Kids college: Let them pay?

[NW-Bound]

I only scanned some of the pages of this thread, so please excuse me if I missed it, but I note little mention of co-op programs. When I was managing engineers at MegaCorp (back in the day!), I had great luck with kids who were full co-op participants (NOT just summer interns). And I understand the pay can be very good too since by their 2nd or 3rd working semester, they're doing junior engineer work on the job instead of waiting tables or mowing lawns.

I worked part-time when in graduate school, and got paid an engineering salary as I already had my BSEE. The pay was indeed good. It was before the time of the song "The future is so bright I got to wear shades", but the song was appropriate and not in the sarcastic sense.

My daughter did payroll and accounting work while going to school, and obtained good work experience. My son had a tougher time than I did with engineering school, so wanted to have the summers to relax, and I did not push him.

A niece has been doing summer internship while getting a degree in Chemical Engineering. She said competition was fierce, and several of her classmates could not get a summer job despite having good grades.

 

[NW-Bound]

... once you get out in the earning world, it matters a whole lot less where you went to school as opposed to what you've done lately (like having been promoted and/or having had a successive string of jobs that had ever increasing levels of responsibility).

+1

A degree from a prestigious school gets one through the door easier, no doubt about that. But after that, one has got to show what he is capable of, and not all of them do better than graduates of lesser schools.

The above should not be surprising, because admittance to prestigious schools depends on many factors not related to performance, e.g. family and social circumstances, not to mention luck.

 

[socca]

Students without specialized or high demand skills are at a significant disadvantage in the job market.

For this reason, I also think many parents and students do not choose well and also spend too much on college.

If I'm not mistaken, there was once a time when the primary reason for going to college was to become a better human being / better citizen. However, this perspective on education was a luxury mostly reserved for the children of the financial elite, whose families could afford to support the children during post-secondary education.

Fast-forwarding to today, is it foolish for a family of modest means to financially support a kid who selects a major without good employment prospects? I don't know. Here are a couple of data points in my extended family:
• a family of immodest means sent their daughter to Sarah Lawrence (one of the most expensive colleges in the U.S.) for a 4-year degree in a "useless" major. Now she's headed to law school.
• a family of modest means (both parents still working middle-class jobs, but they received a substantial inheritance a few years ago), is paying for an apartment in Manhattan so their daughter can attend grad school in a major notorious for lack of job opportunities. Good idea? Don't know, but to be young and beautiful in Manhattan is going to be a helluva ride...

Not to get off-topic, but I wonder if today's typical high school graduate is sufficiently well-educated to take their place as a good citizen in the modern world. If not, then perhaps someday four years of post-secondary education will be publicly funded by taxes just as primary and secondary education are funded today. I'm not suggesting that this is a good idea, but I certainly like the idea of more 'good citizens'.

 

[MarieIG]

Late to the thread. My parents paid for my tuition, room and board... DW's parents contributed what they could but it was not much... she graduated with student loan debt equal to a year or two if tuition, room & board.

We decided that we would fund 4 years anywhere they wanted to go. DD went to a good college... they offered her a scholarship (discount) of 20-25% a year... we paid those costs from cash flow.

DS has so far decided not to go but we have funds earmarked and I continually tell him that there is funding if he decides to go. My dilemma is if he decides not to go as seems likely, do I somehow use these funds for his benefit or do they revert to the familial pot that he and DD will inherit once we are gone. Still mulling over that question.

When he works, you may want to give him something specifically earmarked for a Roth and/or when he buys his first home, something towards a down
payment. You don't have to give him the money all at once. You will probably want to feel that the money is well spent.

 

[SecondCor521]

DS has so far decided not to go but we have funds earmarked and I continually tell him that there is funding if he decides to go. My dilemma is if he decides not to go as seems likely, do I somehow use these funds for his benefit or do they revert to the familial pot that he and DD will inherit once we are gone. Still mulling over that question.

I'm mulling over a similar hypothetical. My three kids are just starting to head off to college, and they are all choosing good paths for them but each path is quite different and comes with quite different costs.

My tentative solution is to keep track as best I can of what I spent on each of them in education-inflation-adjusted semesters, then distribute the excess to them in inverse proportion. So for example, if kid 1 spent 20% of the total pot, kid 2 spent 50% of the total pot, and kid 3 spent 30% of the total pot, then kid 1 would get (50%/2 + 30%/2) = 40% of the remainder, kid 2 would get (20%/2 + 30%/2) = 25% of the remainder, and kid 3 would get (20%/2 + 50%/2) = 35% of the remainder.

In general, in this way each kid either gets a pricier education and smaller bonus or a less expensive education and larger bonus. Of course, this does assume there will be a remainder.

But my case differs from yours in that I have three kids not 2, and all three of my kids have already used at least some portion of the college funds.

