The Money Mustache Community
Learning, Sharing, and Teaching => Mini Money Mustaches => Topic started by: Melissa on February 20, 2012, 12:06:00 PM
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We have three children (12, 11, and 9).
Our oldest will be in high school next year and now is time to be thinking ahead. We have plans to 'retire' in 9 years. I think it can be done sooner, but if all the kids wind up going to college that could hamper things a bit.
What are others planning on doing?
On a side note, I am 37 and will be graduating as a Physical Therapist Assistant (PTA) in June. We figured my salary would take care of all the college expenses since we have been living on one salary since the children were born.
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Honestly, speaking as someone not too far out from college, I think an individual paying for at least part of it themselves tend to take it more seriously and get more out of it.
I knew lots of people whose parents were paying for the whole thing. Think they felt bad skipping classes, not working hard, etc.?
Whereas if a student needs to have a job to pay some expenses, or take out loans, or whatever, they will be more invested in their own education.
While that generalization won't be universally true for everyone, I feel that it holds more often than not.
We plan to contribute some to their college, but under 50%. We plan to help them look for scholarships and such, but if they have to get some student loans, that is okay. I don't feel like it's too big of a burden to start out with some student loans, especially if they have been taught frugality, so they have no other debt (credit cards, car loans, etc).
Even if I did decide they shouldn't have to have any student loans, I'd probably not tell them, let them get loans (subsidized, so no interest), then pay them off when they graduate. Then they have the feeling / pressure of having "skin in the game."
I don't think I'd do that though, I think it really hurts the child.
Read The Millionaire Next Door. The most enlightening part for me was parents who gifted money to their children versus didn't. The kids who weren't helped ended up being much more successful, even though initially "burdened" with debt.
That part really stuck with me, and so I plan to financially help out my children as little as possible. Emotionally, mentally, physically, etc. I want to help make them the most prepared, best they can be. And I think the way to do that is by not helping them financially. Overcoming tough times makes someone successful. Handing them things doesn't.
Just my opinion, no offense intended towards anyone who thinks or does differently. :)
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Honestly, speaking as someone not too far out from college, I think an individual paying for at least part of it themselves tend to take it more seriously and get more out of it.
I knew lots of people whose parents were paying for the whole thing. Think they felt bad skipping classes, not working hard, etc.?
I kinda think the opposite is true. My parents couldn't afford to help pay my college at all, but if they had I would have felt a huge burden to do well. Since I was paying for it myself, I felt more like a customer. If I wanted to skip class or skate by with a C, it was no one's business but mine because I was paying for it.
On the flip side, I was probably more inclined to buy used books and supplies than I would have been if my parents paid for it. Also, I felt more freedom to choose my classes and major. If they had been footing the bill, I would have felt obligated to study what they wanted me to (law).
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Honestly, speaking as someone not too far out from college, I think an individual paying for at least part of it themselves tend to take it more seriously and get more out of it.
I knew lots of people whose parents were paying for the whole thing. Think they felt bad skipping classes, not working hard, etc.?
I kinda think the opposite is true. My parents couldn't afford to help pay my college at all, but if they had I would have felt a huge burden to do well. Since I was paying for it myself, I felt more like a customer. If I wanted to skip class or skate by with a C, it was no one's business but mine because I was paying for it.
On the flip side, I was probably more inclined to buy used books and supplies than I would have been if my parents paid for it. Also, I felt more freedom to choose my classes and major. If they had been footing the bill, I would have felt obligated to study what they wanted me to (law).
You are likely much more self motivated than the typical individual who is spoiled by parents and has everything paid for them.
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I have two sons in college (a senior and a freshman) and I'm paying.
I told them when they were both freshman in high school that I would give each enough money ($100K each) to go to a state university. I also told them that if they spent more than that they would have to pay through loans, work, etc. Then I told them if they spent less than that, then they would get to keep any money left over.
The result is that both of them did very well in high school and took entered college with about a semester's worth of AP credits. Both have academic scholarships and the senior will be getting an honors degree in biochemistry with 3.8+ GPA.
I admit that I felt obligated to pay because my father paid for my education. However, I think it has turned out well so far.
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My daughter is a whopping three weeks old but this is something that is already on my mind. We're just waiting for her SIN number to open an investment account for her.
I'm hopeful that being frugal from the start and learning to appreciate what you have at a young age will curb wasteful behaviour. I like the idea of letting her know what's available and if she goes over, she has to pay. If there's leftover, it's hers.
I'll let you guys know in 18 years how it turned out.
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Me and my wife have discussed this and decided that we will provide free room and board (at our home, not on campus) but our future child will be working full time and paying cash for the tuition portion. I was not ready for college when I graduated high school but by the time I started at age 23 I had worked at three companies that had 100% reimbursement programs. I do not think very many people take advantage of these programs because I do not know any coworkers that are using the tuition reimbursement program at my current employer.
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MiniMEJG is not quite two, and MR. MEJG and I have talked alot about this, though we haven't come to any clear conclusions.
We are leaning towards paying for tuition room and board and making our children responsible for any books/sports/travel/fees etc, and only for undergrad not for graduate school. Our parents did this for us and we feel that we were well prepared and took college seriously.
Our financial point of view was influenced by how our parents handled their money and made us handle our money prior to college. They did it in different ways and the outcomes were a bit different but we both are very grateful for their generosity and did not take advantage of the situation.
However, we're not sure that we'll be able to do that with a current projections, and the fact that we want more children. We have to weight up working longer vs. retiring and being able to spend more quality time with our kids vs. college costs. We're not there yet and we'll keep re-evaluating until we get there. I suspect we'll sit down with each child when they get to high school and explain our plans like Rjack did. So everyone is clear on their roles to play in the situation.
If we can't pay for everything we'll be giving each child a set amount to run through (80k or 100k, an amount to be determined) with any left overs going to them.
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We plan to pay for two years of community college. It's about the same expense as homeschooling/extracurricular programs so it won't hurt us financially. In those two years they could prep for university or complete a lesser degree or trade training. If they want to go on they'll need scholarships, loans or to work through their education. I do expect them to work part-time(16-24 hours) during their community college years. And I expect them to contribute at home in chores if they live at home. Most kids are staying at home until 22-24 now so I'm planning on that.
My husband and I have some college and are lowish income. We don't feel that is a handicap if you practice good money management and are happy with your work and life situation.
My FIL made really excellent money working for the SSA but he griped every day about going to work and how stressful it was there. My hubby works in manufacturing but he has a smile on his face when he leaves in the morning and when he comes home at night.
Emotional health is more important than more money.
I hope our kids learn that from us.
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Speaking from the vantage point of a "kid" who had her parents pay for college, I think it really depends on their personality and financial perspective. Growing up, I had little to no idea how my parents managed their finances, but I got all kinds of subliminal messages from my mother as she helped me manage my credit card and stressed the importance of running a tight ship. My parents paid for 4 years of in-state public college, so although it wasn't "my" money, I still felt the pull to do well in school knowing my parent's "investment" in my education. Yes, I partied a bit, and got a C in Anthro, but my parents trusted me to do well. And I did. I'm also bookwormy by nature though, so I'm sure that knowing my eagerness to learn helped them feel better about my study efforts.
It was a different financial story when I decided to go to grad school, though. I chose an out-of-state public school which cost $10k a semester. My parents gave me financial advice (to use funds they had invested for me earlier, even though I wanted to put it towards a downpayment on a house down the road), and also agreed to loan me money directly even though I had started to read up on loans and filled out the FAFSA. So now I have $30K in "student loans" to my parents, and feel just as nervous about that as I would if I was in debt to banks/etc. I've been throwing at least $1k a month at it since starting my new job, so I'm trying to be done with it in two years so the guilt is off my chest. My parents aren't charging me interest, but I'm giving back an extra 3%.
I'm sure this approach isn't going to work with everyone - I did turn out to be a Mustachian-In-Training, after all. Just wanted to share my experience to say that it's possible to pay for some school or set up a personal loan for your kids and still have them turn out 'stache-minded (and dedicated to paying you back!).
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This is a timely question, as my husband and I are expecting our first bambino (due in two months). We're not yet on the same page so I'm not sure where we'll land. My H's perspective is that his parents paid for his undergrad (private liberal arts school in New England), so he graduated with no debt. He wants to pay it forward to our kids. My parents also paid for my undergrad (MIT) though unbeknownst to me they took out a crapload of student loans on my behalf to make it happen. Not sure how much I set back their own retirement plans but they never once gave me a hard time about it.
While some part of me "gets" the pay-it-forward philosophy, a much larger part of me feels like a better idea would be to bankroll part or most of an undergrad education, but not all of it. We do plan to open a 529 plan shortly after bambino arrives, though we may start with minimal contributions while we work to pay off my remaining student loans from grad school. I've also read some interesting ideas from other frugality blogs where parents deposit some portion of every cash gift their kid receives into a savings/investment account that the kid can access upon HS graduation - this would create a nice 2nd source of income for higher ed.
More generally, I like the idea of telling kids early that they'll have $X to work with, and they are responsible for covering any costs above, but they get the excess if they stay below it.
The trick will be convincing my husband of any of these ideas.
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We've got six kids ages 4 to 18. The oldest will be finishing up his AA at the local community college in May. Our commitment is to pay for two years of community college and provide room and board (at home) during that time and the time it takes to complete a bachelor's degree for each of our kids. The kids will have to find the money for anything else themselves, although I am strongly discouraging any student loan debt and will not cosign for any if it is asked. The two year degree-then transfer to a university is one of the best deals around in my opinion. In our area the community colleges only cost $26 per credit and offer a wide array of study options as well as easy transfer to the UC or Cal State colleges. We home educated our oldest and most of his high school course work was completed at the community college requiring only one more year after finishing high school to get his AA due to all of the credits already earned. As a side bonus, in our area high school students may take classes at the CC for no charge.
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Honestly, speaking as someone not too far out from college, I think an individual paying for at least part of it themselves tend to take it more seriously and get more out of it.
I knew lots of people whose parents were paying for the whole thing. Think they felt bad skipping classes, not working hard, etc.?
I kinda think the opposite is true. My parents couldn't afford to help pay my college at all, but if they had I would have felt a huge burden to do well. Since I was paying for it myself, I felt more like a customer. If I wanted to skip class or skate by with a C, it was no one's business but mine because I was paying for it.
On the flip side, I was probably more inclined to buy used books and supplies than I would have been if my parents paid for it. Also, I felt more freedom to choose my classes and major. If they had been footing the bill, I would have felt obligated to study what they wanted me to (law).
You are likely much more self motivated than the typical individual who is spoiled by parents and has everything paid for them.
This is interesting. It probably depends on the child's personality. My brother and I grew up in the same house and we have very different money personalities. He's a spender (to the extreme, although he's a lot better now that he has a family) and I'm a saver. He always took advantage of any money my parents gave him, where as I tried to make it on my own and earn my own keep since I felt more independent that way.
My first year of University was free because my mom worked at the University as a social worker. That year I flunked out of school. It may have to do with the fact that neither my parents or me were paying, but it also might have to do with the fact that it was my first year away from home and my straight-A student personality needed to crack at some point.
Anyway, this was actually a good thing as it led to some thinking about what I REALLY wanted to do. One thing that came from all this is that I will not push my child to go to University or to major in a particular topic (I was pushed into science from an early time and just assumed that's what I would do). So, I did a year part-time and had to pay for it on my own. Then, when I decided on my degree, I worked really hard to get into a co-op program so that I could afford to pay for my tuition. The co-op program (work 4 months, go to school 4 months) was awesome and helped me gain tons of real-life experience and enough money to pay for my education. After that, I worked really hard because I was paying for my own tuition. I think it makes a big difference if you pay for it yourself.
I think that when the time comes, we'll play it by ear. If our child wants to go to college (who knows, he may take a different path -- play in a band, become an artist, there are lots of options) then we'll see what he's interested in and make some decisions based on the cost. I would even suggest taking a year off between high school and college to figure things out.
But, he will definitely need to earn some of this himself and we'd be willing to help him earn that money. Maybe it means that he works with MMM on some construction projects every summer to save money. Maybe he finds his own work. But, I think that working while you're young is an awesome experience that many kids seem to be missing out on these days.
I imagine we'll start having these conversations the first year of high school. I find that with parenting, you have to go with the flow and see how things are when you get there. It's hard for me to plan these things in advance without knowing what my future son will be like. :)
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My University education was mostly gifted by my grandparents through an education savings program where if I enrolled in the full time course load most of the costs were paid by the institution and there were some left-overs to pay for away from home living expenses.
I don't know what my parents did right, but I took classes seriously, felt guilty about skipping (almost never), I excelled, joined the co-op program, earned extra money to pay for my own extra living expenses.
My allowance was paid by grandparents commencing on my first 'teen' birthday and was money to be saved for what I wanted. I had to clean bathrooms as my chore and wasn't linked to allowance.
Each personality is so different its hard to predict the best way to teach work ethic and dollar values.
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Each personality is so different its hard to predict the best way to teach work ethic and dollar values.
This is true, and completely how I felt until I read The Millionaire Next Door.
Check it out from your local library, and just jump to the chapter (near the end) on gifting money to your kids. It's probably only 20 pages, will take you 30-60 minutes to read it. In fact, you don't even have to check out the book then, just grab it off the shelf and read that one section and put it back.
Although you feel your child is different and special, and every child is, statistically, your child will be much more successful if you don't monetarily help them when they are struggling.
It was by far the most eye-opening part of the book for me.
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Sounds like a good book either way- added to the reading list....
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My first baby is due June 18. Here in Canada you get (at least) $100/month per child from the government. If you put that into an RESP (education savings/investment vehicle), the government will also match at least 20% of your annual contribution. Add in a 4% annual return-- reinvested-- and you're sitting on a hefty sum after 18 years. More than enough to pay 4 years of Canadian university tuition.
tl;dr- the government's gonna pay for my kids' education.
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I have one kid who is 3. I started a 529 plan for her as soon as I got back from the hospital. I plan on paying for tuition at a state school, assuming she is a good student. I expect her to contribute some money as well. I don't like debt, so why would I want her to start out her life in debt?
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Probably. I paid my own way through scholarships, grants, loans, jobs, and the US Navy. But I was poor and got a lot of financial aid. My kid(s) won't be so lucky. So we are saving for a 529 plan.
However, I do expect him/them to work to pay for some of their own expenses. Travel, books, fees.
It will depend entirely on their readiness and attitude also. If they are boring studious engineering types like their parents, then yeah, no problem. If they are partiers, maybe not so much.
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My kids don't know yet (ages 6 & 8) that their grandpa set up accounts for each of them when they were born. He has and continues to put $100 a week into each of their accounts. They should each have around $100k for college. Depending on the school, that probably won't be enough to pay for 4 years each. We are hoping for some scholarship and/or financial aid, but regardless we will cover the rest. My husband and I have never had student loan debt and would like to have our kids have the same start in life.
All of the above assumes that our kids want to attend a 4 year university and are doing what they need to be doing at that age. All of the money is in my name, so if they aren't on the right path, they aren't getting the money from me.
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We want to pay for ours. We also want to teach him (or them) to be frugal and moneywise. Chances are, by the time my son is ready for college, I'll be teaching in a higher education institution. We plan to offer him the option of attending where I teach (or any sister institutions), or the local state school. If he wants to attend somewhere else, he'll have to make up the difference in scholarships, and we'll expect him to work at least part time to cover the extra costs.
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All of the money is in my name, so if they aren't on the right path, they aren't getting the money from me.
If you expect your generous father to live long enough to see your kids through college, you might consider leaving the money is his name, rather than your or your kids'.
The reason is that schools calculate financial aid eligibility based upon ownership of the asset. So anything in the kid's name they assume is like 35% available* per year to pay for school. Anything in the parent's name is like 6% available per year. But anything in a grandparent's name isn't available at all, which increases your eligibility for need-based financial aid.
This might be a moot point if you're planning on paying for college 100% out of pocket, or will have a sky high income that they will take 25% of per year to cover full school costs. But if you have a choice between your name and Grandpa's name, Grandpa is a better deal. Just be sure to have a solid will so that the account reverts 100% to you if he happens to get hit by a car before your kid finishes college.
Sadly, the 6% per year rule for parental assets is a killer. This means that if you're putting two kids through college at four years each, the school will ask for 48% of your total assets before offering any financial aid. At some schools, that includes your retirement accounts and home equity, so it can really wipe you out if you're near retirement and your kid goes to an expensive private college and doesn't get merit scholarships.
The moral of the story: make sure your kids get merit scholarships.
* all numbers quoted here are from my own internet research. I'm not a financial aid officer and rules change all the time.
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Thanks for the info Sol! I will talk to my Dad about switching things into his name. I knew that having it in the kids names would hurt their chances for financial aid more than in my name, but guess I didn't think about just having him keep the $. He can be a little TOO generous, I have been worried he might just give them the money one day, so part of me liked having some control over it.
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I personally like the idea of "Seed Money." Instead of paying for college, I'm planning to give my kids a chunk of change and tell them they can do what they like with it. Of course, I'll be educating them along the way, but they could start a business, pay for college, spend it foolishly, whatever.
Also, I second the recommendation to read, "The Millionaire Next Door."
Jimmy
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My kids are 3 and 1, I'm contributing $300 a month for the both of them in a 529 plan. If they decide to go to an expensive college then they will have to make up the difference.
Start saving early will make a huge differences if you decide to pay for your kids college.
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My thoughts.
Like many both my wife an I wasted our first year at University. As did 80% of my friends. Based on those statistics I won't be overly encouraging tertiary education right after college for my children. And I most definitely won't be pushing them into particular fields of study.
What contributed to me wasting my first year was simply having it to easy. Sure I lived in a dump (actually it was a shed). But I had more spending money per week back then than I do how (student loan, allowance from parents, part time job all added up to a lot of disposable income).
I also don't believe in contributing up front is all that successful. I like the idea of paying off all their student loans once they graduate. But think at that age it's important for them to earn their own way, value every dollar they get, and value their time both at University and away from it.
The idea of not helping when your children are struggling financially does work. For myself, in my second year of study (after my first wasted year), I refused to accept any money from my parents. I didn't want the burden of the pressure of pleasing my parents, I wanted to do something for myself. This motivated me a whole lot more work hard, and made me a little wiser financially.
I saw the same effect in my older brother. His tertiary education was a mess (quite a surprise for someone who was a top achiever at high school). It wasn't until he'd had a year of working a bum job (sandwich artist), with no support from our parents or the government that he took tertiary education seriously. And the transformation was astounding. He went from skipping 80% of classes, and throwing all his money and free time at video games. To someone who worked tirelessly to succeed. He'd rollerblade to course at 8am to get there before 9. Study non stop until 5pm. Eat, then go to sleep at about 8pm. He'd wake up at 2am in the morning. And rollerblade 5km to the airport (and occasionally if it was super cold out he'd wake me up and so I could drive him) to work until 7.30 am (to pay all the bills, rent food, tuition etc) then have breakfast and the cycle would repeat.
So the current plan both my wife and I have is not to save specifically for our children's higher education. Instead to save for our own financial independence, and when the time comes, we'll simply deal with it then.
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I can't offer the perspective of a parent -- only 22 & my own college education isn't over yet (just finished undergrad last year, currently working and plan to stay at my fantastic job for at least 3 more years before hopefully going back to school). However, I am 100% planning to pay for my future kids' education in full (which I expect to likely be 4 years of private college). My parents never talked to me about money, but I am obsessed, have a personal finance blog, etc. I think whatever a parent's choice re: paying for college, it's important to be upfront. I remember some stress my senior year of high school when I was applying to lots of expensive colleges (and some less expensive ones as well), because I felt like my parents had raised me to value education highly and to apply to the most competitive schools, yet I wasn't able to get a definite answer from my parents as to how much they would pay. They pretty much said they would try to pay for all of it, but they would see. Thankfully, I have graduated and am debt-free thanks to the generosity of my parents. I can't overstate how thankful I am every day as I watch many of my friends pay off their debt, that I have a head-start in saving for retirement and other shorter-term goals.
