.
October 5th, 2010
06:00 PM ET

A quarter of parents using retirement funds to pay for college tuition

FROM CNN's Jack Cafferty:

Yet another sign of how the troubled economy is forcing Americans to make tough choices:

A new study shows almost a quarter of parents plan to raid their own retirement accounts in order to pay for their kids' college education.

The Sallie Mae survey, conducted by Gallup, shows 24 percent of parents say they plan to save for college by dipping into accounts like 401(k)s, IRAs and pension plans.

Twenty-four percent. This is the money that people have set aside for their golden years.

Experts call the trend disturbing and a "desperation move." And it can be risky. That's because there are tax penalties and other fees if you withdraw money from these accounts early. There also are restrictions on how quickly you must pay back money you borrow from a retirement plan.

Financial experts point out that there are other options - like 529 college savings plans - that can be spent tax-free on college education.

Nonetheless, the survey finds that despite the shaky economy, education is still a priority for Americans. Sixty percent of parents say they're saving for their children's college education. By the time their children are ready for college, most parents will have saved close to $50,000.

The most common way parents say they're saving for college are CDs or saving accounts, followed by investments like stocks, mutual funds and money market accounts.

Interested to know which ones made it on air?

Curt in Avon, Indiana writes:
Don't know what that means, Jack. I worked full-time and went to college part-time and earned my B.S. in six years. I think that adult children need to take care of themselves and should not be such a burden on their parents. Blowing your retirement money on your kids is stupid!

Peg in New York writes:
It means the kids will need to make vast amounts of money to pay for their parents' retirement.

Abel writes:
Parents will now have to work more years to make up for the money lost. Thus the graduating students will have fewer jobs available. A vicious cycle indeed.

Barbara writes:
We have no choice. Even by using money that should be in retirement, our son will be strapped with over $50,000 in debt after four years in college, not including the loan we, as parents, took out. At a price tag of $40,000 per year, where else is the money supposed to come from?

Pat in Michigan writes:
There are a lot of cheaper colleges in this country. We have become so label-driven that it has seeped into our culture in the field of education. An "A" is an "A".

Tom writes:
That is moronic to say the least. You can borrow money for college. You can't borrow money for your retirement.

Shawn in Florida writes:
Not a good idea. In spite of what most seem to think, it is not a parent's duty to put their kids through college. My parents didn't. I got financial aid and loans that took me ten years to pay off. I am flat broke in this economy and if my kids want to go to college they will have to pay themselves.

Joanne writes:
We have tougher times ahead in the next 3 to 5 years. We have not hit bottom as of yet.


Filed under: Economy • Education
soundoff (96 Responses)
  1. Mari, Utah

    That's because Americans are not good savers; we like to spend on our 'toys' and then our kids grow up..... and .......ooops.... we need to pay for their college!

    October 5, 2010 at 5:03 pm |
  2. Samir in Florida

    With savings accounts and CD's giving abnormally low interest rates and the relentless annual increase in college tuition, Even those responsible enough to save $50K will actually lose purchasing power for their kid's college education. Affordable Education may be another American staple lost to the recession.

    October 5, 2010 at 5:09 pm |
  3. DANO

    Why would the libs raid there own kids college funds. there are required to raid mine. Don't worry America before Maobama is done. there will be free education and free retirement. free trips to Vegas and sunshine and loppypops for all

    October 5, 2010 at 5:10 pm |
  4. Mike Guyader

    Sounds like lots of people are getting bad advice. They could have taken some of the money they were socking away in their 401Ks and put it into a 529 plan for the children's education.

    October 5, 2010 at 5:10 pm |
  5. Jim Campbell, St. Paul, MN

    We need to provide for our ki\d' eduction. Whatever it takes, we need to make that a priority. If the government helps us with tax credits or deduction, that is great. If not, we still need to stash away the money for our kids.

    October 5, 2010 at 5:12 pm |
  6. Lance, Ridgecrest, Ca

    Jack, sounds like very poor planning on their part. Failure to plan adequate finances and make adjustments as time passes, is so often the real story. May be time to return to the 60's philosophy. If the kid wants a college education, get a job flinging burgers, tutor on the side, work at anything and everything you can find, and earn the degree yourself. That way it will mean something to YOU! I know one thing! When the student has to work for the degree, the chances of graduating goes way up, and usually translates to greater success in the future!

    October 5, 2010 at 5:15 pm |
  7. Andrew Amherst NY

    The cost of college is increasing faster than our Health Insurance permiums. Due to the added cost of over paid professers, the public unions and the lower funding from states, who deam paying for gold plated medicaid programs over education, has made the cost of even a public education to much for most. We need to focus on driving the cost of college down so we can go back to being the most educated country, not number 25.

