Give the Best Christmas Gift Ever: Free College Tuition
What if you break tradition to do something truly astounding: fully fund your child’s education?
It’s that time of year again… you either love it or you dread it. If you have little ones in your life, it means you’ve got to shop for lots of gifts. But how many? Let’s look at two options for Christmas:
- You buy $300 of gifts for each of your little ones. Most of those gifts become outgrown or obsolete in the next year.
- You buy $200 worth of gifts. Your kiddo never knows what they’re missing. You put that other $100 toward their education. That $100 doubles in time.
As Benjamin Franklin puts it:
I’m certain that
“an investment in knowledge pays the best interest”
only holds true if the educated graduate isn’t crippled for the next 10+ years by student loan debt.
The average 2016 college graduate holds around $37,000 in student loan debt… outrageous. This kind of debt sets new graduates back years — even decades — toward financial goals such as retirement, home ownership, or saving for their own children’s education. But:
For just $100 a month, you could pay a full 4 year tuition for your child.
Is there any Christmas gift greater than the gift of a free college education?
Here is how you could rebel against the “buy more gifts” trend and turn the extra cash into something much, much more incredible for you kids.
While they may not understand in childhood,
your children will fully realize your gesture of the gift of education when they discover that their peers are in crippling debt.
So for this Christmas, here is how you can fund your child’s education:
- Find $1000, perhaps from your tax return, to put into a balanced mutual fund (decent returns without excessive risk) — here is one example:
- This Christmas, start putting $100 a month into that fund, automatically
- After 17 years, even if you only get 6.5% average annual earnings (lower than the historical 9.83%), this will grow to over $40,000:
$40,000 will pay for in-state public tuition for a four year undergraduate program.* Only half of that was out of pocket — the rest was earnings!
Plus, you can put this investment in what’s called a 529 Plan AND NOT PAY TAXES on it. To learn more, try here or here. Where you start a 529 is less important than actually starting. Want to start today? Try Vanguard. (No this isn’t an ad. Vanguard has no idea who I am — I just believe in their product.)
But wait! What if my child goes out-of-state or to a private institution?
The difference in education quality and employment opportunity of graduates is hardly any different between a public university and a private one. The only real difference that private or out-of-state offer is the “prestige” in the name and the cost. If your kiddo doesn’t get a full scholarship, then…
Why pay $50,000–$90,000 more for an equivalent 4-year education?
The answer is simple: no one should. Explain to your son or daughter from an early age that you plan to pay for their 4-year college so long as it is in state and that an in-state education will get them just as far in life.
Your child will thank you for the gift of education without the burden of student loan debt. Best. Christmas. Gift. EVER.
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Charlie Cameron is an avid investor and peer educator on money concepts missing from education. How to learn more:
*Note: Investing the amount above would cover CURRENT average in-state tuition costs for 4 years. This does not cover increasing education costs, nor room, board, or meal plans. $100 is a starting point, but putting away more than that of you can is certainly helpful!
Disclaimer: I don’t account for inflation in the calcs above. Those numbers are today’s dollars. The important thing to remember is that even with 2–3% inflation a year (decrease in buying power of the dollar) investing is still a fantastic way to earn money and may be the best way to beat inflation!