 

[Badger]

...I also think many parents and students do not choose well and also spend too much on college.

+1
In all my decades of teaching I have seen this all too often with unfortunate results. I watched as many college students spent money on things they wanted as opposed to needed while they borrowed for it and went more in to debt.



Cheers!

 

[Beer-man]

We are setting up 529’s but minimally funding them. We will let grandparents know about accounts and they will probably assist with funding eventually.
Another tactic I’ve been considering is working as an instructor/teacher part or full time at our local state school. As an employee you are entitled to either you or dependent getting 12 credits a semester fully funded. Our kids are 3yrs apart so that could be a decade’ish of full funding plus a somewhat relaxed job for me

 

[athena53]

I only scanned some of the pages of this thread, so please excuse me if I missed it, but I note little mention of co-op programs. When I was managing engineers at MegaCorp (back in the day!), I had great luck with kids who were full co-op participants (NOT just summer interns). And I understand the pay can be very good too since by their 2nd or 3rd working semester, they're doing junior engineer work on the job instead of waiting tables or mowing lawns.

Yes, it WAS covered but worth mentioning again. That's how my Dad got through the University of Cincinnati, graduating in 1953. Definitely superior to internships.

 

[pb4uski]

Another source is corporate tuition assistance plans. Megacorp paid for all of my MBA and we had many employees who attended school at night at company expense (for B's or better).

 

[Al in Ohio]

My wife and I paid most of our own ways through college, but that was when a college degree at a state school was less than $1000 per year tuition. Now it’s over ten times that. My oldest boy got accepted in a handful of private and state colleges 3 years ago when I kept a spreadsheet. His top 3 private school choices would cost over $240,000 on average after four years. State school was less at under $60,000. This did not include room and board. Can they afford that?

Luckily for my oldest boy he got a full tuition academic scholarship and an extra few grand per semester for room and board. The rest we paid from saved up 529 plan money.

 

[Osprey]

. oes this "superiority of private schools" theory still apply if the state school is also "top tier?" For example, Purdue is ranked in the top ten (when I last looked a few years ago) in mech eng nationally. Would that hold up? Or is it still the kiss of death to have gone to school with the mere mortal plebeians at a public university?

Top tier public schools open many doors. My son graduated from a highly ranked public school engineering program.

 

[courtjustshan]

I grew up poor, from a poor city, and a poor school district. I paid my own way through school, 2 years at a community college (I can still remember paying my $535 per semester tuition in the early 1980's and thinking it was expensive) and then 2 years (which took 4) at a university. I didn't get any help and I didn't expect any as the first of my family to graduate college. I worked relentlessly through college, paid my way and although it took me awhile (6 years saving/going back cycles), I made it through with my B.S. degree. I felt like Charlie Bucket when he found that last ticket.

I have always said, there are 2 things that people can never take away from you: Your self-respect and your education. Going to school opened my eyes up and I feel that it allowed me to "escape" my circumstances.

I have 3 kids. I decided long ago that although I struggled growing up at the near poverty level and scraping my way through, that I didn't want to see my kids do the same. My first child went to an expensive private school, but was gifted academically which made the cost about the same as a state school.

Life took a turn for me near the end of her schooling when I decided to leave MegaCorp early. I ended up getting a job in a highly respected public university, and my daughter decided to take a gap year between her junior and senior year as she needed a break. I was thankful for that as my new lower income was allowed to "catch up" to the FASFA which about a 25K difference in her final year to the good.

My middle child received free tuition from my employer as well as my youngest. My son graduated and is working for a top bank and my oldest is working in memory research at another university. My youngest is still in college. I have learned a bunch from working for a university, it is nothing like a company.

All in all, I learned a great deal working for a university. I also look back to where I started from, and am relieved that my kids have no student loan debt and bright futures. They are buying houses and getting married whereas I was still scratching and clawing at that same age. While I think there was benefit in the struggle, I also know that they know how hard life was for me and really believe they appreciated all the help. They have been all over the world, they are outgoing, independent and hard working. My oldest graduated in 5 years (with a gap year), my middle graduated in 3.5, and my youngest will make it out in 4.

 

[Rianne]

I grew up poor, from a poor city, and a poor school district. I paid my own way through school, 2 years at a community college (I can still remember paying my $535 per semester tuition in the early 1980's and thinking it was expensive) and then 2 years (which took 4) at a university. I didn't get any help and I didn't expect any as the first of my family to graduate college. I worked relentlessly through college, paid my way and although it took me awhile (6 years saving/going back cycles), I made it through with my B.S. degree. I felt like Charlie Bucket when he found that last ticket.

I have always said, there are 2 things that people can never take away from you: Your self-respect and your education. Going to school opened my eyes up and I feel that it allowed me to "escape" my circumstances.

