College savings and "fairness"

[malakito]

Hi all,

I have three kids and in general want to see them all graduate from college and help pay for it.

My father's deal with each of his three kids was that we could go anywhere we wanted to that we could get into, and he would pay for it. After we graduated whatever was left in our college accounts was ours to do whatever -- house downpayment, wedding, etc.

I'd like to offer something similar but I want my kids to have some incentive to be aware of the price of the college or university they're choosing.

I also am not sure I'll have enough money saved up to pay for all of it by the time they reach college age, so I'm concerned about that.

Then there's scholarships which my kids might earn.

Then there's grants and loans and work study.

Any of you have thoughts on how to make the overall process "fair" and still achieve all of the goals above?

I'm thinking that as each kid goes through, I'll pay for their college in the following order:

1. Scholarships and grants
2. Their college accounts
3. Loans

And then when they graduate, whatever is left in their college accounts becomes theirs, but I'll try to even it out based on some proportion of how expensive a school they went to and how much in scholarships and grants they got.

If there's no money left over (i.e., they all choose Harvard), then I'll do the same thing with their loan balances; try to make it proportional somehow based on how expensive of a school they went to and their scholarship/grants.

I also don't want them to grow up to be the kind of people who say, "You should pay $X towards this because you did Y for my brother/sister," you know? I want them to grow up all feeling loved and appreciative of the opportunity to go to college and feel that we treated them all fairly -- i.e., no "Cinderella" children.

malakito.

 

[John Galt]

No recommendations but here is what I did (3 kids).

They could go anywhere they wanted but they had to find a way to reduce the total cost close to what an in-
state public school would charge. Then , we split it (the net amount). They paid half. I paid half. Worked out fine. Last one
will graduate in 2006.

JG

 

[farmerEd]

I still have a ways to go before paying any college expenses, but I am going to encourage my kids to go to a good, nearby, state college or even a community college for 2 years and then transfer on to something bigger.

I may even offer to pay the full-cost if I can; if they insist on going someprice pricier, I'll probably just pay the instate state-college amount and let them figure out the rest....I am of the opinion that top colleges are overarated, and unnecessary in order to succeed. You can excel or fail at either place. If one prefers to get an MBA/MS/PHD at a top notch college after having gone to a state school, let them work for a while, save for it, and pay for it. It builds character and prevents children from growing up with a sense that they are entitled to anything.

Same as I'll never hand my kids a new car when they are old enough to drive....want a car? get a job and buy one. I know so many people, upto their eyeballs in debt who think they "have" to buy their 16-17 year old kid a new, or close to new car so they will fit in....sad imo.

 

[John Galt]

I agree with farmer Ed that most of the "better"
schools are not worth the money. In only a very limited
number of cases will the school that issued your degree ever matter.

Regarding cars, I bought all 3 kids a car when they hit 16 (remember, this was in my big spender days).
Not new ones but pretty nice. No regrets.

JG

 

[haha]

My Dad paid college costs for four children. It was a burden, and he let us know about that. I went to a college with a lot of rich kids. I had a scholarship, and worked part time all the way through, plus all vacations. I think the main difference between me and the rich kids was the places where we got drunk and had promiscuous sex during breaks. Them in Bermuda, me at Jones Beach and someone's local pad.

That plus I worked a lot harder and got better grades. 40 years later I still remember a lot of course content, even if it was not of much day to day use to me.

So I decided that it helps for a kid to have an easily perceived stake in his education. I know many young men go $30,000 to $50,000 into debt to buy a pickup and a set on Snap-Ons. Or maybe $100,000 to get a minimal pizza joint off the ground. So I figured what is wrong with financing an education with debt and the student's own earnings?

It immediately ends all tense discussions about grades, whether one's son or daughter should study engineering or history of art or women's studies, etc., etc.

Nothing like Stafford loans! They can't repossess your knowledge, and can't call the loan if you get in arrears. You can pay it off over a long period, and you have at least one shot at refinancing-consolidation.

My one son is long past college, and it worked for him. My second is winding up now, and along with his degree he has 2 full time equivalent years of in-field experience. I think he probably did miss some of the "college experience", but I think at worst that is a push, and more likely a help. How enriching is it to puke on one another's shoes?

It is possible that MIT might have been better, but I am not sure of that. And if he is so inclined, there is always graduate study. Besides, I like having him around.

