Is saving for college still relevant?

I’m a conservative person, but sometimes even I see the need to change. For example, I belonged to a high-profile service organization for many years. They are very proud of their tradition of raising money each year to give a Webster’s dictionary to each 5^th grader in our city.

Now I’m not an educator or a technology expert. But no self-respecting 5^th grader is going to be caught dead looking up words in a hard copy dictionary these days. My service club has a lot of older folks, but doesn’t everyone know kids look everything up online? Traditions die hard even when they don’t make sense anymore.

Which brings me to the topic of saving for college. Should we continue to automatically fund 529 college savings accounts “because we’ve always done it that way?” Specifically, I’m trying to decide whether to fund 529 education savings plans for my three grandchildren.

It’s a big question in the world of financial planning. Some parents sacrifice their retirement contributions to make sure their kids college education is funded. Others might fail to pay off debt because they feel a duty to fund 529 plans.

And, if anyone should know the value of a college degree it should be me. A college degree opened the door to a successful banking career.

So, why am I having doubts about funding 529 education accounts for my three grandchildren? It’s not that we’re trying to save money. Unless an unseen financial catastrophe hits, we should be able to assist. But I have six concerns that it might be time to rethink this priority.

First, I had a heart-to-heart talk with one of my sons last week. He stated that if I hadn’t helped pay for his college education, he doesn’t think he would have gone. He’s a Millennial, doing well with a technology job, but his conversations with his friends convince him that it would not be a good value if he’d had to borrow to pay for it.  

Here’s a stunning statistic that backs up my son’s anecdotal evidence: half of Millennials do not think College was worth it. Why? In short, because of the student loan debt that takes years to pay off and hampers building wealth. The value proposition is not as clear today as it was when I was in college.

Second, there are fantastic job opportunities available from exceptional companies without a college degree. For example, Google wants to disrupt higher education with their Google Career Certificates.

Imagine spending six months in Google’s program with a total tuition cost of around $300. If successful, you have everything you need to be hired in a good job by Google. Without an undergraduate degree, or student loan debt, you can be qualified to be a manager at Google. And, they have convinced fifty other large companies to join the program. I’m sure there will be more to come.   

Third, is the growth of real time learning. Studies indicate we forget about 80% of what we learn in a course in the first 30 days. But haven’t we all experienced the joy of going to YouTube and learning just what we need to solve a problem? That’s real time learning available to all of us.

I have a good friend who runs a successful online business. He is a master of just-in-time learning. He has a master’s degree in business, but he has told me whatever he learned in college is too old to be of any use. He learns what he needs each day in real time. The world changes way too fast for universities to offer anything relevant to him.

Fourth, covid-era learning has revealed the education emperor has no clothes. One blogger, Mr. Money Mustache, shared his decision to allow his son to pull out of school and get a superior education at home.

Many, like this blogger, have discovered that bland and repetitive teacher led instruction can be replaced by extremely high-quality instruction through videos and online resources. It’s hard to imagine a self-educated student like this bloggers son would be satisfied with the traditional 4-year curriculum universities offer.

Fifth, there is a shortage of high paying blue-collar jobs. Not everyone is cut out to be a coder. We still need plumbers and electricians. And we will pay for them. The popularity of Mike Rowe, host of TV’s Dirty Jobs, is a sign the assumption everyone should go to college is starting to erode.

One of my grandsons can’t get enough of playing with trucks.  I might be better off planning to buy his tools for an apprenticeship in construction instead of funding 529 plans.

Finally, there is an age-old question many parents wrestle with regarding the challenge college presents to the faith and values they hope their children will hold. My five kids all left college, as far as I can tell, with the same faith and values they had when they entered. I’m grateful.

But it’s a growing concern. Social theories we may not agree with have exploded out of college campuses and into the mainstream of American life. What a shame it would be if parents sacrifice other financial goals only to send their kids to college and have them abandon their cultural heritage. That risk makes looking at alternatives more attractive to some of us.

Let me summarize all this. I want to be clear. I’m not suggesting everyone quit funding 529 plans. If your children are going to be doctors, they won’t get a Google certificate in six months. A 529 plan is probably an excellent idea.

But for many of us, I am suggesting being more thoughtful than just automatically making annual college fund contributions. The world of education is changing fast and it’s worth a close look to make sure the 529 annual contributions still make good sense for your money.

Joe Kesler

Smart Money with Purpose