I have 3 kids. I decided long ago that although I struggled growing up at the near poverty level and scraping my way through, that I didn't want to see my kids do the same. My first child went to an expensive private school, but was gifted academically which made the cost about the same as a state school.

Life took a turn for me near the end of her schooling when I decided to leave MegaCorp early. I ended up getting a job in a highly respected public university, and my daughter decided to take a gap year between her junior and senior year as she needed a break. I was thankful for that as my new lower income was allowed to "catch up" to the FASFA which about a 25K difference in her final year to the good.

My middle child received free tuition from my employer as well as my youngest. My son graduated and is working for a top bank and my oldest is working in memory research at another university. My youngest is still in college. I have learned a bunch from working for a university, it is nothing like a company.

All in all, I learned a great deal working for a university. I also look back to where I started from, and am relieved that my kids have no student loan debt and bright futures. They are buying houses and getting married whereas I was still scratching and clawing at that same age. While I think there was benefit in the struggle, I also know that they know how hard life was for me and really believe they appreciated all the help. They have been all over the world, they are outgoing, independent and hard working. My oldest graduated in 5 years (with a gap year), my middle graduated in 3.5, and my youngest will make it out in 4.

That's a great story and a successful one! I agree education and self-respect very important. I do believe young people have unique talents and should grow those talents. There is nothing wrong with a trade school. Learning about crafts such as carpentry, car engines, plumbing or other trades that traditional college or universities do not offer. I don't have kids but I would encourage them to have enough self respect to realize education is not just about book learning. Explore all the options. Sometimes it seems there's pressure to go to a 4 yr university for an education.

 

[daylatedollarshort]

We used Payscale reports by college and major and The Job Outlook Handbook for our kids to make sure they were going into careers where they could be self supporting from good ROI schools. Now there is also the College Scorecard which is a good resource on gradation rates, college costs and salary info 10 years post college -

https://collegescorecard.ed.gov/

It seemed to us from looking at the reports when our kids were deciding where to go to school and what to major in that major was really the biggest factor in post college earnings, rather than school choice. As an example, according to College Scorecard, the 10 year median earnings from one of the most expensive schools in our area ($50K in tuition alone), for students who received financial aid is $85K, while the senior software engineer salary, including those from pubic schools (~$8K tuition), with 8 - 10 years experience in the same local area is $157K.

 

[The Cosmic Avenger]

My partner's parents paid their whole freight, they graduated with no debt. My parents paid what they could, but I graduated with a lot of debt. Thankfully, we're both LBYM types, and we paid off my student loans way ahead of schedule. Now we're going to pay our kid's tuition wherever they choose to go. We should be able to tighten our belts and pay cash for four years anywhere, and if we have to take out loans we'll pay them for the kid.

I know it will be appreciated and not squandered because the kid (16, entering junior year in HS) recently said "is it weird to be thinking about retirement at 16?"

 

[mdsmith1]

My kids finished college with zero debt. One of my finest accomplishments. There isn’t a year that goes by my kids don’t acknowledge and think my wife and I for our sacrifice. Life is about family.

 

[mpeirce]

My kids finished college with zero debt. One of my finest accomplishments. There isn’t a year that goes by my kids don’t acknowledge and think my wife and I for our sacrifice. Life is about family.

So true.

 

[nhcycling]

I worked near full time while attending college full time. I didn’t want my kids to have to do the same. All 3 undergraduate educations we paid, they’re were their own for grad school however.

 

[morriss003]

College is not about education, it is society's way to transition kids safely from our homes to their homes. That said, a smart kid will take advantage of college to get a good education and marketable skills. So the question is, how much are you willing to spend to transition your children, and are they smart enough to get that education and marketable skills?

 

[bclover]

The best gift we can give our kids is an education. I’m more than happy to pay for a full ride at an in-state university.

Regarding if they value it, DS is in his second year, is in a very marketable major and has excellent grades. He has grand plans, which is great for his age.

DD has one more before heading to university and also leaning towards a competitive major.

As a parent, I have no problems helping them out to get a better start in life.

That's was pretty much our philosophy. I did not want my sons being saddled with 10's of thousands of dollars in loans and believe me they are fully aware of what will if they start goofing off and wasting my dough.

My parents paid my tuition. I was beyond grateful.

 

[Canoeboy]

For both DW and myself, our parents sacrificed to pay our college costs - and both of us appreciated that. Early in marriage we committed to cover our children’s college - call it an investment in the next generation. One down a few years ago and 1/8th the way into second child. Both at good public 4-year schools which we view as a good value for the money. (< half the cost of private schools). Drilled into them that the “free ride” was contingent upon academic success - not a problem with either kid.

Started early with 529’s funded heavily up front (15+ years ago). Ended up with about 80% funded from 529’s of which about 66% was investment earnings.

