College Cost Sharing/Structuring

[TromboneAl]

This is a question not about how to pay for college, but about how to share the cost between parents and child. It's aimed mostly at those of you who have sent a child through college.

Background

Daughter Jenny will go to Wash U in St. Louis starting this fall. After taking into account scholarships, total bill will be about $36,000 per year (I know, ). We've saved enough that we can pay without loans. Jenny has saved $3,400 and earns about $3,000/yr in her summer/after school job.

Her career choice is biomedical engineering, so she won't have trouble paying off loans.

My general feeling is that the parents should pay for education through college, but that the student should contribute as much as possible.

The Question

My question today is: how should we share the cost between parents and student? And how should we structure the cash flow?

Current Plan

To give you an idea of the kind of answer I'm looking for, here is my current thinking.

1. When she finishes college, she should owe a total of about $22,000. I got this figure by taking my college loans (which I paid off without too much difficulty) and adjusting for inflation.

2. We will pay the tuition, fees, travel, room and board (that is, after subtracting student loan amounts). She pays everything else including books.

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Do you think that will work? How did you do it?

Thanks,

 

[yakers]

I certainly don't think there is a "right" way to do it. All depends on how much you have, how much your child can contribute and what the expenses are. My older boy went to junior college and I was happy to pay for it. He left town and worked part time and went to school part time. He could have done it on his own I suppose but I contributed to his tuition costs to make sure he understood that I took his studies seriously. He does now have a grad degree and a lot too many loans but that was his decision and he will have to resolve those. His grad school loans and wife's education loans would pay for a house in some parts of the country. But they both got jobs they like. (And I have a grand daughter that I like, but thats a different story.)

My younger son is in high school. I do not know where he will end up in school. But he is a great kid and I am inclined to support him in any way I can. If it is a cheap school I will be happy to pay for it. If he gets into a good, expensive school he will have to have some scholarship support or a job. I am happy that he is serious about school. Its not about economic fairness, if I were wealthy I would pay for it all. All I want to know is that he is serious about school and contributing to the costs. The amount is less important .

 

[Mr._johngalt]

My youngest chose a very expensive private college where she
took "bowling" and "gender studies". A real waste of resources.
I got stuck for a big share of the cost, but it appears there is
little I can do about it. A bitter pill indeed.

JG

 

[DrJDoe]

I just typed a bit about how my dad handled this with 3 girls under the topic "Loans to Child for College." Probably there are any number of good ways but I would think that a set amount ("You have this much - spend it wisely.") or a set list of what will be paid for (Tuition plus dorm R&B plus $500/semester for books) would be wise -- to avoid the cliche of "Dear mom, college life is great, I got a new dress for the formal, running low on beear and pizza, send $..."

I'm not an advocate of "absolute fairness" but I am aware of friends who are still bitter because older sib got a free ride to college but the economic climate had changed by the time it was their turn (lay offs, economic downturn) and they were on their own. Granted in the long term I think that the younger (non-subsized) kids learned alot about how to manage their money and look for value even in their education and overcame the financial set back but the anger is still there.

Dad set aside a % from each pay for each of us from the time we were born, it stopped when we graduated high school ("Here's your college fund -- spend it wisely"). So in actuality, youngest sister got a bit more as her 18 years were years of higher earnings for him -- on the other hand tuition costs go up annually so it probably was about even. We were required to contribute 1/2 of all gift money to the college fund and a % of any paycheck we earned while in high school - which was matched in full by Mom/Dad. Dad was also making sure he wasn't underfunding his retirement (you can't get loans for that) and FIRE'd at 51. (my hero)

DrLLLong

 

[Mr._johngalt]

When I was married to the mother of my children (3) , I set up a
system of rules to make it come out even. Of course, being
"King" I was allowed to make the rules.
Anyway, after my divorce I still had one to get through college
and the court set the "rules". A bitter pill indeed.

JG

 

[BUM]

Often the best and hardest working students pay for their own education. Kids with free rides have no skin in the deal (only their FUTURES).

I'm a big proponent of incentives and cost sharing. Along with JG I had a kid taking dumbbed down courses and a major called Undecided.

Whatever funding plan you engineer, keep it simple and attainable, otherwise the little darling could be moving back home in a semester or two. Also if biomed is a pre-req to med school, now were talking real money. My buddy agreed to pay the whole shot for his daughter, undergrad + some gradschool + medical school. But first they went to a lawyer and agreed that when the kid started making doctor money, 10% went to the bank of dad.

Another thought... I think your intro said you are a consultant. Can you put her on the payroll? Tuition + some work from her = business expense.

Either way I applaud your objective. Be creative and keep her involved. Let her realize that this is real money and has an impact on the entire family.

 

[P.S.]

I dunno...think it kinda depends on the kid, depends on the family. I had a partial academic scholarship to a small college which was expensive b/c private, a program that combined high school and college. Parents paid for the rest. Don't think parents ever had a thought to have a 15 yo apply for a big loan. On the other hand, knew which direction we were headed in and what to do to get to the next level of the game.

Brothers chose expensive fancy schools. Parents began with we'll pay part, we'll loan part...but paid the loan part when it was clear the brothers were serious.

By grad school, we all decided to take care of ourselves.

Now my dad is pretty sick and neighbors and friends comment that they're amazed he doesn't have a nurse but my mom says they're doing fine, with my brothers helping out (they're all in CA, I'm on the East coast). I think it just depends on the family, one's individual situation, like all things in life?