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Paying for College?
Old 01-10-2010, 11:52 AM   #1
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Paying for College?

I have done a little poking around on here and it seems that a lot of folks are paying for their kids schooling. I have two teenage boys myself and understand the astronomical costs myself. We chose a different route. We entered our state's pre-paid tuition program when our kids were 2 yo and and infant. Because we got in early, we pay only $110 bucks a month and are guaranteed full in state tuition for 4 years of school or the equivilent applied towards a tech school or out of state college. We used to think that we would pick up the rest (books, fees, dorms, food, etc) or pay out of state costs.

Then we kind of thought about it and asked why? Why are we paying for our adult children to go to school and to theoretically get out and get a great job making a lot of money? Why would we spend tens or hundreds of thousands of dollars of our money? Our answer was we shouldn't. We still contribute to the prepaid tuition (my advice to anyone is to get into a program like that), but we have been telling our kids to expect to pick up the rest. Of course, if they need a little help her and there we will be there, but don't expect us to pay your way. Considering the options for getting additional money for school (scholarships, grants, loans, military, jobs, etc.) they should not have too much trouble doing it. I think the lessons learned and the sense of ownership and pride that will instill will far out weight the financial obligations they will incur.

Are we really out on an island here? How many folks on here are doing something similar? How many have RE because they didn't pay for that education? Just wondering. I totally understand wanting to pay and don't judge anyone for doing so, just curious if not paying was considered?
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Old 01-10-2010, 12:10 PM   #2
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I've always told my kids that I paid for most of my college education and that they could do the same.

Unfortunately, my wife has always told the kids that her parents paid for her college education and that she would do the same. This is not a bad outcome for me, since my wife is willing to keep working just to pay for college out of her current cash flow and not from any retirement assets nor from any income that I get.

So think about it: If you are an uber-saver for early retirement and get that all taken care of, then you don't need to save any of your income for college in the future. And when your kids get to college, you don't need to save any of your income anymore for retirement because that's in the bag.
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Old 01-10-2010, 12:18 PM   #3
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The plus side of paying for college out of current cash flow is that you can practice living off your retirement portfolio without quitting your job.
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Old 01-10-2010, 12:29 PM   #4
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Every family is different. DW had her state university education paid for. I shared costs with my parents. Our philosophy going into the process was that we expected our son to work a reasonable part-time schedule and we would make up the difference, at a state school, to let him graduate debt-free. As it turned out he won a large (but not full ride) scholarship at an out of state school. (Thanks in part to the 6-digit private school education we paid for.) We still want him to work and contribute to the cost of his education. I want to ER and don't see why he should be working less than me for his future at this point. Sadly he doesn't see it that way, and feels underappreciated to still be asked to contribute to his education after winning the scholarship. It's an ongoing source of tension in our household.
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Old 01-10-2010, 12:31 PM   #5
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My parents did not pay a penny for my college tuition, books, or living expenses while at college. They also refused to fill out and sign those infamous financial declaration forms for financial aid, since they felt these were an invasion of privacy (a valid viewpoint, IMO). Basically, I got the clothes on my back and a "good luck" on my way out the door. My job choices were limited by having no car, so I elected to work two jobs all night, doing factory piecework while simultaneously babysitting the sleeping kid of a female cop who worked nights. I struggled through a state college while working these two jobs. I often wonder what my life would have been like if my family had been the type to pay for my college.

I was determined not to do that with my daughter, though we did not have much money. So, we told her that we would pay for tuition, fees, books, and $500/month towards living expenses at any state school, and we gave her my old car. That was all we could manage. She worked and went to school but at least she didn't have to work all night.
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Old 01-10-2010, 12:42 PM   #6
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When we first evaluated paying or not paying for children's colleges we definately took in the aspect of sense of ownership and responsiblity. I had seen to many party away parents college money.
However we wanted them to know they could get a degree (and since the were all intelligent enough we expected it)and Money wouldn't be what stopped them, since it did stop me.