Understand the logic of kids having some “skin in the game”. Several older coworkers insisted their kids cover all costs “because that’s what they experienced” (back when tuition was a few K/year). Just don’t think it’s a realistic strategy today.

Agree they are (largely) on their own for Grad School.

 

[HunterGatherer]

This is a very interesting thread to me as I have a daughter entering a CA state school this year.

DW and I always intended to pay for her college, even when she was looking at much more expensive colleges like Chapman and LMU.

We saved about $55k in our 529 for each kid, a daughter and a son. My father-in-law also created a 529 with about $6k for my daughter, which was a nice surprise. This will cover at least the first couple of years.

My daughter also has a part time job she started this summer and intends to keep throughout college. DW and I have concerns about this because we aren't sure how heavy the course load will be -- her college has a reputation for being tough -- but ultimately it's her decision.

One thing I'm surprised hasn't come up here is whether anyone is considering purchasing or has purchased a condo or house for your kid while he or she is in college. The idea is that your kid could rent out the other rooms and use that for spending money/defraying college costs. Then as college is over the condo or house could be sold at a slight profit.

I believe it would be tremendous experience for my daughter being a landlord, financially as well as learning responsibility. And moving the assets around for a few years would be no big deal. Does anyone have experience with actually doing this?

As for me, I feel fortunate that I was able to pay my way through college starting in sophomore year, thanks to my state college's co-operative education program.

The money for my freshman year came from an account my dad set up for me after selling the family house when my parents split. It was just enough to cover out of state tuition while I co-oped and established independence and in-state residency.

(Turns out my mom had been taking out the interest the whole time, so the same amount of money that was in the account when I was 6 was in there when I was 17. Not the most pleasant way to learn about compound interest, but the concept stuck.)

My kids are sick of hearing how I've supported myself since I was 18. But I think it's an important concept for them to understand, especially since they are growing up with many of the things that I never had.

One last thought on this topic: When I think about the kids we hired out of college at my last job before I retired (fast-growing tech startup), there is no way they could have made it through the schools we preferred -- or the gotten the internships that made them stand out -- without tons of parental support, both financially and in terms of social capital. Essentially, 4 out of 5 of them grew up upper-middle class.

 

[The Cosmic Avenger]

I believe it would be tremendous experience for my daughter being a landlord, financially as well as learning responsibility. And moving the assets around for a few years would be no big deal. Does anyone have experience with actually doing this?

Personally, I would be wary of doing this in my family, as my kid is an introvert, and being a landlord requires proactive communication and planning. I'd rather they concentrate on classes, and not have to worry about, say, a burst pipe when they have a final the next day. But I'm glad you brought this up, we might consider managing it ourselves or hiring a management company instead. I never really thought about it because my partner and I met in college, and at our school pretty much all undergrads and even a lot of grad students lived on campus.

 

[TrophyWife]

2 Adult sons age 25, 26. We told them all along that they would not be paying for college. I think this is key. Let them know early on.

We even had conversations about not going to college. Husband and I both are college graduates, husband has his masters. We talked about options and helped them with those. They both decided to go to college. We did end up contributing a small amount each year ($5000).

One chose to go Army ROTC (never did this before college). He graduated debt free as an Officer while attending a private Christian College that was over $40,000 a year in tuition alone. He worked hard and that working hard launched his career after college. He chose to go reserves after college and now works for the govt in another capacity. It's a good solid career job.

Son #2 stayed at home. He finished community college in 1 year. He stayed at home and worked part/full time and went to the State University. He made sacrifices not going away to college. He used the extra college money we provided to buy his first rental property, a tiny 450 square foot studio in Southern California. (he hired a property manager). After school, he stayed at home and continued to rent out the studio. At his 4 yr graduation date he started paying us rent-even though we didn't need it. Our goal was to help him launch well. A couple weeks ago he moved out. In our area that is amazing because it is very expensive.

These kids are average kids and yet they excelled. I think it's because it wasn't handed to them. Don't get the wrong idea. This was incredibly hard to not be able to pay for college for them. And some kids do really great with college paid for. I really wanted to pay for college but chose to stick with our goals of financial independence.

Was that selfish? Maybe. But now we use our time and resources to spoil them and their wife/girlfriend.

There are a million stories for both sides of the argument. I think only we know our kids and can make this decision.

edit: 2nd Son Works in Marketing. He got this job based on the experience he gained from the jobs he had while in college not so much because of his degree.

 

[The Cosmic Avenger]

Was that selfish? Maybe. But now we use our time and resources to spoil them and their wife/girlfriend.

There are a million stories for both sides of the argument. I think only we know our kids and can make this decision.

Absolutely. I don't think it's selfish to let them take out loans or work their way through college if paying for their college would significantly hurt your retirement. After all, while student loan debt can be a burden, you can't borrow to fund your retirement! If you run low/out of funds and need to rely on your kids for help, you've only deferred the burden on them.