My brother and I have pretty different educational experiences -- My parents paid for my entire tuition at Carnegie Mellon (plus living costs, food, etc though I worked part-time through all of college). My brother's tuition is paid by his university (MIT) as my dad is a professor there, and so my parents only pay for his living/food. I definitely worked my ass off, and I definitely felt a lot of pressure to be successful and make the most of my parents' extreme generosity in funding my education, but I don't think my attitude towards school would have been different either way. I do, however, absolutely believe that grad school is entirely my responsibility to pay, and would not take my parents up on any financial assistance if they offered (not that they ever would). Just wanted to write in from the perspective of a child whose parents did indeed pay for (what most of you would argue unnecessarily expensive) college -- I appreciate it so much, it's been a wonderful gift, and I don't think it has spoiled me in any way. I do feel that all of the money is worth it, and intend to provide any future children with the same start to adult life.
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I can't offer the perspective of a parent -- only 22 & my own college education isn't over yet (just finished undergrad last year, currently working and plan to stay at my fantastic job for at least 3 more years before hopefully going back to school). However, I am 100% planning to pay for my future kids' education in full (which I expect to likely be 4 years of private college). My parents never talked to me about money, but I am obsessed, have a personal finance blog, etc. I think whatever a parent's choice re: paying for college, it's important to be upfront. I remember some stress my senior year of high school when I was applying to lots of expensive colleges (and some less expensive ones as well), because I felt like my parents had raised me to value education highly and to apply to the most competitive schools, yet I wasn't able to get a definite answer from my parents as to how much they would pay. They pretty much said they would try to pay for all of it, but they would see. Thankfully, I have graduated and am debt-free thanks to the generosity of my parents. I can't overstate how thankful I am every day as I watch many of my friends pay off their debt, that I have a head-start in saving for retirement and other shorter-term goals.
My brother and I have pretty different educational experiences -- My parents paid for my entire tuition at Carnegie Mellon (plus living costs, food, etc though I worked part-time through all of college). My brother's tuition is paid by his university (MIT) as my dad is a professor there, and so my parents only pay for his living/food. I definitely worked my ass off, and I definitely felt a lot of pressure to be successful and make the most of my parents' extreme generosity in funding my education, but I don't think my attitude towards school would have been different either way. I do, however, absolutely believe that grad school is entirely my responsibility to pay, and would not take my parents up on any financial assistance if they offered (not that they ever would). Just wanted to write in from the perspective of a child whose parents did indeed pay for (what most of you would argue unnecessarily expensive) college -- I appreciate it so much, it's been a wonderful gift, and I don't think it has spoiled me in any way. I do feel that all of the money is worth it, and intend to provide any future children with the same start to adult life.
I think it is great that you appreciated that and didn't take it for granted. It shows how well your parents raised you.
I also went to Carnegie Mellon (uh, graduated 20 years ago), but paid my own way because I was poor (ROTC, scholarships, loans, work study). There were a number of students there whose parents paid all of their expenses in my engineering classes. Some were snots, some partied, and some were just hard workers. The snots made comments like "doesn't it suck that you have to join the Navy and make 1/2 what we do when you graduate?" And I answered "well, no, I'm lucky to be here." I was the first to go to college in my family, and the only one of the 9 kids to do it out of HS. I am very proud of that. This from a guy whose GPA was probably 1.5 points below mine too.
The other guys though...they worked hard anyway and were driven.
My boss (who is in his 50's) and I shared similar experiences in college with the ramen noodles and feeling flush when we dated people with more money and could "trade up" to bean burritos. His parents offered to pay for his college and he refused. He paid his own way entirely. I totally agree that grad school...okay, you are definitely on your own there. And, good luck in grad school!
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Carnegie Mellon grad here as well.
I plan to pay for my daughter's college education, paying it forward so to say. That said, I applied for enormous quantities of scholarships and was lucky enough to win many of them, which really helped lower the overall cost of CMU. I will expect and help my daughter to do the same.
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It makes sense to me to be willing to pay for a state school (at least tuition). I guess what's more important is to teach the kids that they are going to school for a reason. I am so tired of hearing about college grads that majored in history and rocked a 2.8 GPA who are underemployed. I don't understand why they were in school. If your kids love history and can't do anything else in the world, fine. Most people seem to go to college because that is what you're supposed to do and theyre just going through the motions.
Try to help your kids figure out what they are good at and what they can be. That was the most challenging for me. High school did nothing to help me figure out what I wanted to do. I was just supposed to go to more school because that's what everyone did. I decided I wasnt going to even go to college until I took some aptitude tests that helped me figure out what I wanted/what I could be good at. They don't HAVE to go to college either. Maybe they want to be an electrician or a mechanic. They can can make very good money, but it seems people often don't consider trades possible options. (seems like a class thing)
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After teaching at the collegiate level for a few years, I've come to some realizations that have greatly impacted my approach to providing financial assistance to my child(ren)'s future plans.
Degrees from four year colleges are overvalued. This will likely continue for at least a little while longer, and it may get to the point where paying for college won't make any financial sense. College tuition has increasingly outpaced cost of living over the last 30 years (http://www.georgesaines.com/wp-content/uploads/2010/10/educationbubble.jpg) (2x the rise in cost of living) while real wages have remained relatively stagnant (http://en.wikipedia.org/wiki/File:US_Real_Wages_1964-2004.gif), and yet enrollment and graduation rates have increased. Thus, the overall ROI in college degrees has declined. If this trend continues, there simply may be no overall ROI for those who earn college degrees by the time my kid(s) would attend.
Moreover, the job market is over-saturated with people who have been awarded bachelors degrees who could have started working straight out of high-school or could have received the training to do their job in 1/4 or 1/8 the time it took to get a bachelors degree. The most popular majors at universities right now - Business and Communications - don't really prepare one for work in a specific field, and as a result, they don't learn any special or general skills that they couldn't learn while on the job. Indeed, internships typically provide Business and Comm majors with their most valuable learning experience, since it actually allows them to utilize their skill set. Undergraduates don't generally learn much during their time in college (http://chronicle.com/article/article-content/125979/) that would make them better employees than those with high school diplomas. Employers would be better off hiring straight from high school. If they need someone more specialized, turn to trade & technical schools. Eventually all interested parties will realize this, and the education bubble will burst. But who knows when that will happen? As long as people keep believing college is the best means to a higher paying job, the bubble will keep getting bigger.
Some might argue that the value of a university education is more than just future ROI - it provides exposure to topics that one might not otherwise explore or even know exist, it's an opportunity to satiate one's curiosity, etc. In other words, academic engagement is intrinsically valuable, and not a mere instrument to increase purchasing power. So even if the ticket price of education keeps going up, it's worth it because one can't put a price on something that's invaluable. In response, I'd say that although the sentiment is commendable, in my experience as a professor, it ignores the reality of the state of university education.
Universities are run as if they were a business. The job of administators is ultimately to increase revenue and endowments. When they succeed, it comes with pay raises and bonuses. The endowments mostly come from fund raising drives, which target high-earning graduates. For instance, at the university I work for, most of the endowment money comes from graduates of the Law, Engineering, Dental, and, more recently, Nursing schools. Some of this money is distributed to other programs, but the vast majority of it is invested in the programs that will generate more high-earning graduates. "Pure" academic pursuits in history, physics, biology, etc. receive secondary attention. Virtually everything is in service of the high-profile programs. As a result, It's become a glorified technical school, a "university" in name only.
Revenue mostly comes from enrollment. Increased enrollment is important, especially in the face of budget cuts from state funding. All sorts of non-academic nonsense is invested in to attract students to enroll. The trend over the last 15 years or so has been to make universities out as if they provide a long, four year vacation: sports teams and shiny new stadiums, cool bar scene, on-campus bowling alleys and cinemas, fancy restaurants, waterparks (yes, my undergrad institution built a waterpark to compete w/ other local colleges!), absurdly expensive wellness centers, resort-like student unions, etc.
This emphasis on college life as "fun and entertaining" spills over in to the classroom, too. Faculty members (who are largely adjunct faculty or graduate students, because they're cheaper [more revenue!]) are rewarded with new contracts and promotions based on their performance. Student evaluations play the biggest role in rating performance, since students are more likely to re-enroll when they have teachers they take a liking to, even if the teachers don't educate well. Many faculty members therefore concern themselves with student expectations more so than (and sometimes to the neglect of) professional academic standards. As a result, we begin to see standards regress: more lax grading, less rigor in covering material, easier and shorter assignments, etc.
There's more to it than the above (I don't want to write a novella!), but the point should be clear. Essentially universities nowadays are in the business of selling degrees to their customers, the students, who want the degrees because they believe it's a ticket to a higher paying job. University education is increasingly characterized and cheapened by the trends that this "edu-tainment" business-consumer model produces.
Knowing that the value of education received will probably be far less than the purchase price when my kid(s) come of age, I can't treat sending my kid(s) to college as a foregone conclusion, as so many have/do. I can't save for college for my kid(s) by locking money into a 529 or any other limiting investment vehicle. To be sure, I'll put money aside as an investment in the future success of my child(ren). However, they will have to sell me on their vision in order to earn the investment. If they want to, say, start their own business, get professional training for a career, buy real estate, or start their own investment portfolio with it, they've got to have a clear game plan set in place and pitch it to me. In the same vein, I'm not intrinsically opposed to my kid(s) attending a four year college, especially if they're interested in pursuing a career in academic research, but they'll have to do their homework and show me why it's the best option for them, what they'll do while they're there, and how they'll take that experience to build something of value for themselves and the world.
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This is a fantastic post. It eloquently expresses much of the jumbled observations I've made over my years in school as an undergrad. My school is home to the biggest football fandom in the country and has doubled down funding commitments to the professional schools at a time when all academic research is already funded at a lower level than medical research at the school. Universities (or at least state schools managed by business-minded and forward-thinking administrators) are getting out of the business of teaching undergrads in academics and into the business of attracting them, and only really worrying about attracting professional students.
There's just one bit I disagree with:
academic engagement is intrinsically valuable, and not a mere instrument to increase purchasing power ... In response, I'd say that although the sentiment is commendable, in my experience as a professor, it ignores the reality of the state of university education.
While it may be true that the sentiment is not relevant to the majority of university students, there's no reason that it can't be intrinsically valued by individual students. Education is not a one-size-fits-all thing: while my fellow students may be pissing away four years and mom's money, there's no reason I can't find my academic engagement intrinsically valuable. Perhaps I'm not in a big enough minority to be an essential part of a school's business plan, but it's not like nobody who goes to college values their education as an education and not an earnings tool.
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Thanks, grantmeaname! I know all about Buckeye football fanaticism. My wife's uncle is a former OSU football team captain, so we get to witness it firsthand at family gatherings.
There's just one bit I disagree with:
academic engagement is intrinsically valuable, and not a mere instrument to increase purchasing power ... In response, I'd say that although the sentiment is commendable, in my experience as a professor, it ignores the reality of the state of university education.
While it may be true that the sentiment is not relevant to the majority of university students, there's no reason that it can't be intrinsically valued by individual students.
This is a good point, and I actually agree with you. Originally, I included a similar point, but removed it so as not to make the post any longer than it already was.
There certainly are students who simply want to learn (I love, love, love when I get students w/ such a disposition!), and it is certainly possible to get an education for its own sake at a university. My concern is that college campuses are passively antagonistic towards such an approach on the whole, it's only looking to get worse, and this can be very discouraging, especially at first. Anyone looking to go to college to get an education for its own sake should be aware of the fact that, ironically, the culture of the university might not actually provide a very nurturing environment for that attitude, and that other options should also be explored. In my own experience, self-study at the public library was extremely valuable in enabling me to explore all the fascinating things that I was curious about, and I got just about as much quality community and support from people I met at the library as I did from the university. Local clubs (astronomy club, maker clubs, Linux users groups, Civil War groups, language groups, etc.) are also a good supplement, if not a replacement, to a university education sought for its own sake.
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I'm not intrinsically opposed to my kid(s) attending a four year college, especially if they're interested in pursuing a career in academic research, but they'll have to do their homework and show me why it's the best option for them, what they'll do while they're there, and how they'll take that experience to build something of value for themselves and the world.
Just send your kids to community college. Nothing wrong with that and it's really cheap. I have a few friends that moved to California and started at a 2 year community college and then transferred to a UC school. They have feeder programs and once you get California residency the schooling is relatively cheap. Also, you only have to pay for 2 years at a 4 year University so you save quite a bit. I assume other states do the same. They could also consider going to another country. In Norway, the cost of undergrad and grad (master's) is just the cost of registration fees; a phd takes three years and the salary is 65,000$ (not bad eh?). Those registration fees for a semester are 600 NOK a semester which is about 100$, then you just pay the cost of housing. Grad school is the same cost, but undergrad you need to know the language. For engineering grad school in the US, just apply for a PhD program. Schools are more than happy to give you funding if you teach or do research and are fine with giving out a master's if you don't want to go on for the PhD.
......for Engineering anyway. haha, I guess Im a bit narrow minded. Good thing I dont have kids; I think they would find me pretty annoying
as for the Bachelors being a bubble, I don't think that's the case. I think to get any job in the future you will need a bachelors. Who would you hire to work at 7-11? Some snotty faced high school grad or some snotty faced business grad with a 4 year degree? I think the population is still increasing and the number of jobs seem to be going down. Grim outlook for the western world's youth, but it's much worse other places. If you enjoy learning, there's nothing preventing you from going to the library or youtube. Education is free on the net, but you need to be disciplined and motivated. Having a goal helps too.
The people in my school made the education worth the money. Struggling on projects and staying up all night getting homework sets done; I couldn't have done it on my own. I felt that doing well in hard classes taught me how to work together with other people. When I took general ed requirements (sociology, economics, w/e) then I just worked on my own and didn't need to struggle to get the work done. Meh, I think Im rambling. Theyre now turning off the Wifi on the plane.....Gotta GO!
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Just send your kids to community college. Nothing wrong with that and it's really cheap.
Agreed. Community colleges and technical schools are a great option. I also like the tactic your friends used. It's what my wife's doing now and it's similar to what my grandfather did: attended a no-name, low tuition local state school for three years, then applied to big reputation, high tuition national university. Later on, earned his doctorate in economics in a fully funded position and came back to work for the local state school as the chair of their economics department. (My grandfather had a killer 'stache, too! Both on his face and in investments) Unfortunately, I have a feeling it'd be harder nowadays to do what my grandfather did.
as for the Bachelors being a bubble, I don't think that's the case. I think to get any job in the future you will need a bachelors. Who would you hire to work at 7-11? Some snotty faced high school grad or some snotty faced business grad with a 4 year degree?
You've illustrated my point. Why would anyone need a business degree to work at a 7-11? As long as people think they need to get a degree from a four year college, the bubble will keep getting bigger. The percentage of people attending college relative to the overall population will continue to grow (thanks to student loans), the instruction received will become increasingly more generic in order to accommodate the rising droves of new students, and tuition costs will only continue to rise (again, thanks to student loans (http://blogmaverick.com/2012/05/13/the-coming-meltdown-in-college-education-why-the-economy-wont-get-better-any-time-soon/)). So future students will be paying more money for a less quality degree1 so that they can get a job that doesn't require the level of education they've received. If that's not a bubble, I don't know what is.
1. If one needs a college diploma to get a job, then virtually everyone's going to go get one. So, the bachelor's degree becomes the new high school diploma. One would have to go to graduate school, then, to have a distinguished educational background. And the cycle will again repeat itself.
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I think to get any job in the future you will need a bachelors. Who would you hire to work at 7-11? Some snotty faced high school grad or some snotty faced business grad with a 4 year degree?
Most folks would hire the high school grad in this case. Someone with a 4 year degree applying at 7-11 isn't going to be there for long. Being overqualified is a common problem.
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1. If one needs a college diploma to get a job, then virtually everyone's going to go get one. So, the bachelor's degree becomes the new high school diploma. One would have to go to graduate school, then, to have a distinguished educational background. And the cycle will again repeat itself.
When you say it like that, it sounds more like a trend than a bubble. (Which I agree with)
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I think to get any job in the future you will need a bachelors. Who would you hire to work at 7-11? Some snotty faced high school grad or some snotty faced business grad with a 4 year degree?
Most folks would hire the high school grad in this case. Someone with a 4 year degree applying at 7-11 isn't going to be there for long. Being overqualified is a common problem.
Ok, instead of 7-11, let's say the GAP. I used to work summers at a clothing store early in my undergrad years. When I was there, I was getting paid 7$ an hour (there were good looking girls) and there were plenty of college grads getting a dollar or two more than me per hour. One guy went to undergrad at Boston College (check tuition rates). I went back a few years later, and many of the same college grads that I remember were still working stocking shelves. It doesn't sound that ridiculous either. I don't know exactly what 7-11 pays, but I imagine it's not THAT much worse than the GAP, another clothing store, or other type of unskilled labor that people are willing to do if they can't get a better job.
Being overqualified will only be a problem as long as overqualified people can eventually find something better. As better jobs become harder and harder to find, it will be much easier to retain an "overqualified" person. Not to mention, maybe that high school grad will want to go back to school; then they lose him. Those jobs are typically higher turnover anyway and don't take too much training to get up to speed. So I'm sure it's not a big deal for 7-11 if the college grad or the high school student quit.
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I usually associate a bubble with a burst and things revert back to the way they were... What your describing sounds more like a trend.
Right. As with all bubbles, the trend is fueling it. Many argued that the recent housing bubble was a trend before it burst. The education bubble will burst when two things happen: 1) a critical mass of unemployed college grads start defaulting on their student loans, due to the fact that they're underpaid in relation to their educational expenses and qualifications, and 2) the interested parties (i.e. employers and job seekers) begin to recognize that college degrees are overvalued and largely unnecessary for what they want to accomplish. (1) will naturally lead to (2), as the next generation witnesses what has happened to prior generations. As you say, the future supply of jobs will likely reduce while demand rises. But this will accelerate realization of (2), as many will recognize that debt from a university education is more of a liability than an asset in a down job market. If a bachelors degree (or any degree in higher education, for that matter) very likely doesn't lead to greater purchasing power (and may at some point lead to far less purchasing power, depending on how long the current trend continues), then it's simply irrational, financially speaking, to go to college.
Things will revert back to the way they were, in a way, after the bubble bursts. Most people will askew university education to seek training in trade & technical schools, take on apprenticeships, and get certifications from non-accredited institutions. And after a few years of severe turmoil and restructuring, the universities that survive the crash will get back to doing what they do best: providing an atmosphere and community for inquisitive folks to do research and educate other inquisitive folks in theoretical disciplines.
Of course I may be wrong. Perhaps it is merely a trend and 20-30 years from now everyone will need to pay, in some way or another, for a college degree just so they can compete to get a job. I don't have enough data to calculate any precise likelihood of outcomes. But I reckon it's not merely a trend. Most people, when well-informed and facing a not overly complicated scenario, aren't so incredibly stupid as to fail to avoid purchasing something over-valued, unnecessary, and which brings them no immediate or potentially long-term pleasure.
Just as an aside, I'm speaking only of US private, state, and for profit colleges. My experience and knowledge of universities outside the US is limited.
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I don't know about college being a bubble or not. I think in many cases, it is. Why get a degree in history, unless you have something specific you want to do with it?
On the other hand, our receptionist has a college education, and it's required. To answer the door and the phone. Now, it's a feeder into other positions here that require Excel and ordering parts and other items.
My cousin worked nights at a gas station/ 7-11 type place and went to school days until she was 30 to get her degree in environmental studies. She was SO happy to graduate and get a REAL JOB with her degree, as an administrative assistant. I don't understand that.
But as far as it being useless...I am saving in a 529 plan for my kid (soon to be 2 kids). I don't know what he wants to be, but his parents are engineers, and I have to tell you - you need to have a degree for that. If the apple doesn't fall far from the tree...we'll see.
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As a current-university student, I'm very, very happy my parents are helping me out. My parents (who live in a small town, 1200 mi away (in the same state!)) are paying for my rent & groceries. They agreed to support me for my 4 year undergraduate program. But I'll have to pay my tuition (0% loan) when I get a job down the track.
Without my parents support, I'd be working for several years in some crappy job that's leading me no where. With my parents support, I'll be a mathematician in no time!