    October 5, 2010 at 5:16 pm |
  8. Marco555

    No way will I let my parents do this. I'll do what I have to do to get through college. There are Pell Grants, there are loans, we the students have to step in and not allow our parents to take such drastic action. I don't have to finish college in four years. Leave your retirement money out of this, that's an order!. Thanks for alerting me.

    October 5, 2010 at 5:17 pm |
  9. Scott Stodden

    Its A Shocking World That We Live When Parents Can't Afford To Send There Own Children To College!

    Scott Stodden (Freeport,Illinois)

    October 5, 2010 at 5:20 pm |
  10. realworld

    One problem in itself, that's helping cause this raid on 401ks, is that, despite the economy and bad job market kids are still striving for the best private college they can get in to, and parents aren't dissuading them. Right now it is foolish for kids or even parents to take on that kind of debt.

    October 5, 2010 at 5:23 pm |
  11. Drew

    This blog really doesn't know what it's talking about. Investment funds in a child's name are exposed up to 35% for financial aid purposes. Investments in a parent's name are exposed 5%, except for retirement investments, which are exposed... 0%. And there are no college funds that allow pre-tax contributions, while that's not a problem for a 401(k), TSP, or similar plan.

    Sallie Mae's only telling you it's risky because they'd prefer you to take a loan out so they can service it and make money, as well as perpetuate a bloated bureaucracy.

    October 5, 2010 at 5:26 pm |
  12. Shawn

    You should never pay for your kids college education. If you have raised your kids right they'll be smart enough to pay for their own college, plus I would argue that you value your education much more when you pay for it yourself. Giving your kids that much money for college, or for any reason other than a life or death situation is sending them the wrong message – that they don't have to work very hard to be successful in life.

    October 5, 2010 at 5:28 pm |
  13. Jarrod Rager, Greeley, Colorado

    I am 27 years old and I am a bit of a hard ass. I worked 3 different jobs, normally totalling 70 hours a week, to pay my own way through college. Was it hard? Yes. The price tag for college has gone up, if you really want the education ante up. If you don't think it is worth it , go another way. And to all the parents out there: please teach your children financial intelligence and do not help yourself into detriment. Our world is becoming less stable and more competetive, sharpen your teeth.

    October 5, 2010 at 5:29 pm |
  14. Mark, Oklahoma City

    Work all your life just to pay for your snotty little brat's college education? I don't think so. Let them work their way through college. It builds character and let's them know right away that in life there is NO FREE LUNCH!.

    Sincerely,
    Father of the Year

    October 5, 2010 at 5:29 pm |
  15. lj bernard

    Haven't fallen in love with this concept but:
    If retirement funds are used for college education,perhaps a quid-pro-quo from the recipients may help the payors be they Parents or grandparents-in there retirement.

    lj bernard
    Albany N.Y.

    October 5, 2010 at 5:31 pm |
  16. Ken in Maryland

    Whatever happened to college loans and working part time? That's how I got through college. My parents couldn't afford to buy me books much less tuition. I had to work hard and make sure every penny counted. I think I took college a lot more seriously when I knew it was my money I was throwing away if I didn't do well.

    October 5, 2010 at 5:31 pm |
  17. Don Noehre

    Good for the parents and one big if is will the childern pay back the parents. No one will ever know, but as usual the childern get a free ride and the parents left holding the bag.

    October 5, 2010 at 5:31 pm |
  18. Greg in Cabot, AR

    Forget the kids education,

    I am 61 years old and have been off work for almost a year and I am thinking about using some of MY retirement nest egg to take some short courses, find a new career field and keep on working.

    My 401(k) sucks and I am not sure I can deal with thought of nothing to do every day except sit on the proch with my piddly S/S retirement check waiting to die.

    This way, I can still feel useful and leave the kids with a bigger inheritance.

    October 5, 2010 at 5:34 pm |
  19. bvilleyellowdog

    In retirement you have no more salary income. If a kid goes to college they probably will have income. Will they let you live off of them?

    October 5, 2010 at 5:34 pm |
  20. Keri

    There are still many great college options for today's teens that include work study programs, finding a part-time job and always, student loans. I worked full-time the whole way through college and didn't expect my parents to pay for a nickel of it. Was it tough? Absolutely! But I appreciated it that much more because of how hard I had to work to achieve it. One has to wonder if the novelty of having parents pay for their children's college education has built a sense of entitlement among today's youth.

    By the way, Jack, I'm only 31. That may be considered an old fart for some people today, but I say this because it shows that I am not that far removed from the college scene that I don't understand how tough it is out there.

