I'm the parent of two young children (1 and 4). One thing I think I will encourage is going away to a college that is at least an hour drive away. My starting inclination is to pay full tuition and books, but expect that they pay their basic living expenses themselves via part-time jobs.
I think having the kids live at home during college may delay the natural push towards independence that moving out provides.
I completely agree with this because I lived through it myself.
My Dad died when I was 16, and my Mom wasn't ready to live on her own yet. Basic things like handling the finances, balancing a checkbook, running the household, etc, had always been done by Dad, so there was a lot for her to learn and get used to.
She made me a deal, that if I lived at home and went to school at the local university, she'd cover all the costs so I wouldn't have student debt. Even though the local university was pretty cheap (I think my TOTAL college costs for four years were just a few thousand dollars) and I'd gotten a high ACT score and probably could have gone to a MUCH better school (same state, but a few hours away) on a partial scholarship, I took her up on the offer and lived at home instead.
And as horrible as it sounds, I've always considered that a mistake that I would go back and change if I could.
The reason is, with Dad gone and me as the only child (I do have older siblings but they're much older and moved away from home before all this) Mom got very controlling. She was always a "my house, my rules" kind of person, and I was basically treated like a little kid all through college. I had a ridiculous curfew (8pm IIRC) for a college student, couldn't go out and party, didn't have many friends because of it, etc. And anytime I tried to challenge her on it to get a little more understanding and freedom, especially for an early 20's college kid, she got angry and defensive.
Basically, the college experience for me was nonexistent.
When I graduated, Mom was ready to live on her own at that point, although she still wanted me to find a job locally so I could be close to home, but no way was I having any more of that. I took the first job I could just so I could get the hell out and finally start having some freedom and independence.
I don't have kids, but if I ever did, I would FORCE them to go away to school. In fact, I'd encourage them to go to school in another country to get a completely different view on the world and be exposed to more things.
I would never want a kid to go through what I did, which was a complete lack of learning freedom and independence, and the college experience. That's one of the most formative times of somebody's life, and I would never deny them that.