When I have kids, I think I'll do the same. Either provide rent/board if I live in the same city as their university, or pay for rent/board if they have to move away.
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I don't know about college being a bubble or not. I think in many cases, it is. Why get a degree in history, unless you have something specific you want to do with it?
On the other hand, our receptionist has a college education, and it's required. To answer the door and the phone. Now, it's a feeder into other positions here that require Excel and ordering parts and other items.
You think it's reasonable that it takes a college education to use spreadsheets? That seems like a bubble to me...
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It seems like a lot of job criteria have a distinct "because we can," odor to them. There are relatively so few jobs these days, that the employers keep adding criteria (5 years of X experience, BS in Y degree, notary public, 2 dan karate) and they still get enough applicants.
Whenever the job market gets better, it could be that this becomes less prominent.
However, I do agree that the value of a college education has been quite inflated.
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That's totally how it works in the museum field. Want to do easy brainless work at a historical society? Better have a BA in history and an MA in museum studies! Even with those requirements, there are dozens to hundreds of applicants for every $20k/yr job.
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After teaching at the collegiate level for a few years, I've come to some realizations that have greatly impacted my approach to providing financial assistance to my child(ren)'s future plans.
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You know there's trouble when university employees are not in immediate support of higher educations, professors in particular. Not one professor I have spoken to praised university education as a necessity.
I can say I learned a lot in my years in college. But that's all I can honestly say. I may have an easier time being trained in certain jobs, but I would STILL need that training. Since I've recently graduated, that's exactly where I have to look: Larger companies that want individuals with degrees to train. Why would they want a degreed individual that they would need to pay more? Perhaps for mobility. They can train these individuals for a year before giving them more responsibility. In the global market, a more educated person is also considered with higher esteem, and that principle is becoming increasingly more important as our market becomes more global.
So to me, it's hard to say if education is a bubble that will burst, or something that will become a new standard.
But the students who are currently attending college, purely for the sake of 'riding out the recession' (Yes, I still heard this phrase just before I graduated), aren't going to make their lives any easier. Grad school because you're afraid of the real world? It's not guaranteed you will get that degree, or even use it, but it IS guaranteed you will accrue a large sum of debt. This just seems asinine to me. Yet the debt will only grow from here. While I'd like to get a Masters or even a PhD at some point, I think I need a few years to get back my focus; I don't want to meander about for 10 years for a PhD like some students do.
I whole heartedly agree with darkelenchus' sentiment: Save up money for your kids success, and let them convince you where it would be a wise investment. If they don't have the capability to convince you, you still have the freedom to do anything you choose with it, from letting them withdraw a percentage of the funds to spend as they please, to purchasing them a home or vehicle, or even to help finance a business.
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In the global market, a more educated person is also considered with higher esteem, and that principle is becoming increasingly more important as our market becomes more global. ...
Grad school because you're afraid of the real world? It's not guaranteed you will get that degree, or even use it, but it IS guaranteed you will accrue a large sum of debt. This just seems asinine to me. Yet the debt will only grow from here.
Many of the students I've had in my courses who have gone on to graduate studies have done so because their job prospects were bleak and they didn't think they would be able to handle paying back their loans and simultaneously cover their other expenses with the salaries they'd receive in the "low-hanging fruit" positions available to them, if there were positions available to them at all. Since more education is generally treated with greater esteem, they reasoned that by going to graduate school they could gain a competitive advantage when they do enter job market while deferring their loans when the job market was still down. For some, their debt grew a little bit because interest accrued on some of their undergraduate loans. But most haven't added further debt by going to graduate school or they haven't added much more, at least. Most receive some form of tuition remission and stipend for teaching or research assistantship.
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I don't know about college being a bubble or not. I think in many cases, it is. Why get a degree in history, unless you have something specific you want to do with it?
On the other hand, our receptionist has a college education, and it's required. To answer the door and the phone. Now, it's a feeder into other positions here that require Excel and ordering parts and other items.
You think it's reasonable that it takes a college education to use spreadsheets? That seems like a bubble to me...
I'm not disagreeing with you there. My sister is an office manager, and has all of those skills and then some, no college degree at all. In fact, a few of my sisters fall into that same category. They learned on the job.
I'm so old now that I really have no idea how many MS Office skills kids have when they graduate HS. I was 26 before I had an email address, and 38 before I had a cell phone.
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I'm a few years out of high school. I used Powerpoint and Word starting in fourth grade and Excel starting in fifth grade. In general, I would say that to people my age, it's just the expectation that any reasonably intelligent person our age is capable of using at least the main functions of the big three of the MS Office suite.
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I would say there is substantial variability in computer skills. My wife teaches at a low income high school, and most of her (9th/10th grade) students are uncomfortable using a computer for anything besides games and the internet.
On the other hand, at the more affluent public HS I attended, all of the (honors) kids in my classes could use anything in MS Office at a basic level, and many knew either more advanced functions or some basic programming.
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Since more education is generally treated with greater esteem, they reasoned that by going to graduate school they could gain a competitive advantage when they do enter job market while deferring their loans when the job market was still down.
That competitive advantage works only if most other people don't have masters degrees. In terms of degree valuation, college is new high school - even low-skilled jobs like receptionist require (or, rather, strongly prefer) a college diploma. The grad school bubble will also get to that point sooner or later - my guess is in 10-15 years, tops. :(
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Most other people don't have masters degrees, though. And the logic works: people with graduate degrees are less likely to be unemployed, and have higher mean earnings (http://en.wikipedia.org/wiki/Educational_attainment_in_the_United_States#Income) than their bachelor's-only peers.
even low-skilled jobs like receptionist require (or, rather, strongly prefer) a college diploma.
I don't know about that. There are a lot of low-skill jobs out there, and only 30% of Americans (http://en.wikipedia.org/wiki/Educational_attainment_in_the_United_States#General_attainment_of_degrees.2Fdiplomas) have their bachelor's degree. Certainly in unemployable fields like history, that's the case, but I don't think you could say it was the case for all college graduates in general.
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Most other people don't have masters degrees, though. And the logic works: people with graduate degrees are less likely to be unemployed and have higher earnings (http://even low-skilled jobs like receptionist require (or, rather, strongly prefer) a college diploma.) than their bachelor's-only peers.
Yes, the logic works at the moment, but grigory's got a point. The more people go to graduate school to distinguish themselves from their peers, the more it approaches ordinary-ness. To adjust for the influx in demand, universities will adjust their requirements and standards downwards, but raise tuition because people will think they need the degree (I witnessed this in my own graduate program). Also, the link above is broken.
There are a lot of low-skill jobs out there, and only 30% of Americans (http://en.wikipedia.org/wiki/Educational_attainment_in_the_United_States#General_attainment_of_degrees.2Fdiplomas) have their bachelor's degree. Certainly in unemployable fields like history, that's the case, but I don't think you could say it was the case for all college graduates in general.
Most students are pursuing degrees in business (http://nces.ed.gov/programs/digest/d10/figures/fig_15.asp?referrer=figures). It's interesting to compare this trend with the 10 year projections from the Bureau of Labor Statistics (http://www.bls.gov/ooh/About/Projections-Overview.htm). I'd wager that many business majors will be SOL in the coming decade. They will have paid for four years of "education" to do a job that requires nothing more than a bit of high school study and some on-job training.
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To adjust for the influx in demand, universities will adjust their requirements and standards downwards
The supply is not as elastic as the demand, so selective-admissions universities are raising their standards to decrease the influx to a manageable level. OSU, which is not so fantastic that it's calling the shots even in Ohio, has been raising its undergraduate admissions criteria (like an ACT point higher average incoming class every year). Think about it... lowering requirements would require admitting more students.
Most students are pursuing degrees in business (http://nces.ed.gov/programs/digest/d10/figures/fig_15.asp?referrer=figures). It's interesting to compare this trend with the 10 year projections from the Bureau of Labor Statistics (http://www.bls.gov/ooh/About/Projections-Overview.htm). I'd wager that many business majors will be SOL in the coming decade. They will have paid for four years of "education" to do a job that requires nothing more than a bit of high school study and some on-job training.
Business is a much wider category than many of the other 'selected fields' they are comparing it against, like CIS. Besides, while you don't have to gain any skills in the four years you are in college if you don't want to, you can be ready to sit for the CPA or CFA exams after just your BSBA if you take the right courses and study hard, and even if you don't, you can always get your degree in Accounting or Finance instead of "General Business" or Operations Management. It's not like you have to spend the whole four years not gaining any skills or a competitive advantage. Of course, the whole nature of a competitive advantage is that many of your competitors are SOL...
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Think about it... lowering requirements would require admitting more students.
Precisely. What I've gathered from my own experience and from colleagues at other schools is that there are quite a few selective-admissions universities that have lowered their admissions standards, including many graduate programs. Many state schools do this to make up for cuts in State funding and private schools do so because the increase in revenue from tuition can really make a difference in covering operating costs. I'm glad to hear that OSU actually has an upward standards trend, though I'd imagine that in comparison with smaller schools, OSU is more capable of getting away with this while still growing enrollment because they have such a wide reach as an internationally well-known research school.
Regarding the elasticity of supply at the undergraduate level, when you admit more graduate students, you have more TA's and lecturers available to serve those students. Also, not only are universities replacing tenured positions with adjunct positions, they're adding more adjuncts to their staff. Also, I imagine that student to teacher ratio has grown at other schools, as it has with my own courses (used to be 25:1, now it's 32:1).
Business is a much wider category than many of the other 'selected fields' they are comparing it against, like CIS. Besides, while you don't have to gain any skills in the four years you are in college if you don't want to, you can be ready to sit for the CPA or CFA exams after just your BSBA if you take the right courses and study hard, and even if you don't, you can always get your degree in Accounting or Finance instead of "General Business" or Operations Management. It's not like you have to spend the whole four years not gaining any skills or a competitive advantage. Of course, the whole nature of a competitive advantage is that many of your competitors are SOL...
Yes, all very true. Work your ass off and make smart decisions about the courses you take, and you'll have a competitive advantage. Note, however, that it's more work ethic than the degree itself that's gives one the competitive advantage. If it's all about competitive advantage, this raises the question: is the degree necessary? Probably not.
That doesn't mean getting a degree is without value. For instance, I can say that college helped me realize I had that work ethic in me, as well as a myriad of other skills and talents. It was the first time I was really challenged in an educational setting. So a college degree was really valuable for me and I wouldn't have minded if it cost more than what I paid for it. But supposing high school had challenged me in a similar way and educed that work ethic out of me, college wouldn't have been as valuable.
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This is probably one of the most interesting threads I have read. There are so many intellectually prudent people here. Pretty amazing comments.
My parents are poor immigrants although, highly educated. When I came here, both of my parents were employed by the same University so I got 75% tuition discount. My stepsister was studying in law school, so to make up the difference and pay for everything. My mom and my stepfarther washed dishes at Chinese restaurants at night. I also waitressed to help offset the burden. Watching my parents working on scientific research during the day and doing hard labor at night really make me want to make it in US. I don’t want to let them down. I worked as hard as I could and sometimes even took on two part time job plus 18 credits a semester. That was crazy work.
But some of you are right. It depends on personality. My stepsister turned out very differently. She did succeed in law school, but her spending habit was astonishingly terrible. I remember during those hard years when we were still scrapping by, she came home with a piece of plastic jewel that cost her $80. EIGHTY DOLLARS, that feed me and my mom for a whole month!!! She is still a successful lawyer twenty years later. But her financial situation is drastically different from me. She spent everything she earned and had no savings.
So I do agree that we will have to keep an close eye on our children. Based on who they are and how they develop, we will have to adopt different strategy. We are definitely prepared to pay for the cost of college education regardless where they go. But they are expected to work part time jobs just like I did.
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Wow, it's really fascinating to hear that. I'd assumed that what was happening here was the case everywhere. Your arguments about elasticity really drive it home that either approach can be economically (if not ethically) sound... it's interesting to see the other model put into place.
Note, however, that it's more work ethic than the degree itself that's gives one the competitive advantage. If it's all about competitive advantage, this raises the question: is the degree necessary? Probably not.
Yes, you need to be well positioned among your cohort of business degree graduates. But you also have to be a member of your cohort of business degree graduates. There are plenty of people working at Arby's with a great work ethic. You can't be a CPA with just a great work ethic, even if you're smart. You need a great work ethic and a degree.
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Note, however, that it's more work ethic than the degree itself that's gives one the competitive advantage. If it's all about competitive advantage, this raises the question: is the degree necessary? Probably not.
Yes, you need to be well positioned among your cohort of business degree graduates. But you also have to be a member of your cohort of business degree graduates. There are plenty of people working at Arby's with a great work ethic. You can't be a CPA with just a great work ethic, even if you're smart. You need a great work ethic and a degree.
Absolutely. Work ethic is indeed more important than anything else. I feel the system is getting quite unfair. A lot of jobs require B.S degree to even apply. But some of the brightest folks I met don't even have degrees.
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You can't be a CPA with just a great work ethic, even if you're smart. You need a great work ethic and a degree.
Hence my inclusion of the "probably not." :-) Most people with a good work ethic can utilize their talents and be financially successful, degree or no degree. But there are positions where a degree is legitimately a necessary condition. As you say, it's only when the degree is combined with good work ethic (or vice versa) that the sufficient condition is met for such positions.
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There are plenty of people working at Arby's with a great work ethic.
There are also plenty of Starbucks baristas with college degrees. Seriously, ask them next time you go to a coffeeshop - you'll be amazed... I see your point about grad school giving you an edge here and now, but if everybody else adopts that line of thinking (and they are), we'll have yet another bubble in 10-15 years, only this time your friendly neighborhood barista will have an MA, not a BA...
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I'm not one to argue that the 2.8 GPA and the MA in renaissance literature are a golden ticket to wealth and prosperity. The earnings and unemployment margins between the bachelor's and the master's may shrink, but they won't disappear.
Besides, there's no reason that an individual's results have to track the averages. We're Mustachians, goddamnit, and even if the general earning power of a college degree declines there's no reason we or our children can't get more out of it than the average student!
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Here's our deal. Our oldest son just graduated high school and was accepted to a range of schools. Some were pricy (>$55,000) and some were more moderate (State school $22,000). He received merit scholarships to some, but not all of the schools. We had him draw up a spreadsheet of cost, scholarships, cost of attendance and advantages / disadvantages of each school. His top choice, one close to home, did not give him money and is in the higher price bracket. We told him there was no way we would allow him to go $200,000 in debt for an undergraduate degree. Several of his friends chose to go to the expensive private local university at full price. Our final decision is a university that gave wonderful merit, Honors program, has many reputable internships available and costs us less than the State school. Yes, we are sad that he is moving away, but we are so relieved that he chose wisely and that he will not be starting his life saddled with debt. We plan to do the same for our 3 other children, encourage them to get good grades and apply widely to colleges who want them. Hind sight is 20-20...
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18th birthday and I sat in the truck with my parents driving to a party. In there we had 'The Talk'. Basically I was on my own for my own education completely, no monetary support whatsoever. Strangely one of my most fond memories of my parents LOL.
I really don't know if someone else forking up the money to pay for your education is a good thing or not. Kids that go to college/uni on the average don't seem to have the same drive to succeed as the students that are with little or no help from their families. I don't feel it's actually a result so much of the money as it is the kids entering post secondary way too young without a actual goal or career in mind.
Personally I've become a huge believer that the minimum age to enter most post secondary schooling should be one or two years after the average high school graduation age. Gets a lot of the pressure of these young people back and forces them to get some real life experiences.
Personally I spent a year after high school working a few low skill jobs, saved most of it and paid for my schooling completely for the first year. I honestly feel it was the best non decision I've ever done (I didn't know what to do out of high school). Watched more than a few of my friends go off to college and I think one completed a degree??? Waste of money.
But what do I know? I only work in an industry that I love, making huge sums of money and have a lot of fun. I'm only a 'dumb' electrician/sparky :)
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Late to the party but new to the forum. Let me toss in my two cents...
I will preface this by saying that my husband and I met in grad school. We both have master's degrees in Mathematics. My husband is a corporate computer systems wonk while I have formerly taught at the college level.
College is important to us. My husband's family paid for his undergraduate education, although he worked every summer for spending money. I just worked--during the summer, during the school year. I do not believe that I appreciate my education any more than my husband does. Both of us, by the way, financed our grad school educations through teaching assistantships. We lived in poverty but were too busy to notice. We decided when our son (only child) was born that we would contribute to the cost of his education (within reason).
When his college search began, we researched not only what would be the right fit for his interest (which is a bit esoteric--not any old school was going to do) but also how aid was given. Between my husband's salary and our assets, my son does not qualify for financial aid other than non-subsidized Stafford loans. Many of the most highly competitive colleges do not give merit aid--every applicant is brilliant, you know? But there are a number of colleges that give generous merit aid. It just takes research to find them. We saw that some schools give a few total scholarships while others give many lesser scholarships which could be a third to two thirds of tuition. I looked for colleges with healthy endowments that were generous with merit aid, nudging my son to look at those.
Pricey private colleges are not always so pricey. IPEDS, the federal reporting site, has a College Navigator application from which one can yield a ton of information on how many first year students finish their degrees and the projected "net price" of a year at the school. The sticker and the actual cost can be quite different.
I learned in this process that some colleges were still expecting parents to use home equity as a cash machine for college costs! Scratch those schools off the list! I also learned that there are some very interesting programs out there that students might want to consider, i.e. hands on things that might be more satisfying to some students than pure academics.
Unfortunately high school counselors are often overworked and inadequate. Parents can do a lot to help point teens in interesting directions. Books like Colleges that Change Lives are popular.
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I probably won't have to deal with this question on the parenting end since I'm about 99% sure that I'm not going to have kids. However, I am fortunate enough that my parents had pretty good mustaches and paid for my college. I already knew what I wanted to do so it didn't take much to get motivated since I was studying what I found interesting. I graduated on time and made the Dean's list. My younger sister one upped me by getting a full scholarship (merit-based) and graduating early! My parents raised us to have a strong work ethic and education was always a top priority growing up.
I've seen people do well with their parents footing the bill and I've seen some people flop. I've also seen people do amazing things without financial help from their parents. I guess it all just depends on the situation and the people.
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I've seen people do well with their parents footing the bill and I've seen some people flop. I've also seen people do amazing things without financial help from their parents. I guess it all just depends on the situation and the people.
Yes, there is anecdotal evidence on both sides.
Studies have shown, however, that kids who are given less financial help do better financially.
A quote from an unrelated book I was reading earlier:
"A man once told me that he had just given his daughter a substantial amount of money because he wanted her to be financially independent. I looked at him and said, 'No, you don't understand; you just made her financially dependent!' It's a strange and cruel conundrum: The families who - in the most loving, well-intentioned ways - give their children the most are in fact undermining them. Subsidizing children removes any incentive to go out and exercise any of the muscles of independence, which they need to have to take care of themselves."
/shrug
YMMV, and to each his own, but that's empirically what's more likely to happen based on others doing (or not) the same things.
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I love these perpetual debates.
http://the-military-guide.com/2011/06/08/early-retirement-and-the-kids-college-fund/
An additional wrinkle for military veterans is that many of them are now able to transfer their GI Bill benefits to their kids. Yet some parents would benefit more from using their GI Bill to go back to school on their own (for example an advanced tech cert or an MBA) to earn more income than the GI Bill would ever be worth to their kids.
http://paycheck-chronicles.military.com/2012/01/20/dont-transfer-your-gi-bill-to-your-kids/
In addition, the military is full of people who bailed out of college (for whatever reason) and joined the military to accelerate their lives for various reasons. Yet in almost every case, after a few years of service they're highly motivated and keenly focused on gaining a college degree... or another one.
Having watched the debate for years, I'd say that most parents would be prudent to have a plan to get a kid through four years at State U. That might involve living at home for 2-4 years and a couple years of community-college transfer credits. For anything more, it's the kid's problem.
Studies have shown, however, that kids who are given less financial help do better financially.
We were fortunate enough to take this tactic to the next level.
