Kids college: Let them pay?

[WhenIsItTime]

I'm FI mid-forties. Wife and I paid our own way through college. I believe that really got us saving/earning early in life and a key to our success. Realize paying your own way through college is harder now than 20 years ago. However, even though we can pay for kids college not sure that is best for them.

I was surprised by the other "how much do you have set aside for kids' college" thread by how many folks are planning to pay 100%.

Our kids are 7 years from college. Would love to hear from folks dealing with this now, approach and rationale.

 

[LOL!]

I paid my own way through college. I expected my kids to do the same.

My wife had everything paid for. She expected to pay everything for her kids.

I will say that I don't think my parents did the right thing because they actively avoided giving me any help when they could have easily afforded a token amount of help.

I don't think you will really know what you will do until the time comes.

 

[sengsational]

My dad bought mine. State school.

My kids, I said I'd buy state school and (said in my best Ed McMcmahon voice) "A New Car!". Or private school (and no car).

I had one kid that took the former, and one that took the latter.

My feeling is that, since I could afford it, this would give my kids a leg-up, financially. Kids are forced to grow up pretty quickly, and I wanted them to have a little more "kid time" before they reached the "adulting" stage. You have never felt guilt so strong as when your kid suffers and you realize you could have done some simple thing that would have prevented it.

There is a harmful effect of giving a kid "too much". This is especially true if you do them "favors" like giving them a down-payment for a house that they otherwise couldn't afford. That puts them in a neighborhood of "Jones" that they need to keep up with, when their salary doesn't really allow for it. I would consider a "favor" like that quite a disservice, since it will be even harder for them to live within their means in that environment. But if you give them a few years during college to "find themselves", then set them on the adult rat race track with a 4 year degree and no debt, I'm thinking that's a better place than someone who juggled school and work and ended up with debt, and now need to manage all of that while wondering what happened those last 4 years.

 

[gcgang]

My Senior in HS daughter was looking at Amherst. Would probably cost $80k+ per year with transportation and everything else. Barring her becoming a major drug dealer, or worse, I don't see how she could pay for it.

Should we limit her opportunities by an arbitrary cost number, when we could afford more?

I doubt the value of an $80k expense vs something still ridiculously expensive, say $50k. But why would you draw an arbitrary line?

Her school is very helpful in finding aid/scholarships etc, to help with the cost. Evaluating "the package" a college can put together is something they stress. Still I'm not expecting much.

I worry about giving her too much. So far, she's very responsible with $, eagerly taking on additional shifts at her job even though she does sports that take up from after school until 6:30pm every night.

My hope for her is that she find something she really likes to do, rather than just filling time until FIRE, and she will have resources to not "have" to do a job she doesn't like.

 

[nvestysly]

I paid my own way for two years of community college. My parents paid for my tuition and room & board at a state school for my final two years of college. I paid for all my books, supplies, fun stuff, gasoline, beer, etc. No debt. But as you said, that was a long time ago.

DW had some relatively small loans that were paid off within a year of graduating.

Both DW and I worked on & off through college.

We have lots of friends that have done all varieties of paying (or not) for their children's college expenses. In general, it appears 529 plans are very helpful for minimizing taxes while giving the children some additional funds for college expenses. Otherwise, there is nothing wrong with working a job while you go to school. Nothing wrong with state schools. Nothing wrong with community college for two years.

 

[USGrant1962]

Comparing what "we" did with today's college costs is not reasonable. College costs have increased much faster than inflation for 30 years. Here's one example: https://www.zerohedge.com/news/2016-08-18/simple-chart-illustrates-absurdity-college-inflation

This has been driven by both rent seeking (government making piles of cash available through loans, scholarships and grants, so education institutions grab it with gusto) and the explosion of administrators at colleges (again, mostly to satisfy and comply with government regulations).

 

[mountainsoft]

We paid for our daughter to get her associates degree in English at the local community college. I think it was only a couple thousand per quarter for county residents.

We also paid for our daughter to get her bachelors degree in English at the local chapter of Washington State University. I think it was more like $4000 per quarter for residents in the state. Pricey, but we managed without having to take any loans.

She hinted at continuing on for her masters, but my wife and I both agreed she would have to pay for that on her own. As you might expect, she never pursued it any further when it was on her dime.

I was happy to pay for her associates degree, but when she didn't pursue jobs that would use it, I was reluctant to pay for more schooling so she could get her bachelors. But, my wife wanted to be supportive, so we paid. Just as I expected, our daughter never did anything with her degrees once she graduated. She's working three part time jobs, none of which require a college degree. In the years that followed she seems to have lost interest in that field, so it feels like a big waste of money. I hope she finds a job someday that will use her education, but at least we paid out of pocket and didn't have any loans to pay back.