    October 5, 2010 at 5:34 pm |
  21. frank

    You are an idiot if you use money from your pension fund to pay for your kids schooling.

    October 5, 2010 at 5:35 pm |
  22. KDS Irvine, CA

    Boy that is a heart jerker Jack,
    I feel very sorry for parents who are dipping into their retirement savings to pay for their kids college tuition. If I were a parent, I would be sending my child to community college to start out. The first 2 years of college anyway are more of the last 12 years.

    October 5, 2010 at 5:35 pm |
  23. Robert W. North Carolina

    Yes, we are a generation that has been taught by teachers (educated people) that you cannot be successful in this country without an education. I do think basic education such as a high school diploma is important (see they got to me) but not all people will be catapulted to the top by a BS degree. How many smart people with BS or BA degrees are serving tables and selling lumber? Where would they be if they had taken the money spent on college and started a business. Some would be in the same place with no education but others would likely be millionaires. It makes you think.

    October 5, 2010 at 5:36 pm |
  24. Mike Sullivan

    This is simple; you can borrow to pay for college but you cannot borrow to pay for retirement. retirement funds are sacred.

    October 5, 2010 at 5:37 pm |
  25. Jim

    Jack,

    That's a bitter pill, but ultimately a good investment assuming the kids understand and appreciate what their parents are doing for them. Tuition costs are following health costs into the stratosphere, but I guess any attempt by the government to help would be immediately branded Socialism by the GOP.

    Jim
    Reno, Nevada

    October 5, 2010 at 5:39 pm |
  26. Tom Poolash

    That is moronic to say the least. You can borrow money for college. You can't borrow money for you retirement. This isn't rocket science, people.

    October 5, 2010 at 5:45 pm |
  27. Daniel-Mississippi

    The USA has it backwards....military over education and health care. The wealthiest among us also steadfastly refuse to pay for ANY of the three!

    October 5, 2010 at 5:47 pm |
  28. Broke in NY

    Jack, we sold the house at a substantial profit, moved to an apartment in order to afford to send my second son the a private college. My first son's college ran up a bill of $175,000 for 4 years at a private school. Retirement, you got to be kidding? I don't even believe that I will get any money that I put into Social Security, Obama and the democrats have already given that money to the people who don't work for a living. 45% are on some form of government assistance. No one cares about my situation. 48% do not pay federal taxes. The top 1% pay like 50% of all taxes, probably higher. I am going to express my dissatisfaction at the polls. You want to know where the tea party anger is...I see it every morning.... in my mirror. Pelosi calls it astroturf, she will find herself playing in a different field soon enough.

    October 5, 2010 at 5:48 pm |
  29. Allen in Hartwell GA

    Uh, what was the question?

    A well known radio and HLN financial adviser says we'd be hurting ourselves to save for or kids/grand-kids education rather than retirement. I'll assume this would also mean we'd hurt ourselves if we used our retirement accounts to pay for our kids/grand-kids education.

    How would you feel if after raiding your 401(K) and paying for three years college at $25K per year your dear child decided he/she didn't want to finish college?

    October 5, 2010 at 5:53 pm |
  30. Bryan from Chicago, Illinois

    You can borrow for your children's education, but you can't borrow for your retirement. I would rather have my children burdened with education loans so they have skin in the game while in college, than to burden them with my living expenses later in life when their trying to live theirs.

    October 5, 2010 at 5:53 pm |
  31. honest John in Vermont

    Wih the cost of college rising every year they will have to save alot more than $50,000 to pay four years of college.

    October 5, 2010 at 5:53 pm |
  32. JackieInDallas

    As someone with NO children, and NO retirement, I guess that makes me lucky in this economy. My economic status went down the tubes during Shrub's presidency, and hasn't recovered yet. Too bad, since I'm 60 and facing "retirement" soon!

    October 5, 2010 at 5:54 pm |
  33. Shawn, Stuart,Florida

    Not a good idea. In spite of what most seem to think, it is not a parent's duty to put their kids through college. My parents didn't. I got financial aid and loans that took me ten years to pay off. I am flat broke in this economy and if my kids want to go to college they will have to pay themselves. It can be done. My wife went back to Nursing School to try to make more money down the road and is going free of charge on grant money. Unless my kid is signing a contract stating how much he will pay me a month when I retire, he's not getting my (very little) retirement money.

    October 5, 2010 at 5:57 pm |
  34. John in Boston

    "Sixty percent of parents are saving for college and most will have close to $50,000 saved by the time their kids go to college."

    What planet are these people living on? I've never met any of them.