We started saving for college in 1992, back before 529s. By the time 529s actually had reasonable selections and "lower" fees, our daughter was nearly finished with elementary school. But around 2001-2002, our spreadsheet showed us that we had at least a couple years saved for State U in EE & I bonds. So we decided to get aggressive with the rest of the college savings: Berkshire Hathaway stock. It worked out well enough to pay full retail at a good engineering school, and the financial aid office laughed at our FAFSA/PROFILE data.
But by then our daughter had decided to join the military (for her own reasons) and had scored an ROTC scholarship. Over 70% of her college bill is being paid by the Navy, and she gets a student stipend of a few hundred bucks a month. Spouse and I are already financially independent. What to do with the "excess" college fund?
The first motivator was that any money she earns on her own is her money-- campus tours, work-study, whatever she chooses to do. We don't want her working three jobs and barely passing her classes because she doesn't have enough time for studying & homework, and the ROTC stipend covers that. But we also want her to have an incentive to earn instead of begging the parents for money. Even though she's on ROTC scholarship, at least once a semester a lieutenant will hand her a scholarship application and say "Hey, midshipman, have this on my desk by Friday". She's scored over $1000/year for two years so far from alumni scholarship funds that go begging for applicants. Hers to keep. It's also motivated her to become a pretty persuasive writer.
The next motivator is "profit sharing". After graduation she'll be eligible for a share of whatever's left of the college fund. It'll be gifted to her with the understanding that her earned income will go to max out her TSP and her Roth IRA. She understands that whatever she spends now (on a new laptop or an upgraded iPhone or whatever) means that there'll be less profit sharing in the college fund. If she uses her share of the college-fund profits to enhance her lifestyle, well, then there won't be much sharing. Luckily the Navy will keep her busy enough for her first five years of service (training & sea duty) that she won't have much time to spend money. I'm hoping that she'll have laid a solid foundation of TSP & Roth contributions by the time she finishes her service obligation.
We still pay for room/board (from the college fund), however this year she decided to move off-campus. Once she explained the plan, it became apparent that moving off-campus with three roommates would be cheaper than living in a noisy dorm full of drunken partyers. We continue to give her the amount of money that we'd pay to the college for room/board, and it's up to her to house & feed herself. Whatever she saves above her expenses, she gets to keep. She's giving herself a real education on how a roommate can cut your expenses, and how buying raw food for cooking at home is better than eating out. She's even brown-bagging because she can make lunch cheaper than the servery charges for their meal plan.
I don't think this sort of financial planning works for every kid, and she certainly feels the burden of how to handle large sums of money. (We pay her the semester's room/board in one big check.) But so far so good, and she's certainly gaining the financial skills she'll need to move to a new town after graduation and set up housekeeping.
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I will pay some, I expect my children to save $ from jobs and I expect them to take out some loans. That's how it was for me.
I had summer jobs and worked for a semester (it was called a co-op back then). I lived at home that semester and paid for my last semester of undergraduate myself. I got an MS when I finished my BS. While I was in grad school, I got paid through a research grant (it was back in the early '90's 1,000/month) I was able to pay my tuition, housing and health insurance. I chose my grad school based on what I could afford.
I personally feel having student loans is a good thing and I don't understand the logic of people who insist they don't want their children to have loans. I felt I had more ownership over my education because I helped pay for it. I still remember my father's lecture about if I wanted to be independent, I had to be financially independent. I took those words to heart and they have served me well so far....
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I admit that I felt obligated to pay because my father paid for my education. However, I think it has turned out well so far.
This is my perspective as well. My parents paid for half my undergrad state school education + 1 year of out-of-home living expenses (I got the first two years paid for through a state-sponsored CC program). They would have covered all four years had I not gamed the system as well as I did. :) Because they covered my "baseline" college I feel I owe my kids the same. We have 529s set up for both; fully funded for the older and half funded for the younger. That said, I'd prefer my kids go live and travel for a few years on their own dime BEFORE college so they know why they are there and what they want out of it before they go.
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As a child who has had a little college paid for but no degree (picked wrong major, i consider it to be no college since i dont have the diploma) i took it much less seriously then i do now that those loans have weighed heavily on my family for a time.
I did really well in school, but i was not prepared at all for the shock of life. Now that i have a little more experience i will never let my parents pay again, because i dont trust them to handle the money for one, and i dont want anyone else suffering for my bad decisions. So let your kids make their own mistakes and fail, then let them suffer, and then help them out a bit and let them learn. We value that, rather then having everything given and then taken.
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First thing, college is not a necessity. So, we'll see what our son and daughter want to do with their lives, and go from there. Perhaps a university degree will be necessary, perhaps not.
Since college is not a necessity, to date we have not opened a 529 account. My wife would like to, but has conceded the point so far. In the meantime, any additional money simply goes to our own retirement accounts.
Plus, we're shooting to get citizenship in Australia (one year down!). Tertiary education is subsidized here (some smaller degrees may be completely free); my wife completed a full post-graduate year for under $6,000. Could have been even less if she were a citizen (if you're eligible for the government's version of a student loan, and you pay it off early, you get a discount...I think it's 10% but it used to be more).
So I figure it'd go something like this. Child is in HS, we explore some options. He/she picks something that doesn't require a typical 4yr degree, and that's that. We may help a bit financially in getting them setup in their new life (match savings to go toward a house or car, I dunno). Or, he/she picks something that does require a 4yr degree. Look at options ranging from going to community college for the first two years and then transferring to a 4yr university, or checking out schools in Australia. Apply for all the scholarships they can (seriously, just a few hours of work can save many thousands...I don't understand why someone making $10/hr thinks it's not worth his/her time to apply for scholarships where the hourly rate "earned" could be in the hundreds or thousands). Don't just jump in blindly...make sure a degree is what you need, and then find the best way to go about getting that degree.
My wife got her midwifery degree in a pretty unorthodox manner, I suppose. 2yr associate's degree to become a nurse. Transfer that nurse registration to Australia (which requires a bachelor degree to be a nurse, but at the time they automatically recognized US-educated nurses), one year post-graduate to become a midwife, done. Two years of community college plus one year post-graduate subsidized...three inexpensive years at university and she's a midwife. THAT's the kind of outside-the-box thinking I want my kids to do.
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I kinda think the opposite is true. My parents couldn't afford to help pay my college at all, but if they had I would have felt a huge burden to do well. Since I was paying for it myself, I felt more like a customer. If I wanted to skip class or skate by with a C, it was no one's business but mine because I was paying for it.
On the flip side, I was probably more inclined to buy used books and supplies than I would have been if my parents paid for it. Also, I felt more freedom to choose my classes and major. If they had been footing the bill, I would have felt obligated to study what they wanted me to (law).
I'm another one with a similar anecdote. My parents did pay for all my tuition, room, board, books, and food (state school, lived away from home, but same state). But I had to earn my own spending money. At the time, I always felt like I had to work that much harder, because I didn't want to disappoint them. I knew they were giving me a ton of money, and probably couldn't have afforded to do so if I had siblings. It's been over 10 years since I graduated, but I distinctly remember feeling that I'd probably have lower grades if I was paying myself.
My wife's parents were/are pretty wealthy, and sent her to a private out of state school. She loved the experience, made a lot of great lifelong friends, etc. So she wants the same for our kids, i.e. basically an open checkbook policy. I'm pushing for a compromise where we agree to cap our contribution at the cost of a degree from a state university.
I found the discussion about "is a college degree really necessary" quite intriguing. I'm in my mid-30s, and my parents are in their late 50s. From my parents' perspective, a college degree was a huge deal to them. I can only imagine that that sentiment is shared by many people of their generation---many of whom are still working and in hiring manager positions. My dad always used to tell me that when he first entered the workforce (fresh out of college), his peers (most of whom didn't have a degree) expected him to know everything because he did have a degree. Growing up, there was always the expectation that I would go to college--it wasn't even questioned.
Another thing I've noticed: at my previous job (huge Fortune 100 manufacturing company), nobody in my area would even be considered for a position without a college degree. That was the policy. Furthermore, people with a Master's degree immediately got a pay bump. That place also did tuition reimbursement, so before I left, I actually started working on my MBA (I was single at the time, nearly free tuition and a pay increase, why not?).
At the company I'm at now, not only are people without degrees not considered, but generally the degree needs to be from a highly-ranked university (MIT, Stanford, CMU, etc). I was able to lift this restriction for a few positions that we needed to fill. So I interviewed a fair number of people that either had no degree or only associates degrees or had certifications from technical schools and the like. I hate to sound elitist, but eventually I stopped even bringing those people in, because they were consistently lower-quality candidates. I know it's a single anecdotal experience, but that's what I saw.
On the other hand, back at my previous company, I worked with someone for whom I have a ton of respect. He did have a bachelor's degree, but not from a "prestigious" school (budget state school). Yet he was super smart, highly motivated, great communicator, and an all-around pleasure to work with or just shoot the breeze. He left BigMegaCorp shortly after I did to start his own business. Last I talked to him, he was doing well and enjoying life.
So I often ask myself, if I owned my own business and needed to hire people, what would I do? The problem is, if you've ever been in a position to solicit resumes, you'll receive so many it practically becomes a full-time job to simply review them. It would be literally impossible to do an in-person interview for even 1/10th of applicants. At former BigCorp, I participated in a college recruiting career fair. I can't remember how many resumes we actually collected, but I remember sitting in a room with three or four others, and spending hours just doing a first-pass on the resumes, i.e. pruning the pile of 100s down to a manageable pile of dozens that we'd actually take the time to look at more closely.
Another random observation: my degree was in Computer Science. I feel I learned a ton getting my degree, and am certainly better at my job because of it. Virtually everything in my degree can be easily learned via the web and/or library. But back then, I know I lacked the discipline to study and practice everything (in terms of depth and breadth) included in my degree. Even now, I might struggle with completing such an effort without an external structure in place. But that's just talking about my "core" classes, i.e. the real guts of my CS degree. I took a few forced electives that were moderately interesting, but I don't think they've helped me in any way in my post-college life. In that respect, it's kind of like money wasted---why force me to pay tuition on classes that have no real relevance to my degree?
Now, while in college, I did an "application sequence" in MIS (management information systems). In short, I basically took a bunch of classes offered by the business college, i.e. classes that would be part of a curriculum for MBA types. At the time, the information was at best marginally interesting, but mostly seemed like a lot of crap---just a bunch of fancy terms for simple stuff (think Dilbert). But when I started working at BigCorp, I actually saw the relevance of that information.
My take was that the whole MBA "ecosystem" would probably best served by experience first, then formal learning. At least for me personally, it was hard to relate to the information presented in those business classes, and therefore hard to get it to sink in. But once I'd been in the "real world" and actually practiced some of that, it made a lot more sense.
My point is, it seems like the standard order of things---school, then work---probably doesn't make sense for all fields. It definitely made sense for me with regards to computer science. But it broke down with business classes. Again, just my personal experience, but it seems reasonable that this would apply to many fields out there; that is, perhaps some real-world experience should come before formal book learning.
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You make a lot of good points, but isn't the standard expectation of MBA programs work first and school second? Isn't learning the concepts and then going to apply them after graduating at least something of an exception?
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very interesting study, relevant to this thread, i think, that shows that the more parents chip in for their kids' higher education, the lower the grades earned by the children:
http://www.insidehighered.com/news/2013/01/14/study-finds-increased-parental-support-college-results-lower-grades
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very interesting study, relevant to this thread, i think, that shows that the more parents chip in for their kids' higher education, the lower the grades earned by the children:
http://www.insidehighered.com/news/2013/01/14/study-finds-increased-parental-support-college-results-lower-grades
Exactly the point I made in the first reply to this thread.
And similar to many other findings. The more you help financially, the more they become dependent, rather than independent.
Thanks for the link.
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When I was in banking, I had an elderly customer explain how they did it, and I thought it was brilliant. She said they set up the accounts themselves, and paid for half. The other half came from the parents as well, but the parents made their child think that this half was from student loans. That way their child thought that they were going to have to pay the money back, and come graduation it was a nice surprise gift that the student didn't have any debt.
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And similar to many other findings. The more you help financially, the more they become dependent, rather than independent.
I'm watching our daughter carry 17-19 credit hours per semester with an average week of 20 additional hours of study, and she's barely keeping afloat in the time-management quicksand.
There has to be a sweet spot between "support" (enough funding to have time to study without a full-time job or six-figure student loans) and "affluenza".
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That's a good point. It's not nearly as easy to "work your way" though college as it used to be, due to the rising tuition. Meaning paying for it costs a student a lot more in terms of time in a job, which means less time for studying. Tough either way you look at it.
I suppose as long as you raise a responsible kid who takes their education seriously it'll work out fine either way.
Let me knew if you find a surefire way to do that.
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Actually.. I think I'll retire before my kids start uni, then the Government can pay for it :P It sucks cos most of the people I know get a free ride through uni (like, $250 a week!!), but my parents earn too much. (A good problem to have, right?)
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very interesting study, relevant to this thread, i think, that shows that the more parents chip in for their kids' higher education, the lower the grades earned by the children:
http://www.insidehighered.com/news/2013/01/14/study-finds-increased-parental-support-college-results-lower-grades
This is an interesting study. I do take the caveat though, that kids without parental support are less likely to graduate. That leaves them often with debt and no degree--which is one of the worst situations to be in. If you're financially well off enough to contribute but unwilling to, that puts kids in a real bind for financial aid. It's really a lot more expensive than it used to be and student wages haven't gone up in comparison! Some states don't have reasonably priced solid state schools.
I think this study confirms my plan which is to pay part, actively discuss strategies for saving money, and outline my expectations for reasonable performance (which will be more qualitative than just you need to get x GPA or higher--because I know some classes in highly competitive disciplines have a "get serious" class where getting a C is considered good--this is both in humanities and sciences-- and other classes you can breeze through without much effort. I wouldn't want to steer my kids away from the former "real" education ). I think I would be easily at the "ready" switch for not providing a second year right away if either of my kids seemed to be wasting it. A semester or two away and working at whatever job they can find can be a good motivator.
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very interesting study, relevant to this thread, i think, that shows that the more parents chip in for their kids' higher education, the lower the grades earned by the children:
http://www.insidehighered.com/news/2013/01/14/study-finds-increased-parental-support-college-results-lower-grades
i don't believe paying for kids university education means they will be worse off for it or not understand it's value. even in this study the researcher found that the effect she observed was mitigated or eliminated by parent's who "set clear expectations of grades graduating on time or other issues."
i think everybody here would probably agree that just giving your kids endless amounts of money for college or anything else without being engaged with them is a mistake.
am i the only one here that will make the argument for a university education not being a purely financial consideration? of course this is probably colored by my own experience as i do have one of those "unemployable" undergraduate degrees. woohoo humanities!
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am i the only one here that will make the argument for a university education not being a purely financial consideration? of course this is probably colored by my own experience as i do have one of those "unemployable" undergraduate degrees. woohoo humanities!
I agree. I did a maths degree cos I love maths! And at the end of high school, I couldn't imagine living the rest of my life with such a shitty maths education! But.. at least it's a desirable skill.
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am i the only one here that will make the argument for a university education not being a purely financial consideration? of course this is probably colored by my own experience as i do have one of those "unemployable" undergraduate degrees. woohoo humanities!
I'm in school for humanities, and darkelenchus and arebelspy both studied philosophy IIRC. It may not be in this thread, but I think all of us were pretty strongly arguing the same thing in the Best mustachian major (https://forum.mrmoneymustache.com/ask-a-mustachian/best-mustachian-undergraduate-degree/) thread
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Yup.
And - while college isn't strictly a financial consideration (otherwise I'd tell my future kids to skip it) - that doesn't mean I'm planning on paying for their whole college either.
I'll encourage them to go, if that's what they are inclined to do, and to study whatever they find interesting, even if it's an "unemployable" major, but they'll need to be financially invested in the idea, via getting scholarships, grants, loans or a job; which one (or which several) is up to them.
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am i the only one here that will make the argument for a university education not being a purely financial consideration? of course this is probably colored by my own experience as i do have one of those "unemployable" undergraduate degrees. woohoo humanities!
I'm in school for humanities, and darkelenchus and arebelspy both studied philosophy IIRC. It may not be in this thread, but I think all of us were pretty strongly arguing the same thing in the Best mustachian major (https://forum.mrmoneymustache.com/ask-a-mustachian/best-mustachian-undergraduate-degree/) thread
interesting thread! nice posts in there arebelspy. i'm newer here so missed that. i find this community so fascinating because i share so many similar interests (frugal living, investing, getting to a point where no one can tell you what to do) but have gone about it in a very different fashion. from the time i graduated college i knew that i didn't want to spend any of my time and energy making other people rich and that i would make vow to myself to build a life for myself that would make the concept of "retirement" irrelevant. i decided to only do things that interested me creatively and just figure out a way to live on whatever i could get from my creative endeavors. that's the part of this that i don't quite understand. i do understand that for most people who don't have a passion or clear idea of what they want out of life then just working a job that they don't like to achieve FI as quickly as possible makes sense. but for others i think why wait until FI to follow your bliss? IF you have the self discipline to live a mustachian or ERE lifestyle then you probably have the self discipline to start doing whatever you plan on doing once you start "living life" now and figuring out a way to make it work...
even reading through MMM blog posts i get that feeling. it certainly seems to me that he could've quit his job much earlier if he wanted to and just started doing the things he wanted to do and that he could figure out a way to have them generate income and that combined with his savvy money skills and investing would get him to his "FI" number eventually.
but you know i understand. people like certainty. and a "FI" number based on good calculations of a 4% or 3% withdrawal rate represents some level of certainty or at least as close as we can get to certainty. but really the "FI" number is just an illusion. it's just the trick we are playing on ourselves so that we can make that big risky lifestyle change and leave a job and follow our bliss. but in my experience it's the self discipline, goal setting and will to make something big happen for yourself that is the real key not the "FI" number.
this is getting off topic... but i suppose the lesson is my major was "unemployable" because i haven't had a real job since i graduated. oh wait i did teach english for a year in Tokyo... that $$ was just too good and too easy to pass up.
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I get where you're going with that, but it seems to me like you are leaning towards setting up a false dichotomy between studying business or engineering and having meaningful work that you enjoy.
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I get where you're going with that, but it seems to me like you are leaning towards setting up a false dichotomy between studying business or engineering and having meaningful work that you enjoy.
that's not what I mean at all. and what i posted above certainly doesn't apply to everyone. but reading all of these FI/RE blogs there are a lot of people who are doing this because they really don't like what they do for a living and would rather be doing something else. for those people who are young and without other financial responsibilities i wonder if the idea of having a FI number is really the thing for them to pursue. if you have discipline and are savvy about investing and just live below your means while following your dreams you can get to the same place. even dreams that don't seem like they pay like traveling the world... once you get out there and you are doing it you'll find all kinds of ways you can make it enough $ to support a low overhead MMM or ERE life.
or in the case of an engineer or CS major or someone who loves these technical fields why work to make someone else rich why you achieve FI? why not start your own business based on your own ideas and technical skills? why not apply all of your energy and time into enriching yourself while you achieve FI? actually most of my friends who have achieved early FI or could retire early if they wanted to fall into this category. anyways i suppose it isn't for everybody. just something to think about.
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that's not what I mean at all. and what i posted above certainly doesn't apply to everyone. but reading all of these FI/RE blogs there are a lot of people who are doing this because they really don't like what they do for a living and would rather be doing something else.
Bakari works full time for a bike nonprofit. Arebelspy and his wife are middle-school teachers, and really enjoy their jobs. Sol is a PhD climate scientist. Jamesqf works as much as he wants, when he wants, with whatever scientific project captures his interest. James is a nurse anesthetist who uses his skills on at least an annual basis in the third world on a pro bono basis. There may be many on this site who dislike their jobs, but there are tons who love their jobs too. If anything, I'd say that FI might be one more thing to make you like your job- if there's no golden handcuffs and you can afford to be fired, you can step back from the politics and the rat race a little bit and just focus on your tasks, which you presumably like doing.
for those people who are young and without other financial responsibilities i wonder if the idea of having a FI number is really the thing for them to pursue.
