’s life, isn’t it?

    I think in an ideal situation, I would have confidence that JuggerBaby had learned the basics of responsible money management, and had demonstrated this knowledge by earning some money of hir own and handling it responsibly. And I’d also want to know that ze had begun to learn how to recover when you fail and take things like future earning power when choosing a degree or career path. In that case, I would likely want to pay for undergrad and perhaps help with some part of a graduate degree. It might take the form of small loans or subsidizing grocery budgets. I don’t know. We’d work something out.

  19. Does money equal love? « A Gai Shan Life Says:

    […] Then again, Nicole and Maggie have me asking is it support or is it a gift? […]


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