Aside from the obvious fact that this saved me a meaningful amount of money, I think the best thing is that my sons became my peers at age 18. They like everybody else knows that the money calls the tune, so they called their own. Maybe partly because of that, they chose to learn very marketable skills.

Mikey

 

[FlowGirl]

As a friend of mine said "It's easy to treat your kids equally but difficult to treat them fairly." He came from a family where 2 out of the 3 were college bound honors students, and the third had no interest at all in higher education. I don't remember what the exact solution but the 2 honors students went to a state U, and the third got something else (maybe a car?) to start off his working life. Even though the third son saved the parents a bundle, I know they didn't just hand him 4 years worth of tuition in cash and say "have fun."

No personal experience on my part - no kids yet, and I'm an only child. I did pay for much of college myself though out of necessity and it didn't hurt me a bit.

 

[allen76]

I think our past shapes our perceptions of fairness, so there probably is not one 'right' answer to fairness.

For my three daughters - one in grad school, one a senior in college and the last one a high school sophomore - our goals were/are to give them a love of learning, a desire for accomplishment (in academics and in life), a college degree, a car and no debt. A clean start to a new life.

They could/can choose any public institution that will accept them as we cannot afford private schools such as Harvard. The less required for tuition (in-state vs out state), the more they earn and apply towards school, the less of their college fund we have to use and the bigger nest egg they start out with after graduation.

Seems to work OK. Oldest decided to take remains of her college fund and go to grad school. Daughter number 2 is thinking about using her remaining funds to help pay for law school (no lawyer jokes please as I have the market on those). Daughter number 3 is too happy about getting her drivers liscense this week to be bothered about thinking of anything else.

This approach has delayed my plans for early retirement by a couple of years -- but just having 3 kids threw that whole retire at 45 thing I used to think about out of the window.

I wouldn't have it any other way.

Easy

 

[Jay_Gatsby]

Re: College savings and "fairness"http://www.infir

I think he probably did miss some of the "college experience", but I think at worst that is a push, and more likely a help. How enriching is it to puke on one another's shoes?

I'm not going to get into whether certain perceived college "experiences" are more valuable than working to reduce your educational debt. Suffice it to say, in retrospect I would have preferred practical work experience (or better grades through more studying) to some of my college experiences.

As for whether MIT would be better, the prestige of certain schools really does matter. There's a little thing in the legal profession called the "Harvard Dispensation". The following excerpt from an interesting posting on a law mesage board may give you the flavor:

Underperforming associate with vague laziness -- booted. Entitled mental case too uneven to present to clients -- clipped. Hermitic manic-depressive disrupting the ranks and living on borrowed time -- given the Talk. Protected Class senior associate with 1.5 years of bad reviews papered in the file and the approval/go-ahead of the head of the Labor and Employment section of the firm -- the Heisman. Perfectly acceptable, hard-working associate who happened to get into it with the wrong partner -- see ya.

But wait a minute, you may ask. Who is that over there? Yea, that guy/gal, over there in that office. The one with the aloof disposition. Aren't they the first to leave most nights? Didn't he/she only bill 1800 for the last few years? How come they are still here, you are heard to inquire.

Well, the simple answer to that question is that he/she went to Harvard, don't you see. Look on their wall -- see that? All of that Latin lettering on that diploma? That's right -- Harvard. You see, that is worth a lot and firms take notice. If you are smart you may need to bill some hours eventually, but right now you can coast on that sheepskin for a few years at least. The Harvard Dispensation.

Most partners are only a few months out of law school mentally, even if they graduated 20 years ago. They still remember their feelings of inferiority in the presence of that Harvard guy or gal. So when the time comes for a clerk to visit the firm or spend a summer, these partners enter a Geek Shangri Law of no compare. Wow, they say to themselves, we must really be a great firm to attract someone from Harvard. And if that is true, I must be pretty damn good myself, because take a look at this office right now -- I am behind the desk with the resume in my hand asking the questions, and that Harvard Law chucklehead is sitting across from me. Look at him! He is sitting there right now listening to my bullshit, and I went to Texas Tech Law School. Damn, that is awesome. I am awesome.

Years pass, and that clerk has long become an associate and entered the flow of the section. And when it comes time to trim the fat, merit goes aside and Harvard Boy or Harvard Girl doesn't have a whole lot to worry about.