 

[MissMolly]

Both my husband and I paid our way through school and had some rather minimal debt (in today's world). It was only about $10,000 at the time, but that was 40 years ago so it seemed like a million.

We paid tuition, fees, books etc for both our kids. They lived at home while going to college. They both held part-time jobs for any spending money, gas for the car, etc. Our daughter has her MBA (we paid for the BS and her work paid for the MBA). Our son is a mechanical engineer. Both graduated with zero debt. Although we are generous for birthdays and Christmas, they never ask us for additional money. They are both doing very well. I am glad we paid for their schooling.

 

[Newventurer]

I paid my own way through, DW’s folks paid for her’s. We each have two children from previous marriages. We had a minimal amount set aside in a 529 for my two, and my daughter ended up going the Army route so we transferred her $’s to my son’s account. He received a full tuition scholarship and some room and board help. We paid, along with his mother for the residual room and board and he worked summers and lived at home during the summer. My DW’s two kids each got significant tuition help and even more when we decided to move to the state where they were attending and one of them received in-state tuition until he also became eligible for all tuition covered.

I see one possibility, if you have saved significant amounts of money for their schooling, being that they may not put forth as much effort in school or that there may not be more effort put forth to find all the money that is out there for education.

They all got out of school without any debt and feel fortunate as they know friends who are saddled with plenty.

All of the tuition money they received from the school had grade requirements and I liked them having that over their head and it being the schools nickel and not mine. They couldn’t manipulate me to make up for their bad behavior. It seemed to work for us.

Good luck, they are fun years getting to go back on campus for games and stuff.

 

[38Chevy454]

I am one of those that worked my way through college. I call it my J-O-B scholarship, working 25 hours/week when in school, and full time summers and breaks. I also did some co-op program work when in school. Net result was the 5 year plan to graduate, but also graduated with essentially no debt. I did not go on spring break trips, did not drive a newer car, did not eat out much, or go to bars drinking much. All of those took more money than I could afford.



I do realize it is harder to do now than when I was in college. I also believe a kid should have some of their own skin in the game. This works for many things, not just school. Kids should have to work and realize what it takes to earn a buck.

 

[Philliefan33]

We paid tuition, room, & board for each of our DDs. They had summer and part-time jobs to pay for books and social life. Grad school is their responsibility. DD1 lived on her small stipend as she earned her Ph.D. in chemistry; DD2 is working full time as a nurse and paying for her DNP schooling.

DH and I planned to fund their undergrad without loans, and our plan worked. Each of the girls has thanked us for making it possible to start life on their own without student loans. They see how some of their friends have to struggle to make ends meet while paying back the loans on an entry-level salary.

I know that not all parents are in a position to fully fund college for their kids. However, it seems mean to decide not to pay when you can afford it. Why would you want to hobble your own kids?

 

[bongo2]

One reason why parents should help their children pay for college: the financial aid rules pretty much force them to. If your parents don't have any money, then you don't have to pay for college. If they do, then you have to pay more than any 19yo should be expected to (at some schools). It's a crummy system, but there it is.

I doubt the value of an $80k expense vs something still ridiculously expensive, say $50k. But why would you draw an arbitrary line?

On the other hand, I don't believe just because you can afford something means that you have to buy it! IMO you should spend the extra $120k only if you feel it is worth it. My kids are attending good schools for 15-25k a year, and, because I think that was the right choice, I gave them a substantial bonus for not to attending the 70k a year schools that accepted them.

 

[Texas Proud]

I am like a lot of people here... I paid my way through college... borrowed some money from a society of the degree that I got and some from my mother... paid all back in 4 or so years...


BUT, college was cheaper back then...



So, I looked up the avg cost of college at state school including room and board.. about $25K... so X4 years is $100K... that is the max I am paying... so figure out what you want to do...


The one in college now is doing quite well... 3rd year and is working to help pay for his education.... trying to keep costs down...

 

[njhowie]

I have strong feelings about this one.

I paid my own way through college, working the system to my advantage. For my wife, we paid down her loans with a vengeance after we were married and had them paid off within a few years. I believe a good portion of our success has been the result of not carrying any debt other than our mortgage, and even then, ultimately paying off the mortgage early and becoming completely debt free.

After our daughter was born, we set up a college savings plan, and contributed consistently - most years adding my annual bonus, so it grew nicely and had enough to cover the entire undergrad degree for most any school.

