Ethics Dunce: Sally Herigstad

Sally Herigstad, the MSN website tells us, is a certified public accountant and author of the book,  Help! I Can’t Pay My Bills. She is a personal-finance writer, it says, who has been contributing to Microsoft and MSN Money since 1998.

And, based on her article, “6 Reasons Not to Save for Kids’ College,” she is also a fully-qualified Ethics Dunce.

It is fine to explain the various inefficiencies of putting aside funds for your children’s education, but Herigstad’s argument boils down to selfishness, and thus serves as an incentive for parents to abdicate the ethical duties of parenthood because an expert has decreed that it’s the reasonable thing to do. The kids are young, they’ll be fine, she argues. You can get better return on your savings by keeping them out of education funds, and the less money in your kids’ names, the better their chances of getting financial aid. Besides, colleges are too expensive, and the difference between a high prestige college and a cheaper state college isn’t as great as people think.

Much of this is true, but Herigstad’s purpose is to construct a powerful rationalization for today’s parents to abandon the generational ethic that built America. “Save for the future, be frugal, sacrifice for the children, protect their inheritance, make sure they have it easier than we did, and teach them to do the same” was the accepted and successful credo of first, second and third generation immigrants to this country, right up through the World War II generation. Now Herigstad is encouraging the most profligate generation, the Baby Boomers, and their even more irresponsible progeny to look out for Number #1. Make sure you’re set for life, she says. It’s only prudent. The kids can take care of themselves.

Herigstad is certainly arguing the popular side. Seniors, even wealthy seniors, continue to oppose any reduction in Social Security benefits  though the system is barreling toward bankruptcy: they will have their safety net, dammit, even if it means their kids may not. As David Brooks recently pointed out in a column…

“Far from serving the young, the old are now taking from them. First, they are taking money. According to Julia Isaacs of the Brookings Institution, the federal government now spends $7 on the elderly for each $1 it spends on children. Second, they are taking freedom. In 2009, for the first time in American history, every single penny of federal tax revenue went to pay for mandatory spending programs, according to Eugene Steuerle of the Urban Institute. As more money goes to pay off promises made mostly to the old, the young have less control.
Third, they are taking opportunity. For decades, federal spending has hovered around 20 percent of G.D.P. By 2019, it is forecast to be at 25 percent and rising. The higher tax rates implied by that spending will mean less growth and fewer opportunities. Already, pension costs in many states are squeezing education spending.

Ensuring the welfare of someone else before you have secured your own is never “fiscally responsible”in the most practical sense.  Neither is it responsible to give a significant donation toward medical research, when you could invest it in blue chip stocks. Being ethical is frequently not the most practical course. When you get right down to it, having children at all isn’t fiscally responsible, or an efficient use of time and resources. Having kids around even ruins sex. Love makes no sense. Sacrifice isn’t logical. Forgoing personal comforts so your family’s next wave will have as many opportunities as possible is just plain dumb: heck, how does that help you? Why, you won’t even be around to enjoy it!

Unless, of course, you regard the duties and responsibilities of parenthood the way our parents did, and their parents before them. They didn’t think of providing funds for their children’s education as a required trade-off against their retirement planning. They looked at both as necessary, responsible investments, with the children, not themselves, coming first. They paid for both their retirement and their children’s education by staying away from credit cards, driving Chevy’s rather than Cadillacs, not purchasing more shoes that they could wear in a week, dining out only on rare occasions, limiting vacations, and generally making certain that their spending habits were focused on making the future secure for everyone in the family, rather than making the present as exciting and enjoyable as possible.

Were they financially irresponsible fools? No, they were traditionally responsible, ethical parents. And we need experts who will remind us why our parents were right to have the priorities they did, not those like Sally Herigstad, who feed us reasons to forget.

9 thoughts on “Ethics Dunce: Sally Herigstad

  1. It looks like you actually read the article, so I’m disappointed that you misunderstand it so completely. The point is not that you shouldn’t help your kids or sacrifice for them, let alone that anyone should “abandon the generational ethic that built America.” I’m still looking for the place in my article that says not to help your kids with college. (The proof that that is what I believe is the giant checks I’ve written to my kids’ colleges!)

    The only issue is when and how to best save and pay for college. As always, you should talk with your own financial advisor.

