The Education vs. Retirement Debate
Many people consider making withdrawals from their retirement funds for their children's college education. this situation has inspired the great "Education vs. Retirement" debate. When resources are tight, what should you do: help your child pay for their schooling or fund your retirement?
This is a personal decision, but the "rule of thumb" from the financial planning world is to NOT take money out of your retirement fund for your child's education expenses. This can seriously jeopardize your ability to retire.
The main idea is that retirement money should not be raided for other purposes, no matter what. Money saved in a retirement account (104k or IRA) is considered so "sacred" that it is one of the few assets protected if you file bankruptcy.
Other ways to help your children fund higher education:
Open a state prepaid account (go to www.myfloridaprepaid.com for more information); encourage friends and relative to make regular gifts toward it.
Encourage your children to live at home while they pursue higher education. This can save $5000-$1,000/year in room & board costs.
Encourage your children to attend a local public community college or university and receive in-state tuition. This can save 50%-75% on tuition. Starting at a community college and then transferring to a state college to finish can save even more.
Encourage your children to apply for grants (which do not have to be paid back) and scholarships.
Encourage your children to work part-time as their education allows.