    October 5, 2010 at 5:58 pm |
  35. Thomas Chapman

    It is a shame that parents have to pay thru their nose for their kids college education after raise them.

    It is worth it even though the cost is outrageous.

    October 5, 2010 at 5:58 pm |
  36. Graham Jura

    My strategy involves not having kids and spending my money on myself. Smart, huh?

    October 5, 2010 at 5:59 pm |
  37. Carol McKinney, Texas

    That one is easy Jack. After having to raise those little bundles of joy for 18 years parents are thrilled at any cost to send them off to college. On the serious side of the answer a lot of them will never go on to pursue a carrier in the degree that they earn if they are fortunate enough to complete college anyway. For most parents it simply gets those little buggers out of their hair even if only for a short time.

    October 5, 2010 at 6:02 pm |
  38. Gary

    The rate that many colleges have raised their tuition each year is a crime. It’s somewhat ironic that the higher education institutions are usually managed by liberal based administrators but those same colleges has made it extremely difficult for the middle and lower income people to receive the same education. Appears like a double standard and aids in the class division in this Country. It’s shameful that praiseworthy parents must use their retirement funds for their children’s education.

    October 5, 2010 at 6:03 pm |
  39. Annie, Atlanta

    The GOP wants us to work until we're 70, privatize Social Security, and make seniors pay a $2000 deductible for Medicare. I say we all invest in cat food; the sooner the better.

    October 5, 2010 at 6:13 pm |
  40. Paula in Albuquerque

    Here's a perfect example of how corrupt our "values" are: The United States prefers to sink BILLIONS of dollars, each month, into wars and armaments...rather than making higher education AFFORDABLE to all who want it! The Pentagon's getting the lion's share of our treasure only ensures that we prefer bankrupting our future, and deploying our best-and-brightest to die...instead of investing in the betterment of these fine people, so that the nation remains competitive with the rest of the world.

    October 5, 2010 at 6:13 pm |
  41. Corey Akins

    It's time for those that borrowed money for college to start paying it back! I know quite a few people that make good money and dont pay a dime back towards their student loans!

    October 5, 2010 at 6:14 pm |
  42. Ed

    It means they are hoping their kids will repay them by assisting them in old age..I have no kids and little retirement money, so what about people like me?

    October 5, 2010 at 6:15 pm |
  43. Janet

    The fact that people are using money to pay for college is not as scary as the people in their 50's who are unemployed ,and have been for 2+years, who have to live off their 401k and use it up before they turn retirement age. They cannot find jobs and have no hope to replace what they use. Employers are very reluctant to hire older workers especially if they are 55+.

    October 5, 2010 at 6:15 pm |
  44. Abel

    Parents will now have to work more years to make up for the money lost. Thus the graduating students will have less jobs available. A vicious cycle indeed.

    October 5, 2010 at 6:16 pm |
  45. Steven V

    I've got an idea that will help keep your retirement fund intact; let your OWN KIDS pay for their education. What a concept! Many of us had to work and get student aid and we valued our educations more than those who were given everything free on a silver platter. There, problem solved,

    October 5, 2010 at 6:16 pm |
  46. tom

    i dont see it as a bad idea. if your kids get a good education. they can take care of you in your golden years. they will do a better job than wall street.

    October 5, 2010 at 6:16 pm |
  47. Ryan

    Why should anybody go to college these days when you can make just as much money (23 dollars an hour) as an illegal immigrant working in California? That's more then teachers. Yeah, got to love America! Vote Democrats out in 2010 and kick all illegals out of the country, education prices and class sizes will drop and REAL American children won't have to compete with millions of illegal kids in the future. Problem solved.🙂

    California

    October 5, 2010 at 6:16 pm |
  48. Carol, Washington

    It means that there are a lot of parents out there who once again are over-indulging their kids and short-changing themselves. When I was college age, I never once expected my parents to pay my way– I worked throughout my college years, taking time off from school when necessary to build up my savings for the next portion of my education.

    October 5, 2010 at 6:16 pm |
  49. Sandy H

    Parents tapping their retirement funds means they value themselves less than their children. I don't feel I owe my children a paid college ride. They knew from the start that they will be paying. If they go to the community college I will pay. University .....they will pay. They had a choice of transferring in as a junior with NO DEBT or to start their debt as a freshman.

    October 5, 2010 at 6:16 pm |
  50. Buster in Poughkeepsie, NY

    It means what a bunch of suckers. I don't know about you Jack, but when I was a kid, my parents had a special gift waiting for me for when I turned 18...a boot to the backside to ever so gently nudge me out of the nest. I promptly did what a lot of my poor friends did – I joined the Navy. After sailing the Seven Seas for eight years, I got out, got a job and put myself through college. It was rough, but I ended up with a Masters Degree in Civil Engineering from the University of California, got a nice job and a rocket wife, made some grand kids for my folks to dote on, and alas, I did the same for my kids what my parents did for me...made them fend for themselves. 26 year old "kids" on my health insurance plan? Not a chance. Go find yourselves on your dime little birds.

