How much to help kids get started

[rodi]

We didn't put anything in 529s. Our state had pretty high income limits for state grants for 100% tuition for in state public schools, so once we retired and could manage our income the kids started getting the grants. The state grant limit was close to the ACA maximum income so it worked out well for us. (Our assets were mainly in FAFSA exempt asset classes and didn't count against us for financial aid.) Plus we had some educational tax tax credits, the kids had paid internships, took low cost online and community college courses for some of the basic required courses, etc. so we really didn't have to pay too much out of pocket.

That has not been our experience.

At all.

Our income is well under the ACA subsidy limits. Our FAFSA said our family expected contribution would be about half of the expected cost of attendance. The CSU university (CalPoly) offered $2k in student loans and ZERO grants. Similar for older son except when he was applying we only had one kid in college, and the loan amount was less. UC and CSU schools are famous for NOT offering grants to middle income people... Only the poor.

A friend suggested that private schools offered more financial aid - but CSS looks at assets differently than FAFSA and our granny flat (which is on the same parcel as our primary home) counted 100% as asset available to pay towards college. We'd qualify for nothing there. A friend who rents, however, has had her kids attend excellent private schools (Pomona, and Princeton) for free. I was just not in the same situation as her to be able to manage assets and income. Trust me - I've looked at it all FAFSA, CSS, WUE, etc.

 

[FlaGator]

No easy answer to this but do you remember being 18 or 23? If I had known I had kind of a nest egg I would have been even more of a disaster than I was at that age. And I would have found a way to get at it, or made my parents lives hell trying.

The start I got from them was college, and enough down payment on a car to keep the monthly payments low. When I bought a house in 2001 they gave me $2500.

I'm kind of surprised at how much is floating around in these discussions. I don't personally think it's a good idea to front load the kids all that much. Help them in emergencies, gift them little helpings here and there.

Understand the point of view, once held it myself. If my parents had given more than a few hundred while I was in college, I would have spent it as my father trained me - think the opening verse of the Stones "Happy" https://genius.com/The-rolling-stones-happy-lyrics.
Fortunately, I got smart about money before I started making more than I ever thought I would.

Still remember a discussion with co-workers about how they didn't want their kids to "suffer" as they did to get to what was a financially rewarding career. My counterpoint was the things we went through helped us get us to this point, maybe that hardening would benefit our kids? Nodding of heads, but still....

Fast forward 15 years... My kids haven't "suffered", but they learned the importance of getting value from their spending, and the importance of saving and investing. They had jobs by 16 and saved substantial portions of their earnings. The oldest banked banked a big chunk of the scholarships earned as I paid expenses from FL Prepaid and 529. There was teaching going on as they were growing up, and they learned the lessons. Among those lessons was expect "emergencies" and have the money on hand to cover them. At 22/19, they are ahead of where I was at 30. Generational progress

Is there a risk with what I have contributed to their Roth IRAs? Absolutely. They understand the consequences of pulling the money out. They also know I would not have been a stay-at-home parent for the last 8 years if I had not banked what I did while working. Our specific circumstances have provided lessons most are fortunate to not experience.

TLDR, I think it depends on what the kid(s) were taught, what they absorbed from that, parents' tolerance for mis-spending and resources available. I'm fortunate to be able to do what I have, as well as what they have learned growing up.

 

[daylatedollarshort]

That has not been our experience.

At all.

Our income is well under the ACA subsidy limits. Our FAFSA said our family expected contribution would be about half of the expected cost of attendance. The CSU university (CalPoly) offered $2k in student loans and ZERO grants. Similar for older son except when he was applying we only had one kid in college, and the loan amount was less. UC and CSU schools are famous for NOT offering grants to middle income people... Only the poor.

If you are under the Cal Grant Limit them your student / family contribution must be over the current FAFSA non-exempt asset limit. There are many books and web sites with hacks for assets for FAFSA purposes. I looked at the current FAFSA guidelines and they have tightened them up a bit since our kids were in college. However it would still be possible for at least some high net worth households in assets to qualify for Cal Grants as they exempt quite a few categories like personal residence, small businesses under 100 employees (hello Craigslist), retirement plans, annuities, etc. It is kind of crazy what they count and don't count, but we didn't make the rules, we just followed them.

 

[Surewhitey]

Been a while, but we funded college, gave her a budget for her wedding (she kept what she didn't spend) & bought her first new car after high school.

A few years after marriage, we assisted them by financing their first home (and second) as the banks were sticking it to them for being debt free and little credit. Plus saved on closing costs. They are 37&40 now and close to paying off the second home ($500k equity)...

We hope to leave them (she's an "only") with a chunk when we leave this world, but it's just a secondary thought to our enjoying ourselves until then...

 

[athena53]

A few years after marriage, we assisted them by financing their first home (and second) as the banks were sticking it to them for being debt free and little credit. Plus saved on closing costs. They are 37&40 now and close to paying off the second home ($500k equity)...

DS found a great financing deal on his starter house out of college- it was 2010 and an entity called Neighborhood Finance Corporation, funded by public and private money, wanted to make loans to first-time buyers who had little or no credit records who would live in the house. Interest rate was good and he got a $12,000 forgivable loan to be used for improvements.

I'd offered to co-sign a regular mortgage for him and explained that the title would still be in his name only but if he didn't pay, the bank would come after me for the $$$. (It was an amount I could manage.) His immediate response: "Mom, I'd never do that to you". I knew then that I'd raised him right. He used the $12,000 to replace old windows and was NOT happy when the forgiven chunks of the loan every year were reported as taxable income, but I wasn't surprised.

Based on the old saying...take care of the dimes and the dollars will take care of themselves. It was a good lesson to learn early on. Along with 'neither a lender nor a borrower be'. What else would you expect from a canny Scots Presbyterian?

My parents were neither Scots nor Presbyterian but we learned that as well! It's interesting to see how it played out: two brothers are pretty frugal with no "splurge" habits. Youngest brother owns a Tesla and 3 houses (domiciled in FL, townhouse in former city, another is a rental), sister and BIL have a fancy sports car and a big truck and she likes her jewelry. I don't care about cars but have a generous travel budget. All of us are eminently solvent and I'm guessing no one carries a balance on credit cards.

Mom bought major purchases on "90 days same as cash" terms. Given their debt aversion I was bewildered when she said they had the $$ to pay off the mortgage but chose not to. Now I get it. I'm keeping my 3% fixed as well.