Diana Clement: Pros and cons of financially supporting your child through university

Will you support your child financially through university? Photo / 123rf

Your children are your own fault. There, I said it, albeit with the intention of being provocative. When I argued a few weeks ago that parents shouldn’t be paying for their children’s university or providing home deposits, I cut that line out, thinking it was a bit harsh in the post-pandemic world.

But I’ve been emboldened by the people who have stopped me in the street and cafes, or commented online to either a) agree with me, or b) argue passionately against the idea that they shouldn’t fund their children’s university or house deposits.

There were some reasoned arguments against mine.

“We brought them into the world. So we owe it to them to support them financially,” one said. One friend gave me a hard time because she and her husband believe that university is one of the last times in life where kids can have a truly good time, before knuckling down. Fair enough.

Unsurprisingly, social media warriors were quick to comment. I was accused of spouting “BS”, being a greedy boomer, and so on.

“Fantastic plan. Get your kid loaded up with debt for education ... and unable to get a mortgage because of it,” one wrote. “Without family help how does anyone buy a house nowadays? It’s impossible,” another said.

But it wasn’t just people of my age who agreed with the argument that making their own money helped them get ahead.

“My partner and I just bought our first home without family help, and I’m on track to pay off my student loan this year independently, too,” one 27-year-old reader from Christchurch wrote. “Has this been easy? Absolutely not. It’s forced us to be quite enterprising in finding additional income opportunities, ways to save, and also build new skills - things that likely wouldn’t have happened if family had just given us the money. I’m not saying that helping out your kids is bad and no one should ever do it, but there is a risk of robbing them of learning opportunities and experiences that make more confident, self-sufficient people.”

The last person to bail me up in person said my previous article should be compulsory reading for all parents. Her son, a builder, is aged around 30, onto his second home, and is working towards paying it off. All without any financial help from his parents. As a teenager he started trading cars from home, although she had to ask him to not do it with his uniform on. She knows that if anything happened to her and her husband, her children can look after themselves.

University can be expensive.

Not every couple who spoke with me were on the same page as each other. In one case, he agreed, but she didn’t. “They’re my babies,” she said. And boy do I empathise with that. But her parting comment was to show me a text from her daughter, which went along these lines. “My electricity bill is $40. I only have $33. Send $7.” She’d earned money from a part-time job that week, but chose to spend it on Uber Eats.

I must repeat from the last article that children who grow up in secure, fiscally responsible families do have a leg up on those who have only ever seen chaos at home.

Going back to social media, one person wrote: “While you’re at it, complain you don’t have grandchildren.”

What sort of child deserts parents simply because they won’t give them money? It’s probably the sort of child that is prone to financial elder abuse of the parents as they age. Children like the 30-year-old builder aren’t going to be blackmailing or bullying their parents for money, moving into and taking over their homes without permission, or simply taking the cash card and plundering bank accounts as many do.

One reader figured that if her children had to save for a house deposit they’d pay $100,000 to a landlord over five years. If she invested $150,000 as a deposit on an apartment, she’d expect to make a $30,000 tax-free profit. “So it makes absolute perfect sense to invest MY money in MY children as a co-owner. Your kids - your asset.”

The same sensible young person mentioned above responded: “It depends on how good people’s relationship is with their kids. Money is one of the biggest reasons that tensions and estrangement develop in family relationships. There are many reasons why co-owning a property with parents may not be the right decision. Many of these arrangements end up before the courts due to disputes.”