My feeling is that regardless of whether the parents have the means to (help) pay, what is more important is guiding the kids to the right school. It's no longer very unusual for kids to take 5 years to complete their degree (lots of distractions these days at the country club resorts many campuses have become), or end out making a change along the way concluding their interests have changed and so they need to change schools or majors ultimately leading to higher costs. Many kids want to go to a prestigious school carrying a $50k+ annual price tag, and many parents go along and (understandably) view it as a badge of honor for themselves. Without financial aid, that can easily come to $200k for four years. That's just at the $50k price level...there are a handful of schools which are $70k-$75k per year, and with the way schools raise their prices and the magic of compounding, within a few years we are going to see one be the first to crack the $100k/year level...just for undergrad studies.

For our daughter, my wife and I started very early, worked very hard to choose the right school to match her objectives and work with the amount of money we had set aside. We began planning far in advance and essentially brainwashed daughter along the way, so when the time came, there was nothing to do as far as lots of test taking, applying to lots of colleges, going through the months of anguish waiting for the admissions letters to come, and then finally having to make a decision. There was only one school, we worked with them, and they worked with us. We're paying for the entire bill (it's currently in progress) and it's worked out extremely well thus far.

The college landscape is changing very rapidly, in terms of what constitutes a college education, how it is delivered, and how applicable it is in society today. My wife and I both attended the high sticker price top tier college (we wouldn't have ended up together otherwise), and are extremely progressive when it comes to education (daughter was home schooled 7th grade onward). We've likewise taken a progressive approach when it comes to college education for our daughter.

Regardless of what gets decided, I firmly believe that it needs to be a shared decision, with the parents providing lots of input to decide what the best plan is for what the child is looking to do and how the finances work out. Do you really need a Cadillac when a Chevy will do? Are you really comfortable letting a teenager, who cannot even legally vote or drink, make a financial decision regarding $100k or more? Most kids do not have a good concept of money at that age as most all of their finances have been handled by the parents to that point. Sure, there is a time to leave the nest, but (I believe) starting with such a big financial decision which will have life changing implications is not a good gamble to leave solely to the desires/whims of the teenager.

When it comes to a college education, I believe our system has conditioned many to believe that a traditional college experience, a prestigious name, and a high sticker price are indicators of the quality of the education and how well it prepares the student for the future. That's simply not the case these days. Going forward, we are likely to see further upheaval as the costs to attend college continue escalating and get further out of reach for students.

I've rambled enough.

 

[albireo13]

WE have 5 kids so, there is no way we could afford covering 100% college for each of them. We try to cover 2 years for each kid and told them they have to pick up the rest.

 

[MI-Roger]

Comparing what "we" did with today's college costs is not reasonable. College costs have increased much faster than inflation for 30 years.

A former co-worker, who graduated college around 1974 with a BSEE degree and retired around 2006, found his college ledger when he was clearing out old school documents at time of retirement. His degree cost him just $3,500 total!

He did live at home and commuted for 3 of the four years, and he worked numerous jobs to cover the costs. As he said to me when relating this story "That was probably the best $3,500 I ever spent!"

Oh, and entry level wages for a degreed engineer when he graduated were about $16,000 to $18,000 per year, so the full degree was ~20 to 25% of first year wages. Compare that to today when the cost of the degree exceeds the first year wages total!

 

[DrRoy]

My parents paid for my college, although I had scholarships for 20-25%. We offered to pay for our sons to an in state public school.

 

[candrew]

Depends.....

Both of our sons, now in their mid to late thirties with families of their own, paid their own way through college.

IMO, there are variable factors in the decision of whether paying for one's kids to attend college is a good one.

Is he/she ready for and motivated enough to attend college? Neither of our sons were upon graduating high-school. Our eldest son decided to go to work and moved out on his own. Our youngest enlisted in the Marine Corps.

Are mom and dad able to help financially without putting their own retirements at risk? Had we "pushed" our sons to attend even a community college after high-school, it would have been a case of throwing good money after bad. We've witnessed other families watch as their not-yet-ready for college kids drop out in their freshman years after mom and dad have forked over tens of thousands of dollars for tuition.

Our oldest son is a nurse practitioner. Our youngest works in the high tech industry as an engineer.

 

[pj.mask]

I’m sure I could have worked through college to pay for it and it would have cost me an extra year. Instead I put my time into taking an extra class every semester.

I think it is important for the kid to value money. It doesn’t matter if the money is theirs or the parents (sometimes they value one more than the other) so that makes how you give the money important (‘I will pay for state school’ vs ‘I have $80k saved, you keep what is left’)

It really boils down to knowing your kid. My SOs parents paid for everything but she wouldn’t take advantage of them for it. I know plenty of kids in the same situation who are out every night and stayed in $1500/mo apartments.
I covered the cost of school myself with ‘my money’ (did have some inheritance) but that only changed paying for a few hobbies in school (biking, summer travel). I think I pulled $30k over 4 years from ‘unearned money’. Rest came from high school savings/jobs, scholarships, and internships. Paid my loans off with my signing bonus in 2010, maybe $10k.