We told them all, and told them early that we would pay for tuition but they would be responsible for room and board and books and living expenses. By the time the 1st of our 4 reached high school we realised room & board alone was more money than tuition at the state school, and it was way more than they could earn in a summer or borrow through school loans. So we revised our thinking and came up with realistic figures that reflected how much they could earn after school and summers, therefore save and contribute. Earning power of teens hasn't gone up nearly as fast as the cost increases to room and board at state school so therefore we are paying much more for the 3rd and 4th then we did for the first two. Anyone who goofed off or traveled instead of working hard for a summer could borrow their portion or work part time at school,(or live a spartan life at school) Whether they live on or off campus, we figured out what was reasonable for them to earn and save and that's what they needed to bring to the table. Costs were figured out separately from earning ability.
In fact this year because we were in the position to we offered to match the money they earn in pay stubs if they had that amount in the bank at the end of the summer. (so any play money for the summer had to be earned is outside work hours babysitting and pet sitting) both took us up on the challenge and saved like the dickens. We have just paid the last tuition/room and board bill for 14th college year with only 2 more years to go!! And yes we could have retired a little earlier but giving them the opportunity to get a degree is a priority for us. They are all grateful to have graduated with no or little school loans and yet all feel they have contributed and therefore have ownership of there schooling. (and all had at least one semester or year of raman noodle living....which builds character.

I will say I think college itself can be tough enough for some and it's easy to let money take the blame or cause dropping out when hanging in there and pushing harder at classes might lead to better results.
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Old 01-10-2010, 12:45 PM   #7
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Then we kind of thought about it and asked why? Why are we paying for our adult children to go to school and to theoretically get out and get a great job making a lot of money? Why would we spend tens or hundreds of thousands of dollars of our money?
Are we really out on an island here? How many folks on here are doing something similar? How many have RE because they didn't pay for that education? Just wondering. I totally understand wanting to pay and don't judge anyone for doing so, just curious if not paying was considered?
We're hoping that giving our kid a great start in college will mean that she moves out of the house and never boomerangs.

It'd be interesting to see a study of kids' college subsidies vs the ages that they made the final catapult shot from the nest.
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Old 01-10-2010, 12:52 PM   #8
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We're hoping that giving our kid a great start in college will mean that she moves out of the house and never boomerangs.

It'd be interesting to see a study of kids' college subsidies vs the ages that they made the final catapult shot from the nest.
I don't think it is related. I think it is more related to how the family views life. Nobody in my family has ever returned home once they left, no matter how bad things got. We pride ourselves on our independence and self-reliance, almost to a fault. But it would be interesting to see such a study.
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Old 01-10-2010, 01:04 PM   #9
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I paid for my children's education . I did not want them saddled with huge amounts of debt at an early age . I did set some ground rules .They had to graduate in four years . If they partied and failed that was the end of the free ride and they had to have summer jobs to help .Would I have delayed Retirement to successfully launch my children ? Absolutely ! and no boomeranging occurred !
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Old 01-10-2010, 01:33 PM   #10
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Wow, many more like me than I had thought. I definitely don't agree with the kick them out the door with a suitcase and go to Europe approach, but I don't think paying the whole thing is necessarily good either. Honesty part of my reasoning is that I went for a semester on my Dad's dime and flunked out with a 0.0 grade average and new found love of beer and sitting around in my bathrobe. Then I got a job and only then did I appreciate college and I went back on my own dime at night. Nothing like full time job and 15 credits at night. I never finished as I had a in-house training opportunity where I worked.

As for the car, we are buying cars for our kids. We set a budget of $2000 and told them that they can either buy a $2000 junker at age 16 or buy a $2000 junker at age 14 and if they do the work, I will pay for the parts to fix it up. Both want the second option. I think the blend, we pay some, you pay some option is the best. They don't get saddled with massive debt, but you aren't slaving away at a job, slowly killing yourself, while your kid has a grand old time at college with no strings attached.

I am enjoying the conversation, however. Many different approaches and stories.
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Old 01-10-2010, 02:03 PM   #11
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It's a personal decision. We are paying for our kids college. We pay 4 years public college equivalent, room and board. Poor college effort and bad grades? They are out and on their own. No boomerangers either. Get a job. Health insurance covered to 25 though.
Grad school? We will help them if they get into a useful post grad program.
One thing to remember is that if you live to be elderly and feeble, hopfully your children will be there for you, just as you were there for them.
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Old 01-10-2010, 02:10 PM   #12
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the plus side of paying for college out of current cash flow is that you can practice living off your retirement portfolio without quitting your job.

lol, lol.
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Old 01-10-2010, 02:14 PM   #13
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We set a budget of $2000 and told them that they can either buy a $2000 junker at age 16 or buy a $2000 junker at age 14 and if they do the work, I will pay for the parts to fix it up. Both want the second option.