I think it's definitely a more productive thing to aspire to than a 45-year career at Spacely Sprockets. If you're putting your dreams on hold because FI is occupying all your mental energy, that's probably a bad thing, but I don't know how common that is. I've got $700,000 etched in my mind, but I still volunteer, homebrew, spend time with my friends, canoe and bike, and get under a car when I have the chance. It's not like wanting to retire in a decade has pushed those things from my mind.
if you have discipline and are savvy about investing and just live below your means while following your dreams you can get to the same place. even dreams that don't seem like they pay like traveling the world... once you get out there and you are doing it you'll find all kinds of ways you can make it enough $ to support a low overhead MMM or ERE life.
I mostly agree, but some people don't have dreams to follow, and that's ok. Also, some dreams will never make you any money (microbrewer? kiss your life savings goodbye.)
or in the case of an engineer or CS major or someone who loves these technical fields why work to make someone else rich why you achieve FI? why not start your own business based on your own ideas and technical skills? why not apply all of your energy and time into enriching yourself while you achieve FI? actually most of my friends who have achieved early FI or could retire early if they wanted to fall into this category. anyways i suppose it isn't for everybody. just something to think about.
What do you mean, making somebody rich? As in 'the owners of the company are compensated unfairly relative to labor'? Then buy stock, and be an owner instead of a worker. As in 'people with more valuable skills who work more hours than me get paid more'? Then get more valuable skills and work more hours. It's hard for me to see anything but complainypants syndrome in the "my work enriches others" comments.
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Reading all of these FI/RE blogs there are a lot of people who are doing this because they really don't like what they do for a living and would rather be doing something else. for those people who are young and without other financial responsibilities i wonder if the idea of having a FI number is really the thing for them to pursue.
Grant's absolutely right that one needn't hate one's job in order to pursue vigorously and even prioritize FI. Nevertheless, the pre-college, pre-career youth who are passionate about a non-lucrative field and looking into FIRE can learn an important lesson from those who speak about FIRE as a way of escaping an unhappy career (beyond the "nuts-and-bolts" technicalities and "how-to" lessons, of course). FIRE provides greater flexibility when pursuing one's ends. The fact is, most ends a) are fluid over the course of one's life, and b) compete for our limited time and undivided attention. Someone might study some subject S in college out of intrinsic interest, pursue a career related to S, and then after some time grow weary of S or want to focus on some end(s) other than S. At the very least, in attaining FI or a FI-like state, he or she will only have to endure a career in field S for a finite period of time before he or she can pursue/empahsize her new/other ends.
In terms of choosing a field to study in college, it depends on your situation. If studying a subject you're passionate about entails likely postponement of attaining FI and thus puts the opportunity of fulfilling future/other ends at greater risk, you'll have to determine the risk you're comfortable taking and adjust accordingly. You might find it best instead to study a subject that lands you a career that'll get you FIREd sooner but which doesn't correspond to your current passion(s). So you'd be seeking greater flexibility in pursing future/other ends at the expense of leaving some current end unfulfilled. Or you might seek to fulfill present ends at the expense of having less future flexibility and/or of not having that flexability sooner. Either way, it's the ends that are important. The means to those ends, FI included, are important to the extent that they're effective instruments in attaining those ends.
EDIT:
The dilemma in the above paragraph has the following form:
- Choosing X presently fulfills P but jeopardizes fulfillment of P's future/other end(s).
- Choosing Y provides P greater opportunity to fulfill future/other end(s) but requires P to sacrifice fulfillment of X.
- P must choose X to the exclusion of Y or vice versa.
All other things being equal, P rationally choosing between X and Y will involve:
- P valuing X,
- P valuing her other/future ends (if possible),
- P determining the extent to which fulfilling X jeopardizes her other/future ends, and
- P adopting the course of action which provides one the greatest overall value within parameters of risk that she finds acceptable.
Of course we face dilemmas of this form regularly, and the strategy for resolving these dilemmas is always the same, regardless of the dilemma's content (i.e. whether the choice is between different diets, different consumer products, different education/career paths, etc.). A big part of mustachianism boils down developing the ability to recognize when one faces a dilemma, recognizing what type of dilemma it is, discovering/learning the strategy for resolving that form of dilemma, and becoming skilled in employing that strategy.
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it. Arebelspy and his wife are middle-school teachers, and really enjoy their jobs. Sol is a PhD climate scientist. Jamesqf works as much as he wants, when he wants, with whatever scientific project captures his interest. James is a nurse anesthetist who uses his skills on at least an annual basis in the third world on a pro bono basis. There may be many on this site who dislike their jobs, but there are tons who love their jobs too. If anything, I'd say that FI might be one more thing to make you like your job- if there's no golden handcuffs and you can afford to be fired, you can step back from the politics and the rat race a little bit and just focus on your tasks, which you presumably like doing.
Absolutely. I think this is the ultimate. Do something you enjoy and love while working toward FI. That to me is what goal should be. My only point was working toward FIRE builds up a specific skill set that you can use toward taking a more risky career path that follows your interests. You can totally make $$ as a microbrewer. You can certainly make enough to live if you are disciplined and frugal and employ your FI skill set. My only point was that the skills and mindset that you build while working forwards FI have a lot of overlap with the skill set that you can use to take the crazy "follow my bliss" career path. For those people who are building up or have the FI skills and don't like what they do or hate what they do then it might be worth just stopping the thing you dislike doing, keep your FI skill set and put it to work doing something you find more rewarding. That's all I'm saying.
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What do you mean, making somebody rich? As in 'the owners of the company are compensated unfairly relative to labor'? Then buy stock, and be an owner instead of a worker. As in 'people with more valuable skills who work more hours than me get paid more'? Then get more valuable skills and work more hours. It's hard for me to see anything but complainypants syndrome in the "my work enriches others" comments.
I can see where he's coming from with that comment; I've often felt the same way myself. In my case: I work for a trading firm that makes boatloads of money. The firm itself was started by a group of already wealthy, well-connected people with previous industry experience. I got lucky to get in on the ground floor of the company via a close friend. To be fair, I'm making significantly more than I would in an ordinary job, and by virtue of my seniority, making more than I would in a comparable position at a similar firm. But compared to the owners of the company, I make peanuts.
Yes, I do learn a little here and there and at times challenge myself (with stress management if nothing else). But ultimately, my work is effectively making rich people richer. The business itself has debatable social utility.
This is private company, so having an equity position is not an option. Picking the "next big thing" with public equity is at best time-consuming and very hard. I don't know anything about investing in private equity; but I often ask myself, how can I recognize the "next version" of the company that I work for? In other words, how can I actually be an owner (rather than a worker) at a startup where the business model is sound and all the principals know what they are doing? The company I work for was about as low-risk as possible for a startup, and when you look at the risk relative to the reward, it would have been a no-brainer to invest in (if it were possible).
How does one find these nearly "sure bets"? I look at the guys who started it, and I believe the key is being well-connected. How do they get to be well connected? Through a life of hard work where they make those connections and demonstrate their skills and competence. It's not like they woke up rich and connected; they all worked very hard for many years to position themselves for their success.
I freely admit to suffering from complainypants syndrome from time to time, but I think statements like my work makes others richer have some merit; it's what you "do" with that idea that makes it complainypants or not.
I dunno, maybe I'm just trying to polish a turd. :)
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Very interesting thread.. I'll input my .02.. I'm 23 years old, and am still in Uni. I went to community college for 2 years which my parents paid for, and I lived at home the whole time and still do. After Community College (CC) I planned to get a job at a nonprofit Uni so I could get free tuition (my sister did the same). It was my first job (I regret not having a job sooner), and it's now paying me to go to school essentially. Fortunately it all worked out and I didn't wait long between finishing CC and getting a job in this University. I've been here 2 years, switched majors 3 times while I figure out what I want to do, and recently got a promotion to make my *just over* minimum wage a bit higher.
My parents never really offered to pay for my University, and I never asked because they were in no financial position to pay (they would have had to do loans so no thanks).
I'll pay for my kids' CC education, and encourage them to work part time gigs in Highschool and CC (I had so much free time in CC it was crazy), so they can pay their own way. I think they'll appreciate money more when it's earned.
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Other than the sales job I had right out of college, any job I have held required a college degree. Of course now I'm a SAHM and there's no degree in the world to prepare you for that ;)
Our thoughts are to pay for our son's college education and everything that goes along with it BUT not if he's a kiddo who won't work hard and/or appreciate it. It's really going to depend on his personality and how good a job we do raising him. Both my husband and myself had our college paid for 100% and while my husband appreciated it, buckled down and worked hard, I was the one who partied, squeaked by, dropped classes and took total advantage of my trust fund (set up by my grandparents for college). I'm going to do my very best to make sure our son doesn't go to college with the same frame of mind I did!
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Right now me and the wife are planning to save for their college but not let them know. Make them figure it out and hopefully get scholarships, grants other things before we have to go into our pocket for them. Also making them get a side job in college to help.
But if worse things come to worse we could still help them out. I am much more likely to push them towards a trade school unless they actually need college for the job.
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I was talking with a guy at work today who explained that he had to get his kids smart phones to use at college, because professors send out a lot of email notifications these days. He's got the extended warranty-protection-whatever plan on these because "when your kids have them, you never know."
Sure, but when I was in school I had to get my own phone, and pay my own phone bill. It was good practice in responsibility. And I knew damn well not to break my phone! Those things are expensive!
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I'm going to start another thread on this because of our experience. I did not want to take this thread off topic. :)
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Right now me and the wife are planning to save for their college but not let them know. Make them figure it out and hopefully get scholarships, grants other things before we have to go into our pocket for them. Also making them get a side job in college to help.
But if worse things come to worse we could still help them out. I am much more likely to push them towards a trade school unless they actually need college for the job.
Keep the lines of communication open. Our daughter was all too ready to go to a military academy because she'd picked up the (erroneous) impression that early-retired parents couldn't afford to pay for college. She was reticent about bringing it up and making us feel bad, but luckily an offhand comment made us realize that she had something on her mind.
I think that in the long run it's better to shell out the money up front (in a responsible manner) to help a college student optimize their time and their education. It's worth it whether that's pursuing a more expensive engineering degree instead of art history, or doing homework instead of having to wait tables 30 hours/week, or even paying up for a dorm room and a mobile device instead of having them commuting and competing for computing time. It's even worth taking summer school instead of working a minimum-wage job to save up for fall semester. Optimal use of their time means that they can finish college in 3-4 years instead of five or six, they'll have a good skill set instead of a 2.50 GPA, and they'll know how to work the tools of their trade.
We motivated our daughter to help with the college expenses now by promising her a share of the profits after graduation. She knows that they'll go into her tax-deferred accounts so that she can max them out as soon as she has the earned income. She's also learned that several scholarships on her campus go begging just because they're "small" or not advertised very well. Spending a couple hours on an application/essay for a little-known scholarship can pay her $250-$500/hour.
Best of all, the money spent to optimize their college years will help launch them from the nest on the first attempt without hangfires or boomerangs...
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Wow, I never realized that one simple question would inspire so much discussion. We are currently working on a hybrid approach with our kids.
We have decided that any money they earn (either through work or scholarships) will be matched. If it isn't enough to cover costs, they will have to take out loans.
My son immediately started researching scholarship opportunities at OSU (he is currently in eighth grade) and said he would rather work harder and smarter at school than get a 'crappy' job. They all plan on taking advantage of our program in high school that allows them to get some college credits without having to pay for the credit hours received.
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They all plan on taking advantage of our program in high school that allows them to get some college credits without having to pay for the credit hours received.
My daughter's best friend from high school leveraged those to finish her bachelor's in three years.
That BF has been accepted at my daughter's university for her master's degree. They're talking about rooming together for my daughter's senior year.
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Right now me and the wife are planning to save for their college but not let them know. Make them figure it out and hopefully get scholarships, grants other things before we have to go into our pocket for them. Also making them get a side job in college to help.
But if worse things come to worse we could still help them out. I am much more likely to push them towards a trade school unless they actually need college for the job.
Keep the lines of communication open. Our daughter was all too ready to go to a military academy because she'd picked up the (erroneous) impression that early-retired parents couldn't afford to pay for college. She was reticent about bringing it up and making us feel bad, but luckily an offhand comment made us realize that she had something on her mind.
We are definitely going to talk about money and finances a lot with our kids. We are already discussing ways to show them saving is good and other tricks to get them to learn about money at an early age. So while we will already have a 529 plan in place we won't tell them "You have this number figure for college go find the most expensive school you can and blow it". More like "hey what are your plans for college? you should look at local school and apply for some scholarships. You can't find anything? we'll we can still help you out."
But then it all depends on how you raise kids. I knew one or two peers who picked an insane school and degree who learned nothing out of it because their parents paid for it. It will definitely depend on how the children act and giving them money for college will depend on that.
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We're talking a lot with our kids about how to prepare themselves for the careers they want, how education fits into that, what the costs are, and what we can do to help. Unless they can get scholarships, we're encouraging them to start at a community college, and then finish at the state school. We're actively discouraging student loans. We're also encouraging them to think in terms of gaining real-life experience through part-time jobs and internships, starting as soon as they're old enough to work.
They know that they'll need to contribute financially to college, mostly because it's so easy to take it lightly when you don't have a stake in it (as my own wobbly college career attests). The kids should be able to cover their share with part-time work, preferably in the field they want to pursue professionally, and we'll pick up the rest. My parents have offered to contribute if needed, but I'd very much like to avoid that, if possible.
My oldest son is a junior in high school now, so we've been talking a lot about it lately. Just within the last week, he's nailed down some details of how he'd like to proceed, so it feels like we're making progress.
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Grad school because you're afraid of the real world? It's not guaranteed you will get that degree, or even use it, but it IS guaranteed you will accrue a large sum of debt. This just seems asinine to me. Yet the debt will only grow from here.
Many of the students I've had in my courses who have gone on to graduate studies have done so because their job prospects were bleak . . . Since more education is generally treated with greater esteem, they reasoned that by going to graduate school they could gain a competitive advantage when they do enter job market while deferring their loans when the job market was still down. For some, their debt grew a little bit because interest accrued on some of their undergraduate loans. But most haven't added further debt by going to graduate school or they haven't added much more, at least. Most receive some form of tuition remission and stipend for teaching or research assistantship.
Yes, this is me, and I am 43 (mother-of-3). I am fully funded: tuition waiver, stipend, health insurance, no debt. Grad school is simply the best part-time job available to me: challenging, flexible hours, new skills, and a degree. The low pay is ok if you view it as an hourly rate. I'm the second income, though, so there is less pressure. It's not a fear of the real world; more a realistic balancing of options.
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My father paid for my degree. He started saving money for that purpose when I was born, and by the time I graduated he had $50k he was willing to spend on me. He didn't pressure me to go to any specific school or major, and just let me decide on my own what I wanted to do. But if I needed to spend more than $50k on my education I would have had to pay myself. I plan to do the same if I have children.
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I don't think there's a universal answer to this.
We're saving enough to ensure that our kids can be successful on whatever path they choose. The dynamics of that will unfold when the kids are making their choices, and we'll tailor the solution to them because each kid is different, and has different motivations, interests and tendencies.
My parents didn't pay a cent of my university up front. I worked part time and summers and tried to do things as reasonably as possible. I lived at home, which required a car, so that added to the expense. Still, I had to borrow about $6k from my parents to get through it. At the end, they said, "Congrats, and don't bother paying that loan back". I had every expectation of having to pay it back, so that was a very nice bit of help and the right answer for me and who I was.
We know we definitely won't be just handing over money for their schooling, because money received like that isn't valued (normally). We'll make sure they receive whatever support is right for them in order to follow a path to success.
If they don't require as much support as we're saving for them, we'll figure out what to do with the extra then. If they're trying their best, they'll probably get it as a graduation gift as a start on their own 'stache. If they're reckless fools, we'll keep it and put it to good use (at least until they smarten up.)
It's hard to overstate how valuable teaching them the "Way of the Mustache" will be as they grow up though. It's truly amazing what a difference having good money knowledge and skills makes in our society, regardless of all the other skills. It might be a good idea to collectively create a "Mustachian curriculum for youth", and teach it in local communities to make sure as many kids as possible are learning it somewhere.
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A friend recently told me about how his parents handled things for him & his siblings: saved a set (equal) amount of money for each kid, then put them in charge of where they would go, how much they would have to pay, take out in loans, etc. Some of his brothers went in-state and got their full education paid for. My friend (like me) went to Carnegie Mellon, not a cheap place. He paid for the rest with scholarships, loans, and summer jobs. I think that's pretty brilliant -- they didn't limit his options, but helped him out, and ultimately left the responsibility for choosing a college and paying for it to him.
My parents fully paid for my education (& rent & food & books while I was in school). So I had it really, really good and worked as a TA & grader & campus desk person while focusing on school. My parents never talked about their finances (mostly because they're not super interested, they're in good shape) and I remember them making comments like 'we can probably pay for all of college .. we'll see' and getting really stressed out because I found it hard to plan and choose a college without knowing how much I would need to pay. I don't care if I'm automatically spoiled because my parents paid for my education, as I am so grateful and I 100% know I would not have gotten my first job without a top-tier degree, and that I wouldn't have gotten into the PhD program I'll be attending without the name of my undergrad. Of course I'm pretty sure life would have worked out either way (with different schooling), it would just have looked different.
An interesting question, though: does not having loans in the first place make you more averse to taking them on later? And vice versa? I had no undergrad loans due to my awesome parents, and when considering more education, absolutely ruled out getting a master's degree or anything I would have to pay for (and potentially take loans out for). (Thank god you get funding for a PhD.) On the other hand, I know people who had debt for undergrad, then went on to have more debt for master's degrees -- any thought as to whether having some debt (and knowing your interest payments & what managing it entails) makes further educational debt seem less extreme? I think there could be some element of truth there -- if paying loans is alreadya reality, adding more debt to the figure might not seem to be as big of a deal to the average person. Thoughts?
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Consider how we reached this point that people think "everyone must have" a college degree:
We've made it so incredibly easy to get a high school diploma that only the real losers in the world DON'T have one. I'm a high school teacher, and the number of second-third-fourth-fifth chances we give kids has become ridiculous. I could give examples, but I just don't want to think about it . . . but the result is that a high school diploma, which used to mean something, really means very little now. Thus, employers want more.
I personally do not think it'll come to "everyone NEEDS a degree just to work". Why? First, only 25-30% of all Americans (aged 25 and older, if memory serves) have a bachelor's degree; so, although this "everyone has one" idea is pervasive, it isn't really factual. I do think that number will increase in the immediate future. Second, I totally agree that we're reaching the end of this bubble /trend. People are realizing that a degree is no longer the automatic ticket to the good life, and that these two things are rather equal:
1. Working in a blue collar job (or, better yet, starting your own business)
2. Working in a professional job, but paying huge amounts of student debt over decades
We have college folks come to talk to our high school seniors every year, and the real issues are that our students aren't studying the things that America needs. We do not need a bunch of theater or Psychology majors. We can't fill the science-and-math related careers with American-born graduates anymore. Yet we have a glut of Lawyers and Sociology majors. Also, jobs are available for people with Associates' degrees, yet so many kids see those as "beneath them".
I liked The Millionaire Next Door too, but keep in mind that it's got some years on it, and the school debts that they discuss in that book aren't equivalent to the school debts that today's students are facing. As debt-opposed as I am, it's not the worst thing in the world for a student to graduate with a small loan and a profitable degree; however, no one today seems to be taking out small loans. An excellent book, but a bit dated. It'd be nice to see the author come out with an updated version.
What're we doing in our family? We told our daugthers that we'd pay the following:
Tuition and fees
at any of our state's 16 public universities
for 4 years /8 semesters.
Plus dorm and meal plan.
Health insurance and cell phone.
OR
Tuition and fees
at the state university 20 minutes down the road
for 4 years /8 semesters.
And we'd buy them a late-model used car.
Health insurance and cell phone.
If they wanted something more (private school, an apartment, summer school, an extra year), they'd still get the above . . . but they'd have to figure out the difference themselves.