Maybe those big law school loans are worth the money it took to buy the Harvard Dispensation.

(If anyone is interested in reading the entire post, here's the link: http://www.infirmation.com/bboard/clubs-fetch-msg.tcl?msg_id=002Vp2

If an engineering-type has the intellectual firepower to get into MIT, CalTech or a comparable program, it's worth the money to attend just to get the brand name on the resume and a chance to work with the leading luminaries in a particular egineering field. The quality of classroom instruction may not be all that different from a state school (with the cheap state tuition), but the name of a leading school will follow a person around for the rest of his or her life. MIT and CalTech open doors that a state school never will.

 

[John Galt]

I agree about those CalTech and MIT degrees following you around for a lifetime. But, I still say that for most people it's just not all that helpful. In my case, for example it would not have made any difference
whatsoever. I wasn't interested in entering the doors
they might have opened.

JG

 

[FlowGirl]

I agree with Gatsby, except I think if graduate or professional school is in the picture then the investment in "brand name" is better made at that level (although great if you can do both). The strings that get pulled at the grad/professional level are more important.

If grad school is in the picture I would also suggest going somewhere where the kid can get good grades. I know a C- student from Caltech who had an easy time getting jobs, but a tough time getting into his PhD program (ended up rejected by all but one school - his last choice). In my own graduate program (at a brand name school), speaking multiple languages and having great internships/job experience got you into the program easier than an undergrad diploma from Harvard.

There's no one right answer on this, but in general I think you do better going to the best school you can afford and do well at.

 

[Spanky]

I like farmerEd's idea - encouraging the kids to attend a local state university to save money on tuition and room and board expenses.

Brand name schools are overrated in terms of value unless you are talking about certain graduate or professional programs, e.g., medicine, law, business, engineering. If anyone is interested in these programs, he/she should choose a lesser-known or less competivie schools since the chance of getting in is better since he/she will likely receive a better GPA and letters of reconmendation from professors.

Grants and scholarships are very hard to get unless you are poor or your kids have perfect GPA and SAT/ACT scores and have participated in many leadership roles at school or local communities.

I have two kids who will be going to college soon. They realize the amount of money in their 529 saving accounts and EIRA accounts. When we run out of money, we will probably take out a loan instead of taking money from our retirement saving. I guess they see the virtue (or merits) of choosing a local (but respectful) state univiersity, e.g., University of Minnesota.

Spanky

 

[Spanky]

To further my point on "brand name" school, I provide the following example. I have two nephews. One graduated from the University of California at Berkely with a degree in biological science and the other graduated with a degree of civil engineering from California State University at Pomona (a lesser known university). The one with the degree from a "brand name" school is working in a lab making $40,000 while the other with a degree from a "non brand name" university is working for the LA county as a traffic engineer making $60,000.

The difference in tuition between the two types of school is significant. The tuition of a California State U is only $3K. I know a guy at work whose kid is attending Darmouth college. The tuition + room and board is about $40K.

I just do not see sending my kids to any "Ivy league or brand name" schools unless they can receive an attractive scholarship - the chance of getting one is slim unless they can get a min. score of the 98th percentile in the SAT.

 

[kz]

We're just finishing up with the last of our two sons. I would say we were "fair" but we definitely weren't "equal".
Oldest son (avg. student) chose to enter the army for 3 yrs prior to college. Upon discharge he joined a guard unit so he had the GI Bill money along with his tuition being paid for thru the guards. We supplied his room/board, help with car payment (to get back and forth to school) and spending money.
Youngest son (high honor student) went directing to a much more expensive school and we paid tuition, apt. rent, and food. He had to pay for books, spending cash, and car payment which he didn't buy til his 4th yr.
We spent more than twice as much on 2nd son but he also had the grades and the drive to get into the college of his chosing.
In turn we gave oldest son a downpayment on his house, bought all new appliances and do other things for him that we don't do with youngest son. (he lives closer to us and won't make near the money youngest son will make in his career)
They both know what we did and why we did it.
Like I said...not "equal" but certainly "fair". They have no problems with any of it.

 

[Spanky]

Oldest son (avg. student) chose to enter the army for 3 yrs prior to college. Upon discharge he joined a guard unit so he had the GI Bill money along with his tuition being paid for thru the guards. We supplied his room/board, help with car payment (to get back and forth to school) and spending money.