    October 5, 2010 at 6:17 pm |
  51. emma texas

    what are they crying about? at least they have money to send their kids to college. a lot of people doesn't. at least they have money some people don't

    October 5, 2010 at 6:17 pm |
  52. Lynn Oshkosh WI

    It means parents are hoping that their children can get a good education which leads to a good job so that in the future the kids can support their elderly parents who no longer have a retirement account.

    October 5, 2010 at 6:17 pm |
  53. jeff

    It means one-quarter
    of parents actually care where theirb kids futures are going and three-quarters haven't got a clue just how unaffordable college is.

    October 5, 2010 at 6:17 pm |
  54. Samantha

    This startling statistic is just further proof that providing affordable education is not a priority in America. I'm struggling to make ends meet in an economy where I can't find a measly minimum wage job to pay for my college education. Yet, without that degree, I'll be stuck flipping burgers for the rest of my life. Now that's living the American dream!

    October 5, 2010 at 6:17 pm |
  55. Wilma

    That's a frightening statistic...if it keeps up, in about 10 to 15 years the number of greeters at Walmart will increase by 110%.

    October 5, 2010 at 6:18 pm |
  56. Tont Miraglia

    Jack,

    What it means as that, as a nation, we have our priorities up our -. Please, someone, explain how it is that every other industrialized country can afford to subsidize students to obtain a university education and, we, the richest country in the world asks us to tap our 401k's to do so. And oh, by the way, we say that we support education and talk, only talk about its importance. We are loosing ground and this is one of he reasons why my friend.

    October 5, 2010 at 6:18 pm |
  57. Benjamin check

    It means college is too expensive, most Americans are broke, and many Americans will be facing a hard choice between a stable and comfortable retirement, or their kids going to college.

    October 5, 2010 at 6:18 pm |
  58. Tucker

    It means 1/4 of their money has gone to colleges.

    October 5, 2010 at 6:19 pm |
  59. Bob

    Jack, there is no penalty for IRA withdrawals for college tuition for your kids. While it is distressing, even more distressing were the cuts by the Bush administration to funding for college students. We need federal policies that help families pay college. Not just families with incomes over $200K.
    Note IRS rules for regular IRAs without penalty for: "Payment of college tuition and related educational costs such as room and board for the next 12 months for you, your spouse, dependents, or children who are no longer dependents."

    October 5, 2010 at 6:19 pm |
  60. Barbara in Las Vegas, NV

    It means they are fools, Jack and that soft parenting reigns supreme. I don't have kids myself, but I'll tell you what my parents, both working class and working hard to raise four kids, did for me: they CO-SIGNED on my federal stafford loans that I am now responsible for repaying. I wanted an education, I got an education, I should have to pay for that education, plain and simple. My parents were/are the best, most loving folks you could ever meet, but I NEVER considered it their responsibility to pay for my higher eduation. I have friends who have paid their own children's way through both Bachelors AND graduate level schooling and I am left shaking my head. Are parents these days feeling THAT guilty about how they raised their kids that they have to rob themselves of their own retirement funds for the sake of some kids who may very well NOT finish college, and if they do, will likely fall on hard times and find themselves back at the proverbial parental "well" anyway? Parents should think of their own well-being and golden years to come. The Bible says "bring them up in the way they should go..." and I say then let them go do it and finance it, like millions of others have before them!

    October 5, 2010 at 6:19 pm |
  61. Jim - Michigan

    Jack,

    It means that the government cares more about unions then they do the middle class. Think of it, we send our kids to school from K-12 and the teacher unions tell us we need more teachers to lower the class size or our kids will not get the attention they need. Now, we send them off to college costing $30,000 plus per year, but now they are in a classroom with 200 kids, with so many kids bringing in $30,000 per year suddenly class size is not a problem.

    Next problem, many college courses lead to a $25,000 to $40,000 per year salary, with students graduating with huge student loan debts. Let's face facts, the republicans care about businesses and the wealthy and the democrats care about low income people dependent on government handouts, it guarantees their voting base, meanwhile the middle class is in the middle. We are not eligible for government assistance, we have to pay taxes yet we are not wealthy enough to carry the burden of life so we trade our retirement for our childrens future.

    Come November my vote goes to leveling the playing field, starting with massive cuts in government programs. I pay taxes so other kids can go to college free, ye mine I have to take on massive debt to get the same opportunity.