Lesson learned: Don't nail things down too specifically before college begins. We thought our plan was "just right", but then we learned that nursing majors must attend a mandatory 5-week summer school between sophomore and junior year (it's their preparation for student nursing, and it's ONLY available in summer school -- no choice). What we meant when we laid out our plan was, "We expect you to carry a full load in the fall and spring semesters, and if you fail a class, we won't pay for you to re-take it in the summer." Since this class is a different ballgame, we agree to pay the summer school as well. Also, she chose a school that doesn't sell books -- $105 of the tuition goes to rent books, which turned out to be great: Her Chemistry book cost $360. Yes, really. She paid nothing (nothing above and beyond tuition), and as long as she turns it in on time, no cost . . . ever. Each semester she did have to buy a $10 lab manual. So, she avoided the big expense we'd said was hers. We decided NOT to give her another responsibility. Why? Because she worked her tail off in high school and earned 22K in scholarship money, which is roughly 45% of her 4-year education. We decided she'd done her part financially.
We're telling her sister that it's our intention to pay what I listed above . . . and we'll come to something close to that, but we reserve the right to adjust it up or down a bit, depending upon her grades and decisions. I anticipate she'll attend the same school as her sister, and she'll probably also avoid buying $360 Chemistry books.
How's it worked out with the oldest daughter? First semester she brought home a 3.95 GPA, and although exams are next week, she says she's anticipating a 4.0 for spring semester. We couldn't be happier with her academic performance. She's showed responsibility in many ways, and we are pleased with the decisions we've made. She has actively sought out ways to save money; for example, she knows she's going to need scrubs of a certain color when she begins student nursing, so she's asked me several times to go with her to the discount outlet where they sell them for $7.99/item. Sizes and colors are difficult to find, so she wants to start buying them bit-by-bit as they're available rather than waiting 'til she's a junior, then paying $100/outfit from the bookstore.
As for kids appreciating vs. not appreciating their parents' sacrafices in putting them through college, this is a complicated topic, and it boils down to MUCH MORE than whether you're paying the bills or not. You've been living with this kid for 18 years. Either you've taught her to appreciate what she's given, or you haven't. Either you've taught her the value of a dollar and have taught her to shop around, or you haven't. Either she's shown gratitude for the things you've done for her, or you've let her get away with poor behavior. The point: You know this kid. He's not going to suddenly become a different kid. My kid is VERY appreciative of the fact that she'll be able to graduate with no debt. We've had numerous conversations about the debt her dorm-mates are racking up, and she fully realizes that she's got it pretty good.
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Mrs. Pete
I hope you see this. I have a few questions about what you've done with your daughters. I would like to instill the work ethic and gratitude your older daughter is exhibiting. You mentioned she worked really hard in high school &, based on her performance in nursing school, I assume she must have done really well in H.S.
My older daughter is in middle school & is a very motivated student and is doing well in very accelerated classes. I would like her to continue to do well in school, but a strong work ethic is more important to me. B/c she is in these advanced classes she's surrounded by very motivated kids who, in general, have VERY involved parents with extremely high academic expectations for their kids. Most of these parents are completely unconcerned with teaching frugality or the value of earning money, though. They stress grades, test scores, and planning where they want their kids to go to college. Many of my daughters' friends will never hold a menial job. Their parents are busy padding their college resumes, sending them to camps at Ivy League schools, overseas leadership programs etc.
So, I'm wondering if you experienced this with your daughter (or as a teacher)? Did you have her work during the school year in high school? In the summer? How does she get her spending money.
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I'm in the post-9-11 GI Bill group where I can pass my benefit to my kids. Since I have a BS and an MS, I don't need it for myself.
I have 3 boys 19. 15 and 9.
The 19 year old is attending a local community college through a program that guarantees his admission to any state 4 year school here in Virginia. I'm paying for CC out of pocket and intend to use the GI bill for his last two years at Uni.
The deal I made for community college was that I would pay his books, fees and for any of his classes he maintained an A or B grade average. If he got a C he paid half the tuition and Ds and Fs were all on him to pay. You need a C or above for the course to transfer to uni. After the first semester where he had to pay for an entire course (D) and half another course (C) the second semester was all B's.
My middle son has autism and most likely won't attend college.
My youngest will have the same option (Dad pays for 2 years of community college, GI Bill for the rest).
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My son is not yet in kindergarten, so it is hard for me to say how much of his schooling I will pay for since it is so far out. Tuition has been outpacing inflation by a good clip since I was in college (~15 years ago) so I think it is getting harder for kids to do it on their own. What I am doing however, is saving a set amount each month in a 529 plan for him. My husband and I had to pay for college on our own, no help from parents. We figure that whatever we do save for our son will be more than we got and I'm sure it will be helpful for him. I don't think I would ever pay for his entire tuition, even if I could, because I think it is important for him to have a little skin in the game too.
Yes, this all pre-supposes that he will or should go to college. I still believe it is a good idea to at least get that foundation, and then decide where to go from there. It is still valuable in our society.
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You can't be a CPA with just a great work ethic, even if you're smart. You need a great work ethic and a degree.
To illustrate how things have changed, my father was a CPA but not a college graduate. He came to America, studied accounting for three years, but in his last year he was just out of money and tired of being broke all the time. So he decided to go take the CPA exam on a whim to see how far he was from the goal -- he didn't expect to pass, but he did. This would've been early 1960s. No one could do this today.
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18th birthday and I sat in the truck with my parents driving to a party. In there we had 'The Talk'. Basically I was on my own for my own education completely, no monetary support whatsoever. Strangely one of my most fond memories of my parents . . .
Personally I've become a huge believer that the minimum age to enter most post secondary schooling should be one or two years after the average high school graduation age.
I'd say that however you plan to handle your child's educational costs, you should talk about it with them well ahead of time. I think about the time they start high school is the right time. They're old enough to understand the concept, and it gives them time to prepare.
I disagree about the need to wait for college. My mother tried to talk me into that, but I was very ready straight out of high school. I made good choices with my minimal resources, and I excelled academically. I'm glad I've had use of my degrees my entire adult life.
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Yes, my oldest finished with 4.6 GPA, received two scholarships that total about 50% of her education, and was chosen by her teachers as the girl with the most outstanding character. Additionally she obtained a CNA license and was the best in her high school nursing class. She's a wonderful kid and has continued to do well in college.
We do not provide spending money. She worked during the summer (not as much as I would've liked), and she is very, very frugal. She did not work as a freshman, and she "made it" only because she'd hoarded her graduation gift money. She is working part time now as a sophomore in a job that doesn't pay well but will look great on her resume. I'm not sure what she's going to do next summer. She is required to attend a summer school class (taught only in summer) that is required of all juniors beginning nursing clinicals; thus, her ability to work will be hampered.
She did not work during high school. She was very, very involved in school activities, and we feel that paid off in scholarships. Her younger sister (same caliber student, less involved in activities because of her shyness) is interested in a job -- she likes money a great deal -- but she isn't doing too well in her job search. It's not easy for a 16 year old to get that first start, if she isn't desperate enough to work fast food. I'm not all that interested in her working during the school year, but I'll help her find something next summer.
Yes, I see the overly involved, money is no object crowd at school. In the long run, these parents don't seem to be getting much bang for their excessive buck. Their kids vary too widely to generalize about them.
Mrs. Pete
I hope you see this. I have a few questions about what you've done with your daughters. I would like to instill the work ethic and gratitude your older daughter is exhibiting. You mentioned she worked really hard in high school &, based on her performance in nursing school, I assume she must have done really well in H.S.
My older daughter is in middle school & is a very motivated student and is doing well in very accelerated classes. I would like her to continue to do well in school, but a strong work ethic is more important to me. B/c she is in these advanced classes she's surrounded by very motivated kids who, in general, have VERY involved parents with extremely high academic expectations for their kids. Most of these parents are completely unconcerned with teaching frugality or the value of earning money, though. They stress grades, test scores, and planning where they want their kids to go to college. Many of my daughters' friends will never hold a menial job. Their parents are busy padding their college resumes, sending them to camps at Ivy League schools, overseas leadership programs etc.
So, I'm wondering if you experienced this with your daughter (or as a teacher)? Did you have her work during the school year in high school? In the summer? How does she get her spending money.
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We put $100 aside each month for each of our 2 sons in a 529. We will see what the total is when they are ready to go to college and go from there.
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I'm targeting a 100K fund for my son, although it may not get there depending on market returns. I'm also hoping he has online options available for him by the time he is ready to go (2023 or so).
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I'm targeting a 100K fund for my son, although it may not get there depending on market returns. I'm also hoping he has online options available for him by the time he is ready to go (2023 or so).
Remember, too, that most of us are still working while our kids are in college. So what you've saved isn't your only resource for paying college tuition. Some savings -- even if it's not enough to pay the whole bill -- coupled with current earnings is pretty useful.
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My original plan was to set aside enough to fund 4 years of in state tuition for each of our 3 kids. We have about half the required amount in a 529 account, and figure we'll fund the rest from our investment portfolio as necessary. This may mean cutting spending back (forgoing a vacation) or me or Mrs. RootofGood picking up some part time work (we'll both be retired when the oldest starts college).
The kids are 1, 7, and 8, so we are still 10 years away from college expenses for the oldest, and 17 years away for the youngest.
There are so many options out there for financial aid or avoiding/mitigating college costs that I didn't want to over save.
- Summer jobs for kids during high school and college
- work study programs
- research/teaching grants/assistanceships (yes, even in undergrad!)
- scholarships
- side hustle businesses
- living with parents while attending a great local state U
- 2 year community college transfer to finish out years 3, 4
- AP classes in high school
- student loans
Who knows, my kids might be entrepreneurs and not go to college. Or traditional 4 year college might not be their thing.
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yep i'll pay.
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Yes. But, mini Ottawa won't know about that. She'll be selling lemonade, delivering papers, etc etc. The nexus between work and money will be solid. Call the college education an early inheritance :-)
Details at this thread:
https://forum.mrmoneymustache.com/mini-money-mustaches/canada-registered-education-savings-plan/ (https://forum.mrmoneymustache.com/mini-money-mustaches/canada-registered-education-savings-plan/)
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Honestly, speaking as someone not too far out from college, I think an individual paying for at least part of it themselves tend to take it more seriously and get more out of it.
I knew lots of people whose parents were paying for the whole thing. Think they felt bad skipping classes, not working hard, etc.?
I kinda think the opposite is true. My parents couldn't afford to help pay my college at all, but if they had I would have felt a huge burden to do well. Since I was paying for it myself, I felt more like a customer. If I wanted to skip class or skate by with a C, it was no one's business but mine because I was paying for it.
On the flip side, I was probably more inclined to buy used books and supplies than I would have been if my parents paid for it. Also, I felt more freedom to choose my classes and major. If they had been footing the bill, I would have felt obligated to study what they wanted me to (law).
You are likely much more self motivated than the typical individual who is spoiled by parents and has everything paid for them.
I am an individual who was spoiled by my parents and had everything paid for for me. I felt enormous pressure to do well in school because I come from a family that set high standards for achievement, I believed I was capable of being better than those around me, and because I'm an achievement driven person. I did quite well in school (high but not amazing grades, was asked to be the valedictorian speaker for my BBA class due to well rounded achievements).
Honestly, I think your orientation toward taking school seriously can be effected by who's paying, but is SO MUCH MORE than that. I think it has a lot to do with your attitude toward achievement and learning in general, your expectations of yourself, knowing why you are there, etc.
I certainly knew people in school who slacked off. Some were getting a free ride, some were taking out loans. I also knew lots of people who were getting help from their parents but still worked their booties off.
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I don't have kids but might one day. As someone pursuing FI it's hard not to think about it!
Because I think the nature of education is changing so dramatically right now, my main focus will be to have my kids think about WHY they are pursuing education (if they do) and make choices that balance the costs and the benefits. I think I would provide them with a set amount of money for education and help them work though the best way to spend it.
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My 2 cents: my parents paid for my college and also living expenses. But I also contributed by having a merit based scholarship that I needed to maintain a certain grade point to keep, as well as working in summers and a very small amount during the semester for $. The scholarship I had disbarred me working more than 4 hours a week, which basically excluded almost all jobs other than say tutoring, because the school felt that the academic rigor was more important than work study. College was some of the best years of my life and no I would have never considered not taking it seriously even though I didn't have debt over my head. So it really depends. I also have a PhD but went into a field where the university pays for the degree, plus additional amount of financial aid to live on, so I graduated with a small (5K) amount of debt that was paid off in 6 months.
When I was married, my ex and I agreed that it was important to pay the majority of school costs for oldest, and 2 years of community college for youngest (they have different needs/interests). What was frustrating is "how" actually doing it, kept being deferred, other than a nominal (less than 10K) amount in a 529. Now that oldest is a senior, and filling out applications, I realize that, it's on me! While the divorce decree specifies that we will split educational expenses, he doesn't have any money and has already essentially said he can't pay anything.
I let my daughter know, I am committed to paying the parental portion of financial aid, (8-10K range), and the rest she will need to pay for herself. It's not what she wanted to hear. And, not what we said previously, but divorce changes things. I've also brought up the idea of attending a community college for 1-2 years and transferring. Which she is not excited about, but hasn't rejected outright.
If I had the money I would have no problem paying for 100% of her basic costs as she is a decent responsible kid and I know how difficult it is to both work and go to school at the same time. Having stress about paying off big college loans does not "add" anything to the college experience.
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I have a LOT of experience in this from both the student and parent perspective. Maybe I should make a chapter book.
Me: I was going to go in the Navy after high school into an electronic tech program. At the time, I would do 1 year, 6 month service and 6 months training. Then the war ended (Viet Nam). The minimum went up to 4 years. Not interested. So last minute, I signed up for community college.
@ community college: I paid my own way ($200 per semester) and commuted. I had no desire to move on to a 4 year school. Got the degree, only after having quit to work at my ski shop, but fired due to moonlighting at another shop where former manager worked. So back to school, degree and worked. As I was working, I realized I easily picked things up and decided to give night school a try. Some company tuition re-embersement, but some from me and I had to front the money. Decided I could do it an quit and went back full time.
@ bachelor's degree college: Private college and again, I was paying my own way, having sold everything I owned except one car, my stereo set up and my guitar. I was really motivated, with the philosophy that if I didn't pass a class, not only would I have to take it again, but that money was coming from my bank account again.
@ bachelor's degree part 2. Before the first semester was done, I could see that engineering school at this college (primarily a business and law school) was easy. I applied and transferred to a top regional private engineering school. First thing to know.....when you transfer, you get ZIP for merit aid and likely ZIP for any aid. Paid my way there, running out of money and doing an 8 month co-op. Took one night class during this time to progress to graduation. Graduated with Honors and left with $0 in my checking account.
For my son, I really, really value education. He didn't do well freshman/sophmore year in high school because he had decided he was going to be a professional skateboarder. Finally figured out that the pro skateboarder who ran the local indoor skate park was driving a used Dodge Neon that his aunt gave him and didn't have much of a life beyond trying to stay above water. So anyways, this meant he started college at a mediocre place. He did very well and I had told him that if he did really well and wanted to go to a better college and got in, I'd pay for it. Well, he did. Went to my Alma Mater. Cool story....being a transfer, he got zero aid. Started at $60k a year and by the time he graduated, was $70k. I paid it all besides Stafford loans.
An aside: I hear Bogleheads always say "You can get student loans but you can't get loans for retirement". Ok, well, show me what loans besides Staffords a student can take out without a parent co-signing. There are none. So no.....a student can't go to school on loans on their own.
Altogether, I paid about $300k for him which was well below what I budgeted.
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We plan to cover 4 years of the cost of Public in-state tuition, room and board, as well as basics such as cell phone, transportation costs, and medical.
If they decide to go to private school - then hopefully they have scholarships to cover the difference. If they want to live off campus in an expensive fashion, we'll cover the same amount as a standard dorm cost at said in-state public university levels and anything extra is on them.
If they need 5 years - 5th year is on them. But we would be doing some handholding along the way to make sure that they have a clear, achievable plan to get out in 4 years. And they should be leaving High School with a pretty large amount of credits that would honestly allow them to do one major change and still graduate in 4 years - so this really should be a non-issue.
We recognize that doing this pushes back retirement date and we are completely okay with that.
We might consider pitching in to help with graduate school - but honestly that's going to depend on how financially well off we are at the time and on if we perceive the graduate school to be a good ROI. We won't stop a kid from picking a Bachelor's or Graduate field of study of their choice, but obviously if they want to get a Master's in underwater basket weaving...that's not something we intend to help with. But if they kicked ass in pre-med and have wanted to be a doctor for forever, and killed the MCATs ...yeah we might pitch in small amounts to help with med school. However, we would have to be clearly financially well off enough to aid in any capacity and we would likely give equal amounts to the other child in the form of perhaps aid on a down payment on their first house or something to make sure it's equitable between kids. But honestly, they should have their own business plan to make med school create a ROI (e.g. I'm going to study XYZ and make $A as soon as I graduate so I can pay back $B in student loans over Z years.
Requirements of kids to receive college support from us (parents):
- Going into college, have a clear plan on major and be able to clearly articulate potential career paths, salaries for said career paths, locations/hotspots for jobs for said career paths, and present a rough budget of what life would look like on said career path.
If you want to study musical theater and get a BFA in musical theater - fine - but understand that you're likely either going to live 6 people to an apartment in NYC while working as a barista and attending casting calls on Broadway before moving back home and becoming a Theater teacher making $55k a year. If you're going to study pre-law and go to law school - great but understand that to make big bucks in law you have to get into a top-tier school and get top-tier LSAT scores and work at big law etc. Or whatever.
Just want to make sure they understand ramifications of their major selection. - Research and apply for scholarships like hell and maintain grades/requirements of scholarships.
- Maintain excellent grades. They don't have to work if they're maintaining excellent grades and active somehow in the school (programs such as ASME or whatever groups to help with networking etc.)
- Do something in every summer (internships, more classes, something of substantive real value). I learned internships are incredibly valuable and will be pushing very hard to make sure they do 2 internships. Note this "do something" in the summer rule will apply long before college. Middle school, Junior High, and High School kids need to be learning or doing something in the summer. Couple weeks of lazying around in the summer is great but 3 months is overkill.
- Haven't figured it out yet, but there will be some kind of a financial agreement where basically since I'm paying for college and they don't have to take on loans, they agree to share their personal budget (can be a high enough level that I don't see any personal details of their life) for X period of time after graduation and they will prove they are saving $XXX minimum per month or Y% of salary towards retirement - which they should be able to easily afford since they don't have personal loans.
- Make sure they have a really clear understanding of the massive cost of university and how much we (the parents) are sacrificing to help. And an understanding of how huge their student loans would be or how much smaller their average earning potential would be without our help. I think instilling the value of a dollar in kids comes long before they are 18 and heading off to college, so hopefully we achieve this goal before this point. Probably will even tie in the point that they should honestly consider a paid education as a large part of their inheritance (which it may be depending on how early we retire and how the market treats us).
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We can't fill the science-and-math related careers with American-born graduates anymore.
This isn't really true.
For a company in the USA to hire a foreign national, they generally have to sponsor a H1-B visa. Getting an H1-B approved requires arguing that the job is either so specialized or an individual's training is so unique that they can't find enough qualified Americans to fill the job.
Getting a company to sponsor an H1-B for a run-out-of-the-mill undergrad engineering job is basically impossible, because there's tons of bright eyed US engineers eager for a job. I have only ever seen H1-Bs issues for PhD level jobs - professorships and research scientists at IBM, etc. There's a lot more foreign nationals in those jobs for a pretty simple reason - US born students have better options than doing a PhD. The opportunity cost of doing a PhD for (say) a mechanical engineer fresh out of undergrad is about 250k. It just doesn't make sense to do a PhD, unless you want a job that requires one (or you can't find a job, but that's a slightly different story).
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We plan to cover 4 years of the cost of Public in-state tuition, room and board, as well as basics such as cell phone, transportation costs, and medical.
If they decide to go to private school - then hopefully they have scholarships to cover the difference. If they want to live off campus in an expensive fashion, we'll cover the same amount as a standard dorm cost at said in-state public university levels and anything extra is on them.
If they need 5 years - 5th year is on them. But we would be doing some handholding along the way to make sure that they have a clear, achievable plan to get out in 4 years. And they should be leaving High School with a pretty large amount of credits that would honestly allow them to do one major change and still graduate in 4 years - so this really should be a non-issue.