That's nice the you provided room and board. When I got out of the Air Force, I got GI bill to attend college. However, I had to work to pay for my apartment and living expense. My parents did not provide any financial support.
They did not offer and I did not want to ask. They had done enough for me.

Spanky

 

[Jay_Gatsby]

Re: College savings and "fairness"http://www.infir

Brand name schools are overrated in terms of value unless you are talking about certain graduate or professional programs, e.g., medicine, law, business, engineering.

I agree to a point. Medicine doesn't necessarily require a brand name school -- there still aren't enough doctors in this country and countries around the world. As for lawyers, there are way, way too many of them. Private colleges see law schools as cash cows, and charge around $23k a year in tuition for the privilege of graduating without a job 3-4 years later. The same applies to engineering programs, although it may depend on how different industries are doing at a given time (e.g., aeronautical engineering has been in the toilet over the years).

However, if you don't get into a brand name graduate professional school, you're much better off going to the least expensive state school you can attend and studying your tail off. You should also get as much practical experience as you can while you're in school, so that you'll have a leg up on your classmates and can compete with graduates of brand name schools.

 

[Spanky]

Re: College savings and "fairness"http://www.infir

Private colleges see law schools as cash cows, and charge around $23k a year in tuition ... The same applies to engineering programs

Graduate business school is another cash cow. They charge the same tuition as law, dentistry, pharmacy and medicine. The medicine program is usually unprofitable (or lossing a lot of money) and therefore is subsidized by other programs. It's kind of ironic or ludicrous that many doctors complain about high cost of tuition and are reluctant to pay back their loans albiet they are making 4-10x more than an average worker.

Among the professional programs, I would say medince or dentistry are the best value or return on investment for students.


I am not sure that engineering program is a cash cow. The tuition is the same as those of other graduate studies (about half of professsional programs (e.g., law, business, medicine, etc). A graduate engineering degree is almost a requirement by big companies, e.g., our company only hires engineers with graduate degrees or extensive work experinece (for those who only have a B.S.)

Spanky

 

[dm]

I have two in college now. First off they get very little in the way of loans. They qualify for something like $2000 each in unsubsidized loans. They went to community college for two years and now are in State College. There is no way they can make enough in the summer to pay their own way.

I have them taking out the loan and I pay the rest. As long as their grades are ok I don't mind. I have them take the loan as I feel they should pay something.

 

[yelnad]

I paid my own way to a state school with scholarships, work study and stafford loans. Dad chipped in for spending money and care packages.

I work at the flag ship campus of our state university system. My job gets me a 75% tuition discount for my kids. This place offers practically every undergraduate program you could name and its all top quality. The kids will be responsible for part of their college expenses if they stay here; probably spending money, car, maybe part of room and board (the commute would be too long for the kids). I'll probably pay the other 25% of their tuition. If they go elsewhere, I'll chip in the equivilant of the 25% here, but not much else unless they're in a specialty program that my institution doesn't offer.

 

[Bridget]

College -interesting. I like Farmer ed's idea - umm, I got very little help from my parents, worked and had a scholarship. My father said something early on that resonates - for an undergraudate degree, one is usually learning the basics of what they will be working on in the future - if you are interested in research or some type of specialty - get your undergrad anywhere with good grades and then try and find the best school for the area you are interested in for graduate school - his reasoning was that you would meet your career peers their and association would be important.

I would also add that getting your undergrad and them working for awhile in your field helps you get a better idea of what you may excel and/or like to do. What I did in my undergrad program almost has nothing to do with what I do now. When I decided to go to grad school I was very focused and diligent. When one hits the work world with its inflexibility, going back to school is frankly a piece of cake, especially if you are good at allocating your time. I not only paid attention better in grad school, I thoroughly enjoyed it and the extra time I had.

FYI - I'm an engineer

Bridget

 

[azanon]

My take on it, and how i was raised, is that a family is strongest when it sticks together.

My father had 3 children, including me, and he ended up paying for all our educations. Granted he wasnt exactly excited when I dropped out of the Air Force Academy (due to just not making very good grades in school), and then decided i wanted to go to a private school. But i ended up getting a partial ACT scholarship as well as taking on a work-study to defray some of the costs. He paid the difference.

....

