Reimburse kids college - how to structure?

[a60dan]

We opted to continue building our retirement accounts after learning that money would not count against financial aid.

Had them take student loans, as I did.

Eldest went to name brand engineering school with ROTC scholarship. Switched majors to state school. Had to live on campus even though it was only 45 minutes away. Moved back home while earning Masters.

After he married, they began an earnest effort to eliminate debt. While many took advantage of deferred student loan repayment, they paid off all their loans.

The other two realized after one year living on campus, that it was more cost effective to live at home.

They ultimately ended up at state schools and have their debt well under control.

We all learned that brand name schools offer aid that results in tuition similar to (NY) state school tuition.

They each received a post-graduation bi-weekly nominal stipend applied directly to their student loans.

When wedding time came, they all received a fixed amount to supplement what they (bride & groom) were budgeting.

They are all still married 😀

I retire at the end of the month.

The kids get to split what’s left after we’re both gone 😀

[jburk]

This is my first post but have been reading this site for many years. I wanted to share our families story about college and costs.

I too paid for my own college 45 years ago by working hard, saving and being frugal.

When it was time for the kids we proceeded with the following.

1. Encouraged them to save early with the end goal of college to prepare them to take care of a family some day.

2. Hard work and saving through high school and college to help them understand that hard work has positive results.

3. As far as the big bills that start the freshman year we made the following agreement. They pay first semester board room and tuition and i would pay the second semester. They were responsible for all other expenses. We helped with essential clothing, medical and phone bills, family vacations and activities while at home. No more playing on our dime.

All 4 graduated and have thanked us for helping them get the start they needed to understand the value of education, hard work and spending wisely. One needed to borrow 5k and paid it back. One graduated with 15k in the bank.

It can be done but probably not while partying

Thank you all for the great advice and topics over the past several years.

[swabby01]

We told our three kids that we would pay the cost of state school tuition and everything else was a loan on them . They felt both they and my wife and I had “skin in the game” and we discussed majors and potential to earn a living after graduation and the chose their majors. After graduation we shared loan payments on their loans and after third child graduated we paid all theee kids loans off to their delight

[northwetmossbacks]

Quote:

Originally Posted by RetMD21 I have heard good things about that program. Michigan has some poor imitation which the local schools discourage. I think this is based on finances. Also there is some elaborate process for transferring credits. Some classes transfer to some 4 year schools but not to others.

As I understand it……the difference lies in whether the student completes an Associates degree or not. If completed, then when the student transfers to the 4 yr school, a lot of things are marked off and they are essentially received as a transfer student. If no degree, then they are just transferring a bunch of credits (as an incoming freshman) that are then scrutinized closer to see if they fit the requirements needed to check off degree boxes.

It’s been several years since we’ve looked into this (both kids out of college now), but that’s my understanding of it! Ymmv, of course!

[HMMY]

Quote:

Originally Posted by corn18 Pay as you go. I had them get a loan for each semester. At the end of the semester, if they had a 2.0 or greater, I paid the loan. Worked out great for DD #2. DD #1 never made it past the first semester. She wasn't meant for college. So she went a different direction and has been paying off the loans.

We're doing something similar. We're requiring kids to take the max federal Stafford loan ($5,500 yr 1, $6,500 yr 2, $7,500 ea yrs 3 & 4). Every year they maintain a B average, we will repay the loan. The rest of the college costs are covered by their 529 accounts, sufficient to cover 4 years of private. Whatever is left over after they graduate and are self-supporting is theirs.

[Rambler]

We told the kids early on that we’d pay tuition and books all four years, plus rent unless and until they got married, and a food stipend for the first year. That meant that if they wanted play money for the first year, they had to save before they went, or work for it. After the first year, they were responsible for everything except tuition, books, and rent. That meant they had to work.

This worked out great for DD. I had given a lecture at her university to the Japan Club (I was working and living in Japan at the time, in the HR industry, in the C-suite). So the kids she became friends with felt that we were “well to do” and that she shouldn’t have to work. So, she told them, “I work a little to support myself so I can cut the apron strings one thread at a time.” When she told me that, I was one proud papa. She got married in her third year, and between the two of them, they worked enough to support themselves including rent, and they both got scholarships for their last two years.

DS came of college age during the financial crisis. He didn’t get a job in his first year, but otoh, no partying or much of any play money. He got a job in his second year, but it only lasted a year because the company went bankrupt in the downturn. He struggled to find any work for nearly a year, so we had to send him enough money to keep him fed. Then he did get a job in his fourth year that he could do at home on the computer, which extended into a fifth year and a sixth year because he couldn’t get all the credits he needed due to prerequisites and classes being on the waiting list…or that’s the story he told us. Towards the middle of the sixth year, we warned him that he would have to get it together because the next semester would be the last we supported. He ended up having to pay for one class himself so he could finish up. After that, he kept doing that same part-time job for another two years…not because there wasn’t work…but because he doesn’t want to get up and go find a job. He’d always been a bit lazy. But, I think that terminating support for his schooling was the right thing to do, or he would have milked that cow until it was dry.