    • Sally: I did read the article. The tone was wrong, as evidenced by the fact that the readers I talked to (this was brought to my attention by a friend with two children who said your piece “just strikes me as wrong, to not fully prepare your child for work and life, saddling with him/her with debt, while ensuring your own cushy retirement. We signed on for the whole responsibility of child-rearing when we had our two kids.”) who took it to be an argument for letting the kids fend for themselves. It’s hard to reach any other conclusion, is it, with text like “Other financial goals come first. It’s heresy to some, but it’s true: Your retirement plans are more important than your children’s college funds. Your kids can get through college somehow.” My own parents put ne and my sister through college (Harvard for both of us, without scholarships—cheaper then, but never cheap) and laws school, and started our education funds long before they had any retirement saving at all. I’m sure glad they did. My father said he didn’t want us to have to work through college, like he did, because it compromised his own education. You’re a financial planner, and a good one I’m sure….I think you have to lay out the options in practical terms. But the article needed an ethical perspective too, and they just weren’t there. Me, I’m not retiring until I know my son has the best chance at a good education possible. I think there are parents who have been looking for a guilt-free way to send their kids to a state school while they take that world tour and join the Country Club, and I think you gave it to them.

  2. I stand by my statement that retirement funds are more important than dedicated education funds in your child’s name. I’m not talking about world tours and 40-foot motor homes. Social security is going bankrupt and it is irresponsible for anyone to not have a plan for retirement.

    There’s nothing wrong with state schools, either. We can’t all go to Harvard.

    We have more common ground than not. Like you, I am appalled by the over-spending, much of it on transient pleasures like fast food (if you can consider fast food a “pleasure.”) I encourage intergenerational and personal responsibility. My motto is, “Buy what you can pay for and pay for what you buy.”

    Take care,
    Sally

  3. Thanks for the measured and civil reply, Sally. I hope you realize that the term “Ethics Dunce” is rhetorical excess ( alittle like the title of your article, in fact) to focus on what I regard is any ethics miscalculation, and is not a personal attack. Hopefully people will read your article and make up their own minds.

  4. I read the article and thought some of the advice was good (don’t put the money in your child’s name, the limitations of some dedicated education funds, etc), but I was really upset by some of the other points.

    •Students should invest in their own education:
    What if the parents just took more interest in what their kids were doing in school? My father told me that college was my job and if I didn’t get the job done the money would go away.

    •Education doesn’t have to cost as much as we are told:
    No, but neither should healthcare. However, your doctor is unlikely to buy that argument if you don’t want to pay the bill and neither will the college. The community college to four-year school route is a fallacy. Most community college courses are a joke and when you transfer to a reputable 4-year school, you may find that you just wasted all of that time and money.

    •You may find it easier to pay for college when the time comes: Yes, it gives you 15 more years to find that winning lottery ticket.

    •College is not the only route to success: No, but I wish this would have focused more on trade schools than pie-in-the-sky examples. I read an article today about millionaires that didn’t go to college too.

    I talked to one of my classes today about paying for college. Not one of them had a college fund. They all thought that they would pay for college somehow. The fact is that there aren’t scholarships for everyone. Loans are much harder to get and most of them can’t get enough to stay in school You can’t make enough money working part time to “pay your way” through college. They are all working so many hours that their educations are at risk. The faculty talk about what we can no longer teach, because our students don’t have time to study anymore. I see whole fields going away because there aren’t any students who can focus on their studies.

    • Good analysis, Michael. The one argument for the article appraoch is that if everyone did it, maybe the colleges would have to bring costs and tuition down. The fact that increases in college costs have attracted as little criticism as they have (compared, say, to Fortune 500 CEO salaries) shows the effects of an irrational pro-college bias that the universities have exploited. At least CEOs work like dogs—the same cannot be said for all college professors.

      • Well, college costs are interesting. My college is private and considered expensive. However, the state here subsidizes the public colleges to the tune of over $17,000/year for each student. For that price, everyone could go to college at my school for free. I don’t mean just tuition, I mean tuition, room, and board! In addition, of the 8 sections I teach this semester, none exceeds 20 people and 2 have 6 or less.

  5. Jack – You’re right on the titles! Of course, I never get to write my own article titles, subtitles, or teasers – that’s the editor’s job. If I had written this article title, it probably would have been more nuanced. It also probably wouldn’t have fit on one line, so that’s why I’m not the editor.

    Sally

    • Sally: As you know, the title can completely change how someone reads an article. I think your piece is a dramatic example of that. I’m pretty sure I would have seen its intent differently with something like:”Don’t Let Your Kid’s College Fund Sink Your Retirement!” over the text. Prudence is ethical, after all.

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