For me, I have one son (so far). I already started him a 529 savings plan at 150/month, which i estimate could pay 2/3rds of the cost of a public college in Arkansas. Whatever amount that ends up being is what he'll have avaliable for college. The difference can be scholarships/grants, work study, possibly my parents helping too, and last resort, loans on his part.

I think parents "should" help out on college simply because "you" had 18 years to realize that this need would be there for your offspring, and certainly they are not going to be of the means to be able to pay for it.

I disagree with leaving them in the position to have to GI bill as Spanky did, unless the individual either just didnt want to go to college or didn't have the mental faculties to do so. If a child wants to go in the military, then fine, but I think parents should at least put their child in the position of giving them the officer route (having money for college for ROTC, or for OCS after they get their degree).

Colleges are extremely expensive and only getting more so. We're the ones with the income and we made these little fellas, so I think the least we can do is give them a little help to start off life. It took less than an afterthought for me to realize i needed to set him up a plan soon after he was born. I can say i love him a thousand times, but I realize none of that has the same impact as showing him.

 

[RatherBeFishn]

We told our kids that they can go to any school they wanted, and for as long as they wanted. Their parents would pay for the tuition equivalent of 8 semesters up to the cost of the most expensive public university in our state. We didn't promise to pay for room and board too, but so far we have paid and will continue to if we can. Our daughter chose a more expensive housing option this year and she pays the difference between that choice and a normal dorm room. Summers they can live at home free, or live in an apt on their own dime. We encourage the apt as it's good life experience, but don't feel we owe them a completely free ride. We feel this strategy encourages a state U and 4 years but doesn't make other choices impossible.

 

[Nords]

If a child wants to go in the military, then fine, but I think parents should at least put their child in the position of giving them the officer route (having money for college for ROTC, or for OCS after they get their degree).

A lot of kids enter the military just to avoid college. Then they find out that it's not such a bad deal after all.

I worked with college-raised officers, both ROTC & USNA, who weren't worth the ink on their commissions. And for every one of them I knew several former-enlisted officers who had put themselves through college during their enlisted time-- some of them on their own money-- and then OCS. They sincerely appreciated the value of their education. Their focus & organization made them much better leaders.

Navy is starting a program to require E-8 candidates to have at least an associates' degree, and E-9s at least a bachelors.

 

[FlowGirl]

I worked with college-raised officers, both ROTC & USNA, who weren't worth the ink on their commissions.  And for every one of them I knew several former-enlisted officers who had put themselves through college during their enlisted time-- some of them on their own money-- and then OCS.  They sincerely appreciated the value of their education.  Their focus & organization made them much better leaders.
 

My spouse spent 3 years enlisted as a basic grunt before earning a commission and said it was the only way to go - an education in itself.  Although he says he wished he had been more aware of the different commissioning options at an earlier age.

The USMC has a great program called MECEP that is probably one of the last really outstanding deals around.  Through this program they take motivated jr. enlisted and send them to a college of their choice for 4 years with full pay and allowances (along with accelerated promotions while you're in - most end up being paid at the E-6 level while attending school fulltime).  Tuition isn't included but you can tap the GI Bill, which is now around $900/month.  Of course you get your commission at the end and have to serve 4 years as an officer.

Since you're still on active duty during the program, your 4 years of college count towards the time in service needed to collect a pension (unlike ROTC).  We know a 37 year-old who went through the progam after enlisting at age 18.  Will be retiring and collecting his pension starting next year, and because he also went to graduate school while in the military, only spent about 13 years actually "in the Fleet."  No school debt, no military academy, no trying to squeeze in classes between active duty assignments, and a COLA-ed pension w/medical by age 38.  My spouse was like "Damn, wish someone had told me about this program when I was 17!"

 

[laurence]

I graduated from a non brand name state university, and it's only acted as a checked box (as in this job requires a 4 year degree) my wife got her Biology degree from UCSD, which is now a top 25 school and number 6 in biology, I can tell you it opened doors for her, as she met and was mentored by some great minds, and now does incredible work in Biotech. Both of us paid our own way in college, with some time living at home and plenty of meals mooched off the parents. We had about 50k in student loans after she got her graduate degree, and got it down to 30 before we became ineligible to deduct the interest (income rose) and rolled into the house during a refinance.

If your child has the good fortune to know what he/she is passionate about (as my wife did), I think they should go to the best school for that major, with cost only playing a roll in extreme cases. If not, state school or the military is the way to go in my book! It's never too late to find yourself....