We recognize that doing this pushes back retirement date and we are completely okay with that.
FYI, many colleges are no longer giving credit for most AP classes. If you look into how AP tests are scored (or if you consider the fact that 9th graders take "AP Human Geography", which sort of automatically makes it not really a "college-level class") you'll see why.
We might consider pitching in to help with graduate school - but honestly that's going to depend on how financially well off we are at the time and on if we perceive the graduate school to be a good ROI. We won't stop a kid from picking a Bachelor's or Graduate field of study of their choice, but obviously if they want to get a Master's in underwater basket weaving...that's not something we intend to help with. But if they kicked ass in pre-med and have wanted to be a doctor for forever, and killed the MCATs ...yeah we might pitch in small amounts to help with med school. However, we would have to be clearly financially well off enough to aid in any capacity and we would likely give equal amounts to the other child in the form of perhaps aid on a down payment on their first house or something to make sure it's equitable between kids. But honestly, they should have their own business plan to make med school create a ROI (e.g. I'm going to study XYZ and make $A as soon as I graduate so I can pay back $B in student loans over Z years.
We both went to graduate school in a technical field, and our experience is that grad school should pay for itself (in real time, through TA-ships and RA-ships). We understand this doesn't work in some fields...
Requirements of kids to receive college support from us (parents):
- Going into college, have a clear plan on major and be able to clearly articulate potential career paths, salaries for said career paths, locations/hotspots for jobs for said career paths, and present a rough budget of what life would look like on said career path.
If you want to study musical theater and get a BFA in musical theater - fine - but understand that you're likely either going to live 6 people to an apartment in NYC while working as a barista and attending casting calls on Broadway before moving back home and becoming a Theater teacher making $55k a year. If you're going to study pre-law and go to law school - great but understand that to make big bucks in law you have to get into a top-tier school and get top-tier LSAT scores and work at big law etc. Or whatever.
Just want to make sure they understand ramifications of their major selection.
I want to point out that this is ... asking a LOT from a 17-year old. Our now-20-year old has already changed majors once, because he got there, took a few semesters of classes, and realized he didn't love (field) as much as he thought he would. Which should be OK! I'd argue that most adults don't really understand the whole "Career-path" thing, and expecting it from an older teen seems developmentally inappropriate. And do you really want to lock them into a career path that they know they hate from the second semester?
- Research and apply for scholarships like hell and maintain grades/requirements of scholarships.
- Maintain excellent grades. They don't have to work if they're maintaining excellent grades and active somehow in the school (programs such as ASME or whatever groups to help with networking etc.)
- Do something in every summer (internships, more classes, something of substantive real value). I learned internships are incredibly valuable and will be pushing very hard to make sure they do 2 internships. Note this "do something" in the summer rule will apply long before college. Middle school, Junior High, and High School kids need to be learning or doing something in the summer. Couple weeks of lazying around in the summer is great but 3 months is overkill.
- Haven't figured it out yet, but there will be some kind of a financial agreement where basically since I'm paying for college and they don't have to take on loans, they agree to share their personal budget (can be a high enough level that I don't see any personal details of their life) for X period of time after graduation and they will prove they are saving $XXX minimum per month or Y% of salary towards retirement - which they should be able to easily afford since they don't have personal loans.
This should be unnecessary if you teach them to save as soon as they have summer jobs. We offer Roth matches to our kids, to incentivize this. We also talk about spending less then we're making, the power of compound interest and passive investing, and model responsible financial decisions.
- Make sure they have a really clear understanding of the massive cost of university and how much we (the parents) are sacrificing to help. And an understanding of how huge their student loans would be or how much smaller their average earning potential would be without our help. I think instilling the value of a dollar in kids comes long before they are 18 and heading off to college, so hopefully we achieve this goal before this point. Probably will even tie in the point that they should honestly consider a paid education as a large part of their inheritance (which it may be depending on how early we retire and how the market treats us).
Agreed. Full freight at a top-tier university, should that be a good choice for your child, is a hell of a lot of money. It's good to tell your kid you'll pay for the best school they can get into and want to attend (if that's the case) but it also doesn't hurt to point out that it's a LOT of money.
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Holy necro-post!
I would love to see updates from any of the original posters (from almost 10 years ago) to see what they ultimately decided, and if opinions have changed now that a decade has gone by!
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@jeninco Understood on AP classes and obviously we’d make sure whatever they take is relatively universally accepted - our high school offers a ton of options and kids have credits accepted everywhere from MIT to top in-state public schools. My larger point is simply that they’ll likely have a ton of college credit going into college - just like my wife and I or frankly like any of my wife’s students who are graduating high school now.
If our kids want/need to change majors multiple times - that’s fine. Have at it. Our thing is we’re just paying for four years. If they find a new passion and want to switch majors, they can take more hours or summer school to fit it in four years or they can extend another year at their own cost. I don’t see what’s unreasonable about that. If they truly love this new major surely it’s worth one year of student loans considering the rest of college including housing, food, cell phones, transportation, clothes, etc is 100% covered? I encourage switching major if you find you love something more but there’s also no rule book saying I should pay for more than four years. This is my parental incentive to make sure kids know there’s a timeline to the parent-wallet connection. I think with high school credits, summer school covered by parents, and some work ethic on part of kid - they could honestly change major twice in first two years and still finish in 4 years. But, again, if they have to take out one year worth of student loans to fund switching major......I think they’re still in an extremely enviable position relative to most folks. Especially since I’m sure I would be covering transportation, cell phone, and medical for year 5.
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@jeninco Understood on AP classes and obviously we’d make sure whatever they take is relatively universally accepted - our high school offers a ton of options and kids have credits accepted everywhere from MIT to top in-state public schools. My larger point is simply that they’ll likely have a ton of college credit going into college - just like my wife and I or frankly like any of my wife’s students who are graduating high school now.
If our kids want/need to change majors multiple times - that’s fine. Have at it. Our thing is we’re just paying for four years. If they find a new passion and want to switch majors, they can take more hours or summer school to fit it in four years or they can extend another year at their own cost. I don’t see what’s unreasonable about that. If they truly love this new major surely it’s worth one year of student loans considering the rest of college including housing, food, cell phones, transportation, clothes, etc is 100% covered? I encourage switching major if you find you love something more but there’s also no rule book saying I should pay for more than four years. This is my parental incentive to make sure kids know there’s a timeline to the parent-wallet connection. I think with high school credits, summer school covered by parents, and some work ethic on part of kid - they could honestly change major twice in first two years and still finish in 4 years. But, again, if they have to take out one year worth of student loans to fund switching major......I think they’re still in an extremely enviable position relative to most folks. Especially since I’m sure I would be covering transportation, cell phone, and medical for year 5.
This seems reasonable to me. I changed majors twice, and between AP credits, one summer class and taking 6-7 classes most semesters, I finished in three years. Four years is often doable with a less insane course load, even if you change majors.
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@jeninco
If our kids want/need to change majors multiple times - that’s fine. Have at it. Our thing is we’re just paying for four years. If they find a new passion and want to switch majors, they can take more hours or summer school to fit it in four years or they can extend another year at their own cost. I don’t see what’s unreasonable about that. If they truly love this new major surely it’s worth one year of student loans considering the rest of college including housing, food, cell phones, transportation, clothes, etc is 100% covered? I encourage switching major if you find you love something more but there’s also no rule book saying I should pay for more than four years. This is my parental incentive to make sure kids know there’s a timeline to the parent-wallet connection. I think with high school credits, summer school covered by parents, and some work ethic on part of kid - they could honestly change major twice in first two years and still finish in 4 years. But, again, if they have to take out one year worth of student loans to fund switching major......I think they’re still in an extremely enviable position relative to most folks. Especially since I’m sure I would be covering transportation, cell phone, and medical for year 5.
I think this is also where knowing your kid becomes important. My DD is one of those kids who needs to have a plan, and once she is set on that plan, it takes a lot to get her to move off of it, because she views it as failing. So I have been very surprised to find myself telling her that she doesn't have to stay on a particular career path just because she decided on it at age 7, that it's ok to change to something that suits her better and doesn't kill her, that she can transfer or change majors or whatever she needed, and that we had her back through it.*
OTOH, my brothers were definitely of the "need a swift kick in the ass" variety and would have been better served had my dad put some limits on things.
tl:dr: It's great to have a plan to address college. But don't be afraid to change it based on your kids' needs.
*None of which I ever thought I'd be saying for the first @18 years of her life! But by the time she hit freshman year, she had morphed into this kid who wanted to double major in engineering + biology, AND satisfy all the premed requirements. As you can imagine, she was incredibly stressed trying to figure out how to fit it all in, and she needed a lot of hand-holding to realize it was ok to do engineering OR med school.
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We can't fill the science-and-math related careers with American-born graduates anymore.
I know I'm picking one line from a very long post. Sorry for that. I saw this quoted and just had to chime in.
I'm an engineer with a graduate degree. I've worked as an engineer for 36 years. In that time, I have seen plenty of engineering positions filled with qualified US citizen engineers. I've seen H1B positions opened and seen the justification (we can't find a qualified US citizen candidate) and in every single case, the justification was bullshit. There are plenty of candidates either looking for a job or who could be poached from a competitor. What the employer really means is "We can't find a US citizen engineer to fill this position for 1/3 the going rate". I've talked with the very qualified foreign engineers who ended up being hired. I know what they made. In some cases PhD level engineers from Eastern Europe, well educated and with a track record and pile of publications were making 1/3 what I made (Masters degree). And of course, they become indentured to the employer and if they want to leave, they need a new sponsor employer or they're shipped back out of the country. Sorry. In my opinion, the H1B program should be completely revamped in such a way that a true salary is determined by the government for an equal US citizen. Then the employer should have to pay 110% of that to bring in someone from outside the US since they're saying they can't find anyone. Guess how many H1B engineers are going to be hired? It'll be zero. If they can't save big money, they'll simply pay market rates and easily hire exactly who they need.
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We can't fill the science-and-math related careers with American-born graduates anymore.
I've seen H1B positions opened and seen the justification (we can't find a qualified US citizen candidate) and in every single case, the justification was bullshit.
I'm also a manager who has yet to see a H1B position that wasn't opened to save a boatload of money. There was always a US Citizen option.....it just always happened to be way more expensive.
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We plan to cover 4 years of the cost of Public in-state tuition, room and board, as well as basics such as cell phone, transportation costs, and medical.
If they decide to go to private school - then hopefully they have scholarships to cover the difference.
This is what we did.
DD (older child) chose to go to a out-of-state public school and was able to cover the difference (compared to our in-state school) with financial aid and part-time jobs (including one year as an RA). DS went to an in-state school and we paid for everything. So both kids were able to complete their undergraduate degrees with zero debt.
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Our strategy is to do this too. We will cover up to what an in state school costs. If they want to go somewhere else, they need to make up the difference.
I think a degree, while certainly worthwhile, really only gets you your first job. After that your productivity and experience take over and nobody cares where you went.
My wife, a teacher, and myself, a planner, both went to in state schools and went on to successful careers and I think going to a state school actually helped us more than it hurt us because the networks within the state are all connected with the state institutions anyway.
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TL;DR at the end. I'm going to share because not everyone has the ability to pay for their kids college and fund their own retirement, but that doesn't mean it can't be done without debt.
I didn't post on this thread way back then, but I remember reading it (or a similar post) during my lurking days. Our eldest graduates this fall, and this is what we did. Keep in mind, we are low income so we had some of those "benefits."
We do not pay for college, in part because we have a lower income and simply can't responsibly do so. Our children are aware of this from a young age, and they are also aware of our high value of an education.
In 7th grade we applied for the College Bound scholarship. This is open to all children in WA state if their parents earn below a certain income threshold.
He started college at 16 at a community college. He had no idea what he wanted to do with his life, really. Fortunately, he was going under our state's Running Start program, which is open to all high school students. We began playing up this program to him in middle school, so he was actually excited for it and working toward the full time entry requirements from about 8th grade onward. One way we played it up was that by having a 2 year head start on college, he could take a gap year without falling behind his peers. Or, he could just be done with school at 1, but with the benefit of an Associate degree, and then go into a trade or certain other career options.
His tuition was covered by the state, and he went to college full time in lieu of his Junior and Senior years of high school. He graduated high school with an Associate of Arts degree. Tuition coverage did not cover books and class fees, so we paid <$1,000 over two years for these. At the time he was thinking of being an art major (I know, I know), so he filled up electives with art classes. We discouraged nothing, he needed to find himself in his own way, and he would be the one living with his choices not us. He applied for and was granted a small department grant that covered all those expensive art supplies, at least.
He maintained a 4.0 GPA throughout community college and was accepted into the PTK honor society (Cost $75 in one time dues). He did a lot of volunteer work with the society, which was good for him, for his future resumes and scholarship apps, and for the community. It also surrounded him with the "right" type of peers to help him stay focused on school. This also lead to two scholarships - an automatic $1500 for the school he chose, and another $5000 annual scholarship he applied for and received through the society.
He applied to and was accepted to his first choice in-state university. He briefly looked at some private art schools, but decided the amount in loans was scary. He instead decided to go with the state school and perhaps revisit a desired private school in the event he decided to do grad school later. This was a biggie, since unbeknownst to him at the time his goals would quickly change.
At the state school he qualified for enough Pell Grants, state need grants, and work study to fully pay his tuition and cover most of his dorm/book costs, when combined with his three small scholarships. He was short $500 his first quarter, which we decided to cover. His work study would supply his daily living costs, since he was paid twice a month. He interviewed for the onsite Pre-K and Kindergarten as a student aid, and was given the position on the spot. This was in part due to his impressive high school resume - much of his volunteer work at the CC was with a USDA and Farmer's Market nutrition program for kids. This school is a Montessori and Emilio-Reggio inspired school. He also did his portfolio review and was accepted to the art major.
One quarter in and he enjoyed his job so much he switched to an art education major. In spring quarter, the Pre-K shutdown due to Covid. He was such a good worker, though, that he was given the same opportunity as the teaching staff - to work on additional certifications online for pay through the end of the quarter. He did every certification available to him, while going to school full time online. He also moved out of the dorms and moved across the state to stay with his partner and help out his grandmother through the early days of the pandemic. He got a summer job at wal-mart with his partner, and they saved every cent they made (plus the dorm refund), since they were living for just the cost of food and chores in a family member's home. They moved back in fall to a cheap off-campus studio apartment so he could resume his teaching job. Classes remained online.
He decided to change his major again -- this is why it's good that we made it financially challenging to choose the art school, an unintended benefit! He switched to education with an anthropology minor. Thus the need for an extra quarter - he needs it for his final certification time. Fortunately, two of his first year scholarships renewed and he got two more honor scholarships of less than $1000, and the amount of scholarships and Pell grants covers all of his tuition, books, and fees, along with most of his half of the apartment and living expenses. He is still on work study at the school through the end of spring quarter, but he has been hired on for the summer as a full time assistant teacher. He has also been offered the job of a full time junior teacher once he graduates. Most of this became available because he took the opportunity to do those extra certifications last spring (and his students adore him)!
He will be graduating without any debt and only ~$1500 parental help. He did take out a $5000 student loan in the fall. He was worried of the school closing down again and being stuck with no work study and a lease. He repaid in full at the beginning of April once he had enough savings to carry him six months. It cost nothing since student loan interest was paused. We also gave him his portion of the last two stimulus payments, since they paid it out to us and not to him because of his age and because he was a dependent for the first half of 2020. He also was automatically given some student stimulus money that the university paid out to all students based upon their need VIA FAFSA.
He and his partner are savers. When the lease renewed, it was going up almost $100 (to go into effect after the rent hike moratorium ended). He went down and bargained it back down so it only will go up $10. That kid has balls -- their excuse was water/sewer increases and he actually looked up the cost and estimated their average water use and used that as his bargaining chip to negotiate it down!
TL;DR We didn't pay for college and our kids always knew we wouldn't. We did promise to help them in any other way possible to reach their goals with little to no debt. Kid #1 is graduating soon with 0 debt and over $10k in savings. He has a $32,000/yr entry level job lined up that has the benefit of tuition reimbursement. He's planning to go to grad school, so that is a biggie. His partner, soon-to-be spouse, is also planning to finish a degree at this institution. There are tuition benefits for family as well, so this will save them even more money in the future.
If we had provided a full ride, or maybe even a partial ride, the kid likely would have ended up in an expensive art school taking on lots of debt, or at least not really discovering what his calling was at a state school. Having to work for everything, even with lots of parent support in negotiating opportunities and dealing with paperwork/bureaucracy, means at age 21 he will have a career and a nice financial start to the rest of his life.
There is more than one way to do this. My 16 year old younger son is choosing a different path, as he doesn't want to do Running Start full time and is instead considering a clean energy engineer program at a local tech college instead. We will probably convince him to get his English and math requirements out of the way via Running Start so that he doesn't have to pay for those at the tech school. We will then help him piece together a financially viable plan for this, as well. Unlike his brother, his plan is to live at home during college, so that will also save some money.
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Hello, old thread! We are both high wage earners (I plan to FIRE next year) & hope to have a paid off house, fully funded retirement accounts, & quite a bit of investments by the time the kids have graduated college, so they will be eligible for zero aid, minus merit. That is unlikely to be an option for at least one of my kids.
We have a 14 & 15 year old, so this is top of mind for us. Our 15 year old has ADHD, and high school (particularly remote) has been a huge struggle. He's academically gifted, but will likely need to start at a community college (both because of expected grades, and the need to emotionally mature & develop more executive functioning skills). Given how California handles community college & four year schools, we have enough to fully fund this, and all associated costs. College is going to be challenging for him, and we are comfortable with him taking time off to mature more, to provide coaching/tutoring/support as he goes along, so he can continue to develop the right skills. Our goal right now is to help him maintain all available options, so we can help him evaluate what makes the most sense once he's graduating.
My 14 year old is an entirely different animal. He will likely earn merit scholarships & is quite athletic. He has zero desire to play sports in college, but should he choose to, he has at least enough potential to give it a fair shot. We are all universally against an athletic scholarship, mostly because we have enough money to fund college, and would like him to focus on the academics & experience of college. If he chooses to play a sport, fantastic, but we want him to be able to quit at any time, should athletics get in the way of school. He is a very self motivated individual, in everything he does. My husband would prefer for him to go to a CA school, because it's so much more inexpensive. That said, if he works hard & continues to manage his life well & has a clear plan, I'm comfortable paying for him to go to other schools.
We will expect both of our kids to work summer jobs, to earn & save money. That can be their flexible spending money, and we will match whatever they earn for their retirement accounts. We do want them to have skin in the game, but it's clear that grade based expectations may not always be in the cards for my 15 year old.
Parenting these two wildly different kids has certainly made us rethink a lot of our original plans, and also our expectations that we could heavily influence the outcome, through our parenting & raising of the kids. Life has a lot of surprises that way. :-)
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What an interesting thread. Our eldest is only three, so a lot could change in the next fifteen years, but our plan is to offer a set amount of money to each child. However, it won't just be for university. It would be a more general "launch fund" that could be used for a small number of approved purposes, or invested to grow (in a small number of approved investments). At the moment we are thinking higher education or a house deposit but additional approved purposes may occur to us. We haven't thought it through fully.
I doubt we will be able to cover the full cost of university (even in the UK!) even if we wanted to but I deeply approve of the model whereby you say upfront what's on offer and they're on the hook for more but can keep any leftovers. You can set the level of what's on offer at any amount, so it's easy to offer enough to cover the full cost or to force them to work to earn the rest. And you can point out what different options would mean if tuition fees are different in different places. But to me, the incentive of having leftover money vs having to work alongside IS skin in the game, even if you end up covering the whole cost because they choose somewhere cheap and live frugally.
I'm not especially interested in financially incentivising getting a university degree. I went to university just because my parents said they'd pay for the whole thing, and while I met Mr SLTD there and got a 2.i, I don't think it was the best choice for me given my interests and aptitudes at the time. I want to support my children to launch, but I see no point in saving thousands of pounds in a university fund and then being left with it because they decide not to go.