 

[dirt_dobber]

With all 3 of our kids - paying for it all would have really set us back. We went with a 50/50 deal. Oldest 2 sons went to JUCO for first 2 years then transferred to major colleges and our daughter went straight to a 4 year major college.

They all had jobs throughout their college and all 3 graduated with honors and all now have 6 figure income jobs now. Oldest son (35) even mentioned the 50/50 thing in a job interview and the HR guy said it really impressed him.

I will also mention that my kids are the first of a large 6 generation Texas family to have even graduated from college.

 

[njhowie]

Are mom and dad able to help financially without putting their own retirements at risk? Had we "pushed" our sons to attend even a community college after high-school, it would have been a case of throwing good money after bad. We've witnessed other families watch as their not-yet-ready for college kids drop out in their freshman years after mom and dad have forked over tens of thousands of dollars for tuition.

Exactly!

Our oldest son is a nurse practitioner. Our youngest works in the high tech industry as an engineer.

Awesome! Congrats to you and them for making the right decisions! It will certainly have major benefits through the remainder of their lives.

 

[dm]

We have two kids, they both went the first two years to the local community college where they received scolarships. After that we paid the majority of the cost and they borrowed a couple thousand a semester. When they got out they both owed less than $10,000. I wanted them to pay something themselves. But I didn’t want them burdened with a lot of debt.

 

[athena53]

I'll borrow njhowie's opening: I feel very strongly about this one!

My parents put 5 of us through state schools, living on campus. It was the 1970s so a lot less than now, even adjusting for inflation. We all had summer jobs. All of us chose marketable majors: two are accountants, one an engineer, my sister is a doctor and I was an actuary. I SEETHE when I hear people make the gross generalization that kids who don't pay for their own college don't value it. Yes, there kids who will party their way through school if someone else is footing the bill, but none of us fell into that category.

I had one child and was determined to pay for his college. His Aunt and Uncle (she's my Ex's sister; Ex was out of the picture) had opened an account in DS' name that ended up paying for half his education. It was welcome but not expected; I would have probably nudged DS towards the highly-respected state university nearby if money had been an issue rather than have him take on loans for Drake, which he attended. He lacked some discipline and took awhile to get organized (a therapist helped him manage his ADD), but graduated, got a PT job that turned into FT, and is now happily up to his ears in litigated claims at the insurance company where he works as an adjuster.

He wanted a stay-at-home wife and I'm convinced that wouldn't have been possible if he were saddled with loans. She had a 2-year business degree and some loans- not sure how much, not my business. They've never asked for a dime.

Dad is widowed now, 87 and still financially solvent. Now he says he wishes he'd sent us to Ivy League schools for the networking, but we did just fine at state schools. I told him what I'D wished is that they'd sprung for a year abroad for me! (My HS French was pretty good, and still is.) Small complaints.

 

[MI-Roger]

Personal Family Decision

I will tell you what I/we did, but that does not mean you must do the same.

Ancient History:
It was important to my Parents that they pay for college for my two sisters and I. They planned ahead and converted a dilapidated house into two nice rental apartments to generate the additional income necessary to pay for the college bills. One sister was three years older than I and the other was one year younger. This age arrangement meant that my parents would have college expenses for 8 consecutive years, and four of those years would have two kids in college.

This seemed ludicrous to me even as a high schooler, so I applied to, was interviewed by, and accepted into an Engineering Co-Op program where I made enough money to pay for my own education. My Dad insisted on paying $500 to me each semester toward Tuition. I didn't need the money but it made my parents feel better for me to accept it. I paid for all of my housing & meals (Fraternity), all books and school fees, and all other costs during my college years.

Our Kids:
It was important to my wife and I that we pay for their under-grad education. Me, because that was how I was treated. Her, because her family paid nothing for her education and she knew the struggle first hand. Both sons were told that we would pay for undergrad but any graduate education would be their responsibility.

We invested $3500 in an American-Century Gift Trust for each of our sons when they were only 5 & 6. This money grew to nearly $40K by the time the Trusts matured 12 years later. The Trusts had to be converted so to legally not be included in the FAFSA analysis of 20 years ago. Both sons earned massive scholarships which significantly reduced the out-of-pocket costs. We instructed them to not touch the Trust dollars and to take out loans for the added fees. We then paid off these loans over a period of 6-7 years.

They both went on to Grad School and our original conditions held fast.

 

[SomedaySoon]

We paid college Room / Board / Tuition for our son. He worked hard at school and did well and got a top job right out of school during the Great Recession when all his friends spent months finding anything at all. However, 9 years later he decides he doesn't want to spend the rest of his life in an office, so he quits the career and becomes a bartender...….. Oh well...….