    October 5, 2010 at 6:20 pm |
  62. KEN KRIEGER

    Colleges have gone up at double digits for 20 years. The colleges are run by liberals for their agenda and retirement. There is no competition. These same liberals are running the government with record deficits. I would not allow my parents to use their retirement. I would work my way though college if it took 10 years. Fox had a kid on who paid his way thru college working part time and full time in the summer. He broke down the cost logicly. I wish I could repeat it faithfully. Ken Krieger Cape Coral, Florida

    October 5, 2010 at 6:21 pm |
  63. Jim Blevins

    College has gotten way to expensive. Many countries provide free college education. It is time that this country stop putting money into useless wars, overblown security and corporate welfare and start putting money where it will do some good.

    Jim, Craig, CO

    October 5, 2010 at 6:21 pm |
  64. Dave, Orlando, FL

    College is the minimum standard their children will need to get whatever they can in life (these days), so the parents are making a huge sacrifice for their children by doing this – I just hope the kids appreciate it. But raiding the 401k is the most expensive way to meet tuition costs I can think of next to taking out a loan from the bent nose crowd.

    October 5, 2010 at 6:21 pm |
  65. Chris in Cleveland

    What does this say? It says that there are too many lazy, spoiled kids who expect the world to be handed to them and too many parents who are willing to choose between "heat and eat" during retirement to give them just that..

    I worked through college and paid the vast majority if the costs by myself. All of my bills are now paid and I came away from the experience with degree and a sense of character. My parents have a reasonable retirement. It's a win-win.

    October 5, 2010 at 6:21 pm |
  66. Jeremey

    Jack,

    I have no idea how this even came about. Why are parents paying for kids college? Can't they pay their own way? I paid my own way through college. Why can't they?

    October 5, 2010 at 6:22 pm |
  67. SING

    From the culture I was brought up, parents sacrificed everything to put their kids to higher education. The kids support their retired parents in return. My parents put five of us to graduate schools. When we started to earn our own living, we gave them our salaries and got allowance from them. This continued till we married and moved out. Then we just gave portion of our salary to support them till they passed away. We were their retirement and they were our foundation for our better lives.

    October 5, 2010 at 6:23 pm |
  68. Bernie of Lowell, MA

    For years, our Federal government has borrowed our retirement funds to pay for current expenses, greatly disguising the " Social Security Trust Fund" and our real deficits as money that's stashed away, too.

    So, can we fall back on Social Security?

    States and municipalities are currently doing the same thing with the mega-retirement packages for so-called 'public servants' who are retiring with higher pensions than they earned.

    It's called "pay as you go"; Ponzi; it's called "follow the leader."

    Get ready for the "really big show" when current revenues won't cover the costs of

    October 5, 2010 at 6:23 pm |
  69. Jack - Lancaster, Ohio

    Jack:

    Let's say that some of these quarter of parents live in River City.
    Then, "they got troubles, troubles right there in River City, and it ain't the band !

    October 5, 2010 at 6:24 pm |
  70. Nancy, Tennessee

    There are going to be some parents in a bind when they get older and can no longer work. These parents may think these children will help them out later on when they have a job. Usually, this is not the case, as children marry and take on their own responsibilities. It is not wise to use your retirement for your children's education. Student loans are a much better way to go. Then the children will have an obligation of payback.

    October 5, 2010 at 6:24 pm |
  71. Harrison

    it means there are no good options that parents can place education money in. Most of the long term savings options are to difficult to understand and to hard to control, couple this with too many penalties and poor liquidity issues with the current education plan the result is people are not gonna put money into them. This will lead people to save money in other ways are not at all .

    October 5, 2010 at 6:25 pm |
  72. Ralph Vincent

    Jack,
    I went to college when I was young, and I paid for it myself, I
    did not ask my parents for a dime. At the same time I went to
    college, I was working a full time job. If I could do it, so can the
    young people today instead of their parents sacrificing their
    future.

    Ralph

    Illinois

    October 5, 2010 at 6:25 pm |
  73. Bernie of Lowell, MA

    It means the 'refinancing against burgeoning home prices' will no longer work.

    October 5, 2010 at 6:25 pm |
  74. Ed R

    Jack,
    I just saw your report on parents using their retirement accounts to pay for their kids college.... tell people to stop that please. I have 4 kids, the oldest is a jr in high school. They will all be going to college, but I will not be paying a dime. I went to a private college in the late 80's, I paid for my college ... it took me 10 yrs to pay off my loans, but I did it. My children will have many years to pay off those loans... My wife and I on the other hand will need the remaining years of employment to pay for our retirement, so we are NOT a burden on our kids or this great nation. These parents and their kids will be sorry in the long run.