The downside of that is now you'll have a shitbox or two in your driveway for at least four years.
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Old 01-10-2010, 02:17 PM   #14
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Are we really out on an island here? How many folks on here are doing something similar? How many have RE because they didn't pay for that education? Just wondering. I totally understand wanting to pay and don't judge anyone for doing so, just curious if not paying was considered?

You're not on an island, plenty here have expressed that opinion.


For us, we never considered not paying, nor would we. I'm aware that some kids don't take college seriously if they don't pay for it, but in my experience those were the minority and my hope is that he will have developed better values by then.
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Old 01-10-2010, 02:27 PM   #15
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Are we really out on an island here? How many folks on here are doing something similar? How many have RE because they didn't pay for that education? Just wondering. I totally understand wanting to pay and don't judge anyone for doing so, just curious if not paying was considered?
I have two sons. They both paid their own way. The sole disadvantage to this that I can see is that self payers achieve independence from Mom and Dad pretty early. That was great by me, but some parents don't much like it.

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Old 01-10-2010, 02:49 PM   #16
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I don't have kids, but if I did, I would do what my parents did: pay tuition for one degree and offer free room and board at home. After that, you're on your own dime. If you stay at home after getting a degree, you help out with expenses.
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Old 01-10-2010, 02:55 PM   #17
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...I would do what my parents did...


While there are plenty of exceptions, this seems to be the biggest predictor of people's approach to this question.
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Old 01-10-2010, 02:57 PM   #18
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I thought that my folks would at least pay for the trip to my college dorm. I was wrong. They almost made me take a taxi down to Greyhound for the 24-hour bus ride with a transfer. My mom relented at the last second and drove me to the bus station.

Years later my spouse did not believe the story. Then my sister reported that they did the same thing to her. Her transfer was in the Chicago bus terminal where the story gets rather involved, so I won't go into it.
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Old 01-10-2010, 03:31 PM   #19
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I'm budgeting $125k/kid for college. Basically, 5 years at $25k/year at a U. of California or Cal State campus.

DD started college in September and DS will start in two years.

The "college fund" is pretty much fully funded with UGMA and 529 accounts plus some money that they inherited.

I started the UGMA accounts within a month or two of their births. I have been DCAing into the 529s on a monthly basis since near the time the tax free withdrawal status was extended.

They both seem to be fairly responsible fiscally and academically.

I transferred $25k into the oldest's bank account at the start of the academic year and told her that was enough for the year and she had to manage it. I'm hoping this will be a lesson in financial responsibility. She just paid for 2nd quarter expenses and so far I think that she is on track academically and financially.

She knows how much money is saved for college for her because of the financial disclosures for the application process. She has let me know that she understands that the UGMA money is "hers now" and that she can do what she wants with it but she has not asked to take control of it. I've told her that she can have what is left in the UGMA account after she finishes to incent her to be responsible. In response she told me that she wants to make sure to use all the 529 money (which can be transferred to someone else) before starting on the UGMA money.
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Old 01-10-2010, 04:01 PM   #20
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I don't have kids, but if I did, I would do what my parents did: pay tuition for one degree and offer free room and board at home. After that, you're on your own dime. If you stay at home after getting a degree, you help out with expenses.
My history is similar to yours but my strategy for my kids is a bit different.

I lived close to a fairly good state university and therefore lived at home for my BS degree. I had scholarships that paid most of the tuition and those were the days when you could work a summer job and make enough money for tuition and books for the year so I paid for everything except meals at home and board.

Grad school (in another state) was fully funded by my research and teaching stipends.

In retrospect I was incredibly fortunate to be able to earn a BS from a good school and a PhD from one of the best research universities in the world with no financial concerns or hardships and no debt when I was finished.

Like most parents I wanted to make sure that my kids had at least as many opportunities as I had and since the cost of education was increasing faster than inflation I felt that I needed to make sure that I could help with the costs.

I did forget to mention that my parents did help save for college and establish the precedent for doing so. When I was young I got an allowance of $1.25 out of each of my dad's paychecks for doing my "chores." The $0.25 was for spending money and the $1 was saved for my "college education."
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