[WhenIsItTime]

Quote:

Originally Posted by jburk This is my first post but have been reading this site for many years. I wanted to share our families story about college and costs. I too paid for my own college 45 years ago by working hard, saving and being frugal. When it was time for the kids we proceeded with the following. 1. Encouraged them to save early with the end goal of college to prepare them to take care of a family some day. 2. Hard work and saving through high school and college to help them understand that hard work has positive results. 3. As far as the big bills that start the freshman year we made the following agreement. They pay first semester board room and tuition and i would pay the second semester. They were responsible for all other expenses. We helped with essential clothing, medical and phone bills, family vacations and activities while at home. No more playing on our dime. All 4 graduated and have thanked us for helping them get the start they needed to understand the value of education, hard work and spending wisely. One needed to borrow 5k and paid it back. One graduated with 15k in the bank. It can be done but probably not while partying Thank you all for the great advice and topics over the past several years.

Sounds like your kids take after you! Well done on passing on the work ethic.

[WhenIsItTime]

Quote:

Originally Posted by northwetmossbacks As I understand it……the difference lies in whether the student completes an Associates degree or not. If completed, then when the student transfers to the 4 yr school, a lot of things are marked off and they are essentially received as a transfer student. If no degree, then they are just transferring a bunch of credits (as an incoming freshman) that are then scrutinized closer to see if they fit the requirements needed to check off degree boxes. It’s been several years since we’ve looked into this (both kids out of college now), but that’s my understanding of it! Ymmv, of course!

My Michigan is 30 years old, but certain JC's had relationships with certain 4 year schools. It wasn't hard to decipher ahead of time. One interesting thing in my case was all the credits transferred, but not the GPA. My GPA at 4 year school started over. This can be good or bad.

[daylatedollarshort]

Quote:

Originally Posted by RetMD21 I have heard good things about that program. Michigan has some poor imitation which the local schools discourage. I think this is based on finances. Also there is some elaborate process for transferring credits. Some classes transfer to some 4 year schools but not to others.

The public 4 years here in California used to make it hard to have transfer credits accepted and for kids to get the classes they needed to graduate in 4 years, or at least 2 years after community college. The legislature stepped in to improve college graduation rates. They made laws regarding the forced acceptance of transfer credits from the community colleges and transfer programs that required no more than 2 years after community college, as long as students followed their contracts. Initially it was for certain majors and the state college system. The laws have been expanding the transfer programs since then, year by year, to include more majors, the pubic universities and some other partner schools.

[rodi]

Quote:

Originally Posted by Philliefan33 To go to Penn State or Pitt or Temple (which offer reduced tuition for PA students, but aren’t part of the state system of universities) tuition is between $22K and $32K per year. Then you pay room & board on top of that unless you commute.

I look at it as semi-equivalent to the California UC system, vs CSU system. The CSU's are less expensive. Fewer PhD programs, more emphasis on bachelors degrees and credentials like teaching certificates, engineering programs, etc. UC schools emphasize research more, offer more doctorate programs, medical and law schools. All are state run public schools - but they are two different tiers.

FWIW - my husband and I both have familiarity with the PA program... He did his associates at the Abington Ogontz campus of PSU, then transferred to Penn state. I did my graduate work at Penn State Great Valley (suburban Philly). Nieces both graduated from state schools, and nephew graduated from Temple.

Change to another topic discussed here - I agree with the suggestions made that working part time can be a good thing. Younger son is in finals week for his first quarter of his college career. Even he agrees he had enough bandwidth to work part time. He's actively looking for an internship but also considering some on-campus jobs if he can't get an internship. Older son, as mentioned earlier, had a rough start and is now working 25-30 hours week and taking 8-9 units. We're in negotiations for when he will resume full time... but he understands he will need to work 10 hours/week or so. He does better with the structured work schedule/less free time. He also likes having cash for miscellaneous stuff that he knows I'd deny him.

Change to another topic (again) - We started talking about college finances fairly early. We made it clear we'd pay for 4 years of CA public schools (and budgeted for the more expensive UC schools.) If they wanted to go private they needed to come up with the difference. We also said we'd make WUE schools work if the program was a great fit for them. We also emphasized that they goal was to be employable at the end of the journey - so if the preferred major was philosophy or similarly less marketable degrees they'd need to get a teaching credential. One is a STEM major, the other is a business major.

[t49eng]

We were happy to fund 75% of our son's college expenses, mainly using 529 money. Knowing that we wanted him to have some skin in the game, he borrowed the other 25%, and following graduation we "refinanced" his student loan by paying it off & he now pays us the principal + half the amount of interest that he would have been paying on the original loan, but more than twice what we would be earning in interest elsewhere. So we both win!

[JustKickItForward]

Quote:

Originally Posted by MichaelB .... My sister offered to pay undergrad for both their kids, with conditions. Up to the amount that the State University cost including scholarship for high achieving high school students and conditioned on studying STEM or similar ...