    October 5, 2010 at 6:26 pm |
  75. Angela Charlotte, NC

    Jack, When they move back in after college because there are no jobs, you think it will be the same as when they were at high school because you have been keeping them. The trouble is, now they can drink, stay out all hours of the night , double your housekeeping bills, and think they can tell you what is best!

    October 5, 2010 at 6:26 pm |
  76. Gigi Oregon

    I hope their Kids pay them back or they'll be living with. In their retirement.

    October 5, 2010 at 6:27 pm |
  77. Claudia, Houston, Tx

    Parents using their retirement funds for their children's college education won't be buying them a fancy new sports car to drive off to college and they aren't giving them that choice.

    October 5, 2010 at 6:27 pm |
  78. Rondell, indianapolis

    People using their retirement accounts to fund their childs college ? that means to me middleclass americans are broke. thanks to Reagannomics, a poor economic policy and a unwillingness of american goverment to support the mainstreet economy. but to support the wallstreet economy .

    October 5, 2010 at 6:27 pm |
  79. Diane

    I dunno Jack. But then I started college back in '68 and dear old state U was pretty damned cheap. Between the $40 or so that my parents could send per month and the $100 or so that I made at my work study job I got by. Just barely. I did work full time all summer, at minimum wage of course, to help pay for expenses in the coming year. Of course minimum wage has gone up from the $1.60 an hour that I made back then. Not enough to keep up with inflation or pay for the cheapest state U but it's gone up some. I don't know what the rules are now but back when the poor folks food source switched from commodities to food stamps, Nixon cut off college students because they were "voluntarily poor". Times got harder. But I still know one hell of a lot of ways to cook beans.

    October 5, 2010 at 6:27 pm |
  80. Joe CE

    Yeah, the middle class is going down the drain. The richest 2% want to up their share to 99%.

    October 5, 2010 at 6:27 pm |
  81. Greg

    Jack,

    As a naturally born citizen of canada and whose wife has been naturalized for 6 years now we both enjoy the cost savings of a federally supported post secondary school educational system. My wife was able, over the last five years, to save enough to pay for three years of University towards a degree in Nursing. Knowing the average cost of university in the U.S. I can say that she had less to save for those three years than one year of university costs in the U.S. Not only is the education subisidized by the Canadian federal government but the accreditation is from a well recognized university for Nursing and where many graduates end up working in the U.S. Many parents in the U.S. who wish for a quality post secondary school education for their children should consider the many quality universities in Canada, where even though they may have to pay full unsubsidized costs, they should still end up saving themselves costs. Add in the benefit that the children recieve by studying in a foreign country, even if we mostly speak the same language and share much of the same culture.

    October 5, 2010 at 6:27 pm |
  82. Luis

    It means that I sacrificed my retirement account for my daughter's education. Why not since more than half of my account was sacrificed to the crooks in wall st. in 2001. Twenty years of saving and in the end had nothing to show for it other than my daughter's education with what was left. Atleast I have a pension.

    October 5, 2010 at 6:29 pm |
  83. Robert Bauer

    How about these kids get a job and finance their own educations? My son did that very thing, and now he's a major stockholder/manager in a web graphics company. He attends his first stockholders meeting later this month. Oh, and BTW, he's only 21 years old! Proof yet again, that a degree from Harvard doesn't mean squat.

    October 5, 2010 at 6:30 pm |
  84. Sonny

    My parents paid for my college tuition as well as my brother's. My parents are not rich, but they gave everything to support their children. Now, all three of us are supporting them, not because they paid for our college, just because it is natural that children taking care of their aging parents.

    Is that what our parents and grandparents used to do to support their own parents before? Of course, now we just pawn it off to the government and complain about government spending.

    October 5, 2010 at 6:31 pm |
  85. Nic

    Maybe it's time to stop paying for your kid's education... whether borrowing or whatever. School means more anyway when you're the one paying.. not given a free ride. Maybe I'm just spiteful for having to pay my own way - but I can say that I show up to every class, and get straight A's.. I want to get the most out of my money.

    October 5, 2010 at 6:32 pm |
  86. Ron

    I am a married father of a single, 10 year old child. I am the bread winner and I am handicapped with Muscular Dystrophy. I can still ambulate with the use of a cane for shorter distances but need a wheelchair for longer ones. I expect to "have" to use 401k funds in order to afford college for my son. Primarily because with the way the ecomonmy has been for us "middle" class, I will never be able to afford to retire – as long as I continue to breathe, I will need to work.

