Growth strategist Andrea Mac, who earned just over half a million dollars last year, anticipates her business, Prequal, will generate $1 million this year. Despite this financial success, she and her husband have no plans to pay for their eldest daughter's university tuition fees.
Mac's daughter, a sophomore at the University of Iowa, will finance her own education, a decision informed by seven key considerations:
Encouraging Independence
Mac and her husband are committed to fostering independence in their children. They believe that the offspring of affluent parents often have their futures shaped by their privileges. By requiring their children to fund their own education, Mac believes they will gain a deeper appreciation for the value of money and the importance of their educational decisions.
Moreover, this approach allows their children the freedom to attend any university they choose without parental influence tied to financial support. If Mac were to pay the tuition fees, she would likely want a say in the choice of institution, potentially limiting her children's autonomy.
Recognising the Privilege of Higher Education
Mac asserts that students should understand the privilege of attending university and the opportunities it affords. By financing their own education, students are more likely to appreciate the time and money invested in their studies, making the eventual rewards feel more worthwhile. This understanding can drive students to take their studies more seriously and fully engage with their educational journey.
Ensuring Financial Stability
One of Mac's primary reasons for not covering her daughter's tuition is the need to maintain financial stability for the entire family. With other children who may also pursue higher education, paying all their fees could jeopardise the family's financial health. Mac has worked diligently to achieve her current level of success and continues to invest significant effort into her business. Paying approximately $800,000 for a four-year university course could undermine the financial foundation she has built.
Instead of allocating $200,000 annually for her daughter's tuition, Mac prefers to invest that money back into her business, potentially increasing revenue and securing a stronger financial future for her family. This strategic decision aims to enhance long-term stability rather than stretching resources thinly across multiple tuition payments.
Living Within Their Means
Mac and her family have always prioritised living within their means, avoiding unnecessary expenditures that could lead to debt. Financial prudence is a core value for them, and they choose not to make purchases that would compromise their financial stability.
Evaluating Return on Investment
Mac and her husband are keen on assessing the return on investment (ROI) for all expenditures. Given the rising cost of university tuition, it is challenging to determine if the financial outlay will yield a commensurate return. They recognise that degrees do not always guarantee a corresponding career path and that alternative routes such as scholarships, trade schools, and community colleges can also lead to successful careers.
Promoting Equality Among Children
With four children ranging from five to 19 years old, Mac aims to treat them equally. Covering the tuition costs for one child would necessitate doing the same for the others, potentially costing the family over $3 million over two decades, not accounting for future tuition increases. By not paying any of their children's university expenses, Mac can invest in other opportunities that might offer better returns and support her children's varied aspirations.
Preventing Entitlement
Mac is also concerned about preventing a sense of entitlement in her children. She believes that paying for their education could lead to a lack of work ethic and irresponsible behaviour. By requiring her children to take responsibility for their education, she hopes to instill a strong work ethic and an appreciation for their investments and commitments.
The Financial Burden on Parents
Many parents in the United States still choose to pay their children's full tuition fees, often at the expense of their financial stability. According to a 2022 survey by Sallie Mae, nearly half of American parents cover their children's college costs, with many taking on significant debt to do so.
The survey found that 44% of families use student loans, while 22% rely on parent loans to fund their children's education. These financial commitments can lead to long-term debt and financial strain, as many parents struggle to pay off these loans alongside their other financial responsibilities.
In summary, Andrea Mac's decision not to finance her daughter's university tuition is driven by a desire to foster independence, recognise the privilege of higher education, ensure financial stability, live within their means, evaluate ROI, promote equality among her children, and prevent entitlement. These principles guide her strategic approach to parenting and financial management, aiming to secure a prosperous and balanced future for her family.