Conditions in what area to study suck because it's the student's career, not the parents' career.

[sroby2020]

Here's what we did with our children.
We told them that we would pay for their first college degree (tuition, books, fees, dormitory housing and meal plan) Any variation to those terms would be on them.

Our daughter went straight into pharmacy school and had her PharmD in 6 years. She had moved off campus in years 3-6, so she was paying for housing and meals after that. She worked part time and summers to get her savings.
Our son, got his BS in 4 years and went off campus his last year, so he was then responsible for housing and food. He also worked during the summer/winter breaks to pay for that.
At their graduations, they were debt free, and had well paying jobs, and "off my payroll"
I think this method helped them to become fiscally responsible and gave them some ownership of their financial lives. Now, 10 years later, they are very successful and doing much better at their respective ages, than I was at that age.

[RetiredHappy]

Quote:

Originally Posted by bonvoyage My wife and I are both immigrants from Asia and paying for college is one of the few topics where our views seem to differ substantially from those of native born Americans. In our extended family, it is simply expected that it is the duty of parents to fully pay for kids college without any expectation of repayment. In fact, the only restriction generally is that any thing that distracts from studies like campus jobs are strictly to be avoided. So, in a nutshell, we are your typical Asian parents :-)

+1 Same here.

[The Cosmic Avenger]

This thread has been very helpful, in that it's made me appreciate how our kid worked hard enough at school to get a 50% merit scholarship, and is keeping up those stellar grades. I'm going to thank them for their contribution, as I think they are just a perfectionist (NO idea where they get that from...), and haven't thought about it as their contribution to college expenses.

[1242Vintage]

For any of you out there that has a kid with a disability, plz check into financial assistance for higher education through your State Department of Rehabilitation.

These folks have been a godsend for us. Paid 100% of tuition, books and fees for daughters undergrad. And roughly 1/2 of the tuition for her graduate degree.

We would have mortgaged everything we have to fund this kids education cost, but grateful that we didn’t have too thanks to our State Dept of Rehab program.

She’s a cardiac ICU nurse now.

[Librarian]

My parents paid for our college at the state university.
I was done in 4.5 years (changed majors after 2 years)
DB took 8 years--after 5 or 6 years they finally said he had to pay & if he passed they would reimburse him.
But college was only $1K/yr then.

Our children were given the generous gift of 529 plans by their grandparents.
All received partial scholarships as well.
DD26 went to TCU for undergrad plus a Master's at Fresno State. 529 didn't quite stretch & he did acquire some debt due to high CA living expenses.
DD23 went to TCU for undergrad. She still has a decent chunk in her 529 for grad work or her potential children's education.
DD21 went to state university & he has more in his 529 after 5 semesters of withdrawals than any of them started with due to the stock market!

My tip is this--know your kids but be flexible.
My oldest's friend has over $200K in student loans & his career choice was gutted by budget cuts due to COVID (across the country in sports psychology). That is enormous stress for a young person.

Had we not had the 529s, they would have gone to community college for 2 years (1/3 the price of university) & finished bachelors at the university.
UNL is $10K/yr just for tuition & fees. That's a lot to ask of a student.
10x more expensive than 25 years ago...and incomes surely have not gone up 10x!
And private even higher...
Crazy

[jim747]

DS#1 started at a junior college. We paid for it. After junior college, he was hired by a large state university that offered free tuition so he picked up his BA with just the cost of books. He was laid off during COVID but benefits continued so he used he off time to earn an MBA.
DS#2 tried college but wasn’t happy so joined the Marine Corps. Following four years on the USMC, the GI bill covered all further studies.
Considering the educations they have received, our out of pocket expenses have been minimal and both sons now have gray jobs/careers.

[brett]

[QUOTE=bonvoyage;2700450]My wife and I are both immigrants from Asia and paying for college is one of the few topics where our views seem to differ substantially from those of native born Americans. In our extended family, it is simply expected that it is the duty of parents to fully pay for kids college without any expectation of repayment. In fact, the only restriction generally is that any thing that distracts from studies like campus jobs are strictly to be avoided. So, in a nutshell, we are your typical Asian parents :-)


We are not if Asian descent however our view is exactly the same. We view it more as an obligation or a responsibility to our children. My parents, immigrants, had the same view. We view it as a privilege to be in a position to do the same for our grandchildren when they reach that age.

[Sunset]

Quote:

Originally Posted by WhenIsItTime This made me laugh! Your approach seems to balance holding them accountable, but being reasonable. I like that. Yes, the 4 yr constraint is another factor. Maybe next related thread I start will be how did folks help their kids pick a college major and did they end up using the education for their job/career.

I never put a time constraint on it. Figured I'd approach that topic if necessary.

For one DD, after a couple of years of Med school, to become a doctor, she "downgraded" to Nursing, which meant 3 more years.

I helped her through it all, as both were good professions and it would be stupid to cut her off in the last year of Nursing.