    October 5, 2010 at 6:34 pm |
  87. jean

    I did it, so my daughter could go for her master's degree. Nowadays, a simple bachelor's degree is not worth the ink is printed on. Now I a so broke it is not funny, but what the heck! I rather eat mashed potatoes for the rest of my days instead of retiring in Boca Raton looking at the grass grow. Shame on the USA for not having free education like most of third world countries have, shame, shame, shame!

    October 5, 2010 at 6:35 pm |
  88. stu

    here's an idea – save for both. I am. Fifteen years from now, when my first goes to college, she'll be covered and I won't have to touch my retirement savings. What's so hard about that?

    October 5, 2010 at 6:35 pm |
  89. rich

    Belleville IL – I think this is over simplified, lets face it those education savings plans did not exist 20 years ago so parents with a 20 year old in college did not have those plans available to help so to compare them now with a 401K is really sensless, compare them to what parents did have. On top of that as a middle class parent with 3 kids in college tell me how I am to pay that, I did not take it out of a 401K instead we are working extra jobs and getting parent and student loans but since we make over the 50K limit get very little government help so also get to help pay for someone else kids with my taxes. If it is important you work hard maybe an extra job and do what you need, or you can sit back and let other pay or you can sacrifice retirement to make it better for your kids and lets face it the 401K's are not making anything now anyway.

    October 5, 2010 at 6:35 pm |
  90. Gerald

    My wife and I are deciding right now about our son who is a HS senior..he gave us a list of expensive colleges in a field that well has no guaranteed income when he graduates.. but will be saddled with a potential bill of over 80K!!!! When I was in college I paid my own way and worked full time and got my degree in 4.5 yrs.. I will not deplete a nickel of retirement money my wife and I have worked hard for.. Sonny boy can get loans or go to community college for the first 2 yrs for core classes..Enough is enough

    October 5, 2010 at 6:35 pm |
  91. Paul

    Colleges build ice arenas and outrageous student centers with no regard for money. Professors teach a few classes and have armies of grad assistants at their disposal. I stopped paying into my retirement and shifted money to college funds and they still have massive student loans.

    I haven't figured out the FAFSA tricks that others have mastered.

    October 5, 2010 at 6:36 pm |
  92. Curtis Reed

    Why is it that we look at the increasing cost of medical care and some of us turn to the government to help control it, when the vast majority of universities are state-run and their costs are going up faster than healthcare! Why isn't there an outcry for state-run schools to reduce their costs and make education more affordable?
    As for my kids, I don't have a pension in my future, my retirement looks bleak. I also don't have college funds set aside...I think my kids may be forced to go to their mother's home country (Venezuela) for their college and return to the USA (if they want) afterward. I'm not sure what America will be like by then. Maybe they won't want to return.

    October 5, 2010 at 6:36 pm |
  93. rachel

    Bryan, you are assuming loans can be taken out by students. Parents financials are required. I have friends who make "too much" for their kids to take out full loans. 75% is on the parents and 25% is on the student. I'm assuming you haven't got kids in college yet and may not know how it works. The parents are burdened with repaying most of the loan sometimes.

    October 5, 2010 at 6:38 pm |
  94. jean

    and for the ones that say that the kids should shoulder it like we did 40 years ago, I say....we had it easy in comparison to them. The amount of debt they carry is downright scary. My daughter still has to work two jobs and do her Master's; she has so much work sometimes she has no time to go to the bathroom let alone eat. So do not preach unless you know what you are talking about.

    October 5, 2010 at 6:39 pm |
  95. Carl

    Jack,

    The scum bab politicians try to tell us that the economy is getting better. The only people the economy hasn't effected is the crooked politicians, so yes, the economy is great for them, we need to clean house, from Obama all the way threw. The longer this inept idiots are in office, the better they get at lieing and stealing from the Amerian people.

    Carl, from the corrupt state of Illinois

    October 5, 2010 at 6:39 pm |
  96. Heather

    It would be a dream to be able to put my children through college. The $50k most parents are saving won't put a child through a 4-year college but it is nice to help your children in any way you can. My Dad put me through 4-year college but I had to take loans out to get a Master's degree and I will be paying it off for a long time. I think as parents we should do whatever we can to help our children but by hurting ourselves, we aren't helping our children. Taking a loan out to get an education isn't the worse thing in the world but having any kind of debt is looked down upon in this country. This is why I can't stand Suze Orman. I think it is a great lesson for kids to take loans out and learn to pay them back and at the end of it, they have the satisfication of knowing they did that. Unfortunately, the real issue is that good education is not affordable. Our country is in dire straits in so many areas and I think bigger than any is education.

    October 5, 2010 at 6:45 pm |