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I'm enjoying reading everyone's takes on how to approach this issue. I think my wife and I, after both having to put ourselves through college with student loans, will do as much as possible to ensure our son doesn't have to enter adulthood with debt like we did. He's just 11, but at this point he still does not enjoy school outside of the social aspects. He easily maintains A-B grades in every subject, but just absolutely hates school. For this reason, I have huge doubts about whether he will choose to go to college, or go a different route. We are saving anyway, and if he decides to look for work or enroll in a trade-school instead of a traditional 4-year university, he will be getting as much financial help as we can offer in whatever form that ends up taking. We will begin financial education at home over the next year or so...slowly introducing concepts to him that were never taught to us as kids...so that he can go into life with open eyes about how the financial systems work in our country. Outside of that, we will support him no matter what path he takes, knowing that we will be spending the years between now and high school graduation trying to instill a solid work ethic and educating him on his options and their potential risks/rewards.
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What an interesting thread. Our eldest is only three, so a lot could change in the next fifteen years, but our plan is to offer a set amount of money to each child. However, it won't just be for university. It would be a more general "launch fund" that could be used for a small number of approved purposes, or invested to grow (in a small number of approved investments). At the moment we are thinking higher education or a house deposit but additional approved purposes may occur to us. We haven't thought it through fully.
This is exactly what we did and I am so happy we did not do a bunch of contributions to a 529 fund (college savings fund with tax benefits) and tie up our money in it.
Our kids have a launch fund that we agreed could be spend on start of life expenses that we approve of - college/vocational training, practical first car, Security deposit/rent for first apartment, downpayment for a house, etc. - but NOT beer, hanging out, fancy cars or I don't feel like working money. All payouts from launch fund are completely dependent on working, gong to college, or otherwise making forward progress and the kids have been told they are to move out of our house by age 23 at the latest. If traditional college is skipped, some sort of job training for a job that pays a living wage must be obtained.
My oldest is graduating HS this month. He is not going to college, but instead took a vocational program in school for IT. He has a summer job in IT and then is planning to get a career type job in the fall with the plan to move out of our house in the next 18 months. He is open to going to college if he has to, but I suspect he won't. He is thinking of buying a condo or small house with a significant down payment from his launch fund by age 21-22.
My youngest (in High School now) does not know if he is going to college either and may follow in the footsteps of his older brother. He is interested is using part of his fund to get his first car next year.
We told both kids the exact amount of money they would get right before their first year of High School (age 14 here) and explained opportunities for free college credit and/or vocational training in high school.
The kids are pretty pleased with this arrangement thus far.
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Coming back to add this:
Our youngest has been very seriously playing an instrument since he was 9 or so, and has just finished his junior year. We're encouraging him to look at double majoring, even if it takes 5 years (he's also very interested in the place where computer science meets electrical engineering). Meanwhile, MrInCO and the kid have been looking at schools, and reading about the audition process to get into music performance programs... and MrInCO was telling me about at article he was reading from a women who got a music performance degree and then went into business, talking about all the benefits she thinks she got from the degree ("grit" and "persistence" were high on the list.) I listened (mostly) politely, and we went to bed.
And then I woke up at 3 am, rolled over, and said to him "$15K. That's how much interest you accrue per year on $300K of loans at 5%. Are you really going to make the case that a degree that doesn't even teach you how to write, or do math, and probably won't lead to a job in the field is going to lead to a position where you can pay $15K in interest alone, just to keep the principal from growing?"
I mean, I hate to be all "ROI", but for heaven's sake -- there's a point where "pursue what you love" has to meet reality, people!
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@CindyBS Thanks for posting that. It's so interesting to hear not just what people plan to do, but what decisions their children make within the parameters of the plan. It sounds like your eldest has made totally reasonable choices so far, and that the launch fund will be a real boost.
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Posting to remember to come back and read through responses.
Our child is 2.5, and we have not yet decided what we plan to do. I'm not putting money in a 529 either way, as we will be able to pay out of retirement accounts whatever we do end up paying.
We do plan to be retired early enough that we'll be able to keep our SAI (new FAFSA term) low. If we can also pay off our house, even better!
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What an interesting thread. Our eldest is only three, so a lot could change in the next fifteen years, but our plan is to offer a set amount of money to each child. However, it won't just be for university. It would be a more general "launch fund" that could be used for a small number of approved purposes, or invested to grow (in a small number of approved investments). At the moment we are thinking higher education or a house deposit but additional approved purposes may occur to us. We haven't thought it through fully.
I doubt we will be able to cover the full cost of university (even in the UK!) even if we wanted to but I deeply approve of the model whereby you say upfront what's on offer and they're on the hook for more but can keep any leftovers. You can set the level of what's on offer at any amount, so it's easy to offer enough to cover the full cost or to force them to work to earn the rest. And you can point out what different options would mean if tuition fees are different in different places. But to me, the incentive of having leftover money vs having to work alongside IS skin in the game, even if you end up covering the whole cost because they choose somewhere cheap and live frugally.
I'm not especially interested in financially incentivising getting a university degree. I went to university just because my parents said they'd pay for the whole thing, and while I met Mr SLTD there and got a 2.i, I don't think it was the best choice for me given my interests and aptitudes at the time. I want to support my children to launch, but I see no point in saving thousands of pounds in a university fund and then being left with it because they decide not to go.
I've realised (duh!) that the US offers tax advantages to saving specifically for college (I think? I mean whatever a 529 is) that the UK doesn't offer. So even if we were planning to cover their full university costs, it would come out of a "regular" account, so we would have no penalty for not planning ahead what the money is being used for. We could plan to save it to buy them a Mercedes and then change our minds later on to pay for a roller disco for their 18th birthday and then change our minds later on to pay for university, and suffer no financial setback as a result. I appreciate now that this does change the playing field for people in the US (although I'm still not sure how much we're talking in actual $ if you saved in a 529 vs in another account - and whether it's worth the "risk" that your kids won't go to college and you will be stuck with a pile o' money you can't use...although this may not be what happens!
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I appreciate now that this does change the playing field for people in the US (although I'm still not sure how much we're talking in actual $ if you saved in a 529 vs in another account - and whether it's worth the "risk" that your kids won't go to college and you will be stuck with a pile o' money you can't use...although this may not be what happens!
529s grow tax free and the proceeds are tax free if used for qualifying educational expenses (generally: tuition, room and board, books, fees, internet/computer). Depending on how much one is saving up, what kind of investments one chooses, the specific 529 plan, and how one would have invested in a non-529 plan, the difference could be almost nothing to tens of thousands of dollars.
If the kids don't go to college, then the 529 can generally be switched to another beneficiary in the family (younger sibling, grandchild, parent, cousin, etc.) or withdrawn. Withdrawals have ordinary income taxes plus 10% penalty on the portion of the withdrawal that is attributable to earnings. The 10% penalty can be avoided to the extent that the kid gets scholarships (and for other less common reasons such as death or attending a military academy).
There are also ESAs, which are another kind of tax favored account for education, but hardly anyone has those or uses those any more.
There are also a number of tax credits and deductions in the US related to undergraduate education. The most common is the AOTC generally for undergrad and the LLC which is more often for continuing or graduate education.
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I have no intention of giving my kids a free ride, even if I could, butI would very much like to be able to provide enough help to make working for the rest and graduating debt-free more attainable for them. In addition to college, there are other costs that often come close together in that period for young adults in our religious subculture. Here’s our plan for financial help with launching into adulthood:
-If our kids choose to serve religious missions for our church, we plan to offer to pay for enough of it that they will need to save $3,000 themselves to cover the rest. This would mean a $9,000 contribution from us for the boys and a $6,000 contribution from us for the girls. (Cost is $500/month, boys generally serve for 24 months and girls generally serve for 18 months.)
-Getting married young is very common. Weddings are much more frugal than in general American society, $5,000 or so average cost, but can be much more or less. If/when our kids choose to marry, we’d like to give them each some money to use towards their reception/honeymoon/house/savings/etc., their choice. As brides’ families generally pay for the bulk of wedding costs, the plan is to give the girls $4,000 and the boys $1,000 at that time, bringing the total with mission cost help up to $10,000 each.
-My husband and I both attended a private religious university that offers exceptional value for cost. In the interest of providing each kid the same amount of financial help and then letting them make their own choices how best to utilize it, we’d ideally like to offer them the amount of the cost of four years’ tuition at our Alma Mater for them to use at the college or other higher education institution of their choice. This would be roughly half the cost of attendance at our school with living expenses factored in, far less at most other universities. It would currently be $24,000 per student, though I expect prices will rise more before our kids reach that age.
I don’t know if this last will be an attainable goal, though. We are still pretty early on our financial path with saving, and our current rates won’t cut it. We have six years until the oldest is college age. Hopefully we will make financial strides that allow us to put away more before then.
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Each personality is so different its hard to predict the best way to teach work ethic and dollar values.
This is true, and completely how I felt until I read The Millionaire Next Door.
Check it out from your local library, and just jump to the chapter (near the end) on gifting money to your kids. It's probably only 20 pages, will take you 30-60 minutes to read it. In fact, you don't even have to check out the book then, just grab it off the shelf and read that one section and put it back.
Although you feel your child is different and special, and every child is, statistically, your child will be much more successful if you don't monetarily help them when they are struggling.
It was by far the most eye-opening part of the book for me.
Nine years late on this reply, but I went back and re-read the last few chapters of the book after going through the replies to this thread.
I got a very different impression when reading it. While giving money seemed to have mostly bad consequences, giving education did not appear to have the same negative results. The studies suggested that it was a good thing.
Has your mindset in this area changed over the last nine years? You're one of the few early commenters who are still around.
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That's fair. I can see that interpretation.
All of my experiences were the kids who had a stake in their education via paying themselves took it much more seriously than those going on mommy and daddy's money.
My goal (now with three kids as I type this) is to have them self sufficient and successful enough by 18 that they qualify for scholarships and grants and are capable enough to find and apply for them (with me helping where necessary). Loans should be minimized if done right, IMO.
Additionally, my kids (ages 5, 3, 1) are so far off from college that who knows what will happen to college prices in the next 15 years. I'd rather save money in a flexible way than a college fund, certainly, even if something changes about me needing to pay some part.
I don't think my kids will not be able to attend college due to finances, even if I'm not paying, nor do I think they'll be overburdened with loans.
And that was the MND tie in--I think even if they had loans, they'd be as or more successful than if I just paid them off asap, based on my reading of the study (though you're right that most MND's did fund education, iirc the success of that wasn't tested, just the success of giving money to pay off loans made to start a business, and the kids that had the loans were more successful than the ones starting the business free and clear, unintuitively enough).
In short, I still think the same as before. I'll be glad to help the kids get any sort of funding they can, but I think there are much more deserving kids (dying without medicine in foreign countries, for example) that that money could go to than having my kids just not want to bother applying for grants.
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@arebelspy - this is interesting to think about. We're confident that we will have too many assets in retirement for our kids to qualify for any help with a financial tie (grants, for example), and we have one kid with a learning disorder who will be very unlikely to qualify for merit based support. Would that change your mind at all?
We are planning to help out a lot (due to the above factors, & also because we can), but also require our kids to work, save for college, etc. We will want them to have "skin in the game".
This topic is near & dear to my heart at the moment, as we suddenly have a 9th & 10th grader this fall.
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A learning disorder could change the equation, though I'd want to make sure college is the right path for them, not one of frustration and further failure and unhappiness.
Also, I just googled college scholarship learning disabilities and got tons of hits/options. Have you explored that path?
There's so many more grants/scholarships/free money out there than people think. By the time my kids are 16ish, I want them to treat finding and applying for them like a part time job--it'll certainly pay like one, or better. Teach them responsibility, work ethic, give them skin in the game, etc.
My goal as a parent is that by the time they leave the house at 18, they are functional adults--can pay bills, do laundry, cook meals, etc. Applying for these things is good training in dealing with bureaucracy. And, crucially, they should know how to find and learn that which they don't know (watch YouTube video to change oil, or whatever).
Easier said than done, I'm sure, but there you go.
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Thanks for the quick reply. I'm in a similar boat as you (both in mindset and the fact that it'll be a long time from now).
If anything, re-reading that part of the book did make me reconsider my previous plan, but I do still agree that he'll need to have skin in the game. I guess we have ~16 years to determine how much skin.
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A learning disorder could change the equation, though I'd want to make sure college is the right path for them, not one of frustration and further failure and unhappiness.
Also, I just googled college scholarship learning disabilities and got tons of hits/options. Have you explored that path?
There's so many more grants/scholarships/free money out there than people think. By the time my kids are 16ish, I want them to treat finding and applying for them like a part time job--it'll certainly pay like one, or better. Teach them responsibility, work ethic, give them skin in the game, etc.
My goal as a parent is that by the time they leave the house at 18, they are functional adults--can pay bills, do laundry, cook meals, etc. Applying for these things is good training in dealing with bureaucracy. And, crucially, they should know how to find and learn that which they don't know (watch YouTube video to change oil, or whatever).
Easier said than done, I'm sure, but there you go.
Thanks for the reply. It's interesting to think about. I had a similar approach to my own college life (lots of planning to get scholarships & grants), but my parents made very little, I had great grades & extra curriculars, etc. So, I was a really good candidate for many options. I also worked all through high school.
I certainly want my kids to be functional adults by the time they leave the house, and I definitely want them to have real life job experience (my 15 year old applied for a job with his school). We're not sold on a four year college right away for our kid with a learning disability. I think gap year, starting at a community college, etc may all be more realistic options. If he found a trade that he was really passionate about, I'd be fine with that as well. He's got a lot of life navigation ahead, so we'll be there in background to help him explore, fail, learn, try again, etc.
In our particular case, the learning disorder is combined with a lot of executive functioning challenges. Grades are going to be a real struggle, and most scholarships that I've found require pretty high grades. Anyway, we'll go the "must have a job" route, vs "must explore scholarships & grants". I have one child who has the potential for an athletic scholarship, but doesn't want to play sports in college. We are very supportive of this choice, as it means a lot of limits on where you go, how you handle the balance of athletics vs academics, etc. We'd prefer he play sports for enjoyment & then have a part time job to supplement his income.
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I just watched my son go through the college application process last year, and saw what was required in hunting down and applying for scholarships. It requires intense organizational skills and good writing ability, as well as a good dose of self esteem. Kids who do not have string writing skills can get overwhelmed with the amount of essays required in applying for colleges plus the extra scholarship applications, especially if they are applying to multiple colleges because they are chasing merit aid.
The Common Application many colleges use now only asks for one essay, but most colleges also ask for a few supplementary essays, and if you are applying for a particular university's honors program or presidents'/dean's scholarship, there are usually another couple of essays. As you submit the common application for each school, there can be some last minute "quick" supplemental questions asking for just 100 word responses .. but there are 5 of them.
If you have a kid who loves to write, this is hard but not awful. If you have a kid who hates to write.... applying for extra scholarships on top of just applying to college will be very very hard.
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Amen, @CrustyBadger . On top of that, if you have executive functioning issues, often that type of time & organizationally intense projects results in kids shutting down. It's not a great solution for all types of kids.
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This topic came up in my household over the weekend. It is quite likely that our two kids will inherit a fair sum of money from grandparents in their early 20s and I proposed that we set up a trust that will pay them a basic income each year - my logic I was that this would provide a safety net for them, but still require them to earn the luxuries of life. I thought this was an elegant solution that is inline with current thinking about universal basic incomes, etc.
My wife thought that was a terrible idea - her view is that the struggle and juggling to make ends meet is an essential part of growing up into being a fully functional adult. If we pay for everything then we are more likely to more harm than good. We both worked right through college (about 16 - 20 hours a week, although my parents paid my tuition). I agree with her, all that hard work gave us a strong work ethic, budgeting skills, and made us much more employable upon graduation.
Our kids are still small, but I can see it being hard to find the sweet spot between being the backup they need, while not ‘over providing’ when they start adulting.
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Amen, @CrustyBadger . On top of that, if you have executive functioning issues, often that type of time & organizationally intense projects results in kids shutting down. It's not a great solution for all types of kids.
Young adults with executive functioning challenges are often well-served by taking a gap year to mature, work, and take their time with college applications. At least that is my observation from seeing some very bright kids go off to college and totally flame out. An extra year or two to mature and they usually go back and are successful. They just weren’t ready at 18.
It can be really hard for some high-achieving parents to accept this alternate approach (or any alternate approach). We’re so trained to believe there is one very rigid path to success and any deviation from that path will certainly lead to failure. I personally feel like that’s silly but I understand that it’s hard to let go of the idea that there is only one true way to be successful.
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Amen, @CrustyBadger . On top of that, if you have executive functioning issues, often that type of time & organizationally intense projects results in kids shutting down. It's not a great solution for all types of kids.
Young adults with executive functioning challenges are often well-served by taking a gap year to mature, work, and take their time with college applications. At least that is my observation from seeing some very bright kids go off to college and totally flame out. An extra year or two to mature and they usually go back and are successful. They just weren’t ready at 18.
It can be really hard for some high-achieving parents to accept this alternate approach (or any alternate approach). We’re so trained to believe there is one very rigid path to success and any deviation from that path will certainly lead to failure. I personally feel like that’s silly but I understand that it’s hard to let go of the idea that there is only one true way to be successful.
I'm unsure if this is directed at me, since you quoted me, but I agree. I noted above that a gap year, or first attending community college was something we were considering for one of our kids. Ultimately it's his decision, but at the current rate (he's 15), I do not seeing going off to a four year school in three years as a successful plan.
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Amen, @CrustyBadger . On top of that, if you have executive functioning issues, often that type of time & organizationally intense projects results in kids shutting down. It's not a great solution for all types of kids.
Young adults with executive functioning challenges are often well-served by taking a gap year to mature, work, and take their time with college applications. At least that is my observation from seeing some very bright kids go off to college and totally flame out. An extra year or two to mature and they usually go back and are successful. They just weren’t ready at 18.
It can be really hard for some high-achieving parents to accept this alternate approach (or any alternate approach). We’re so trained to believe there is one very rigid path to success and any deviation from that path will certainly lead to failure. I personally feel like that’s silly but I understand that it’s hard to let go of the idea that there is only one true way to be successful.
I'm unsure if this is directed at me, since you quoted me, but I agree. I noted above that a gap year, or first attending community college was something we were considering for one of our kids. Ultimately it's his decision, but at the current rate (he's 15), I do not seeing going off to a four year school in three years as a successful plan.
Mostly it was a general comment on EF as it relates to preparedness for college. Tying it back to the original topic (will you pay?): the parents of these kids expressed some regrets that they didn’t give their kids more space to mature before starting. A few of them shelled out pretty big $$$ only to have that first year be sort of a ‘lost’ year.
I do plan to pay for at least part of my kids’ college so my takeaway from all of this is that I want to really make sure that they’re ready. Because man would it suck to spend a quarter of their college fund only for them to have redo those classes because they failed out.
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Amen, @CrustyBadger . On top of that, if you have executive functioning issues, often that type of time & organizationally intense projects results in kids shutting down. It's not a great solution for all types of kids.
Young adults with executive functioning challenges are often well-served by taking a gap year to mature, work, and take their time with college applications. At least that is my observation from seeing some very bright kids go off to college and totally flame out. An extra year or two to mature and they usually go back and are successful. They just weren’t ready at 18.
It can be really hard for some high-achieving parents to accept this alternate approach (or any alternate approach). We’re so trained to believe there is one very rigid path to success and any deviation from that path will certainly lead to failure. I personally feel like that’s silly but I understand that it’s hard to let go of the idea that there is only one true way to be successful.
I'm unsure if this is directed at me, since you quoted me, but I agree. I noted above that a gap year, or first attending community college was something we were considering for one of our kids. Ultimately it's his decision, but at the current rate (he's 15), I do not seeing going off to a four year school in three years as a successful plan.
Mostly it was a general comment on EF as it relates to preparedness for college. Tying it back to the original topic (will you pay?): the parents of these kids expressed some regrets that they didn’t give their kids more space to mature before starting. A few of them shelled out pretty big $$$ only to have that first year be sort of a ‘lost’ year.
I do plan to pay for at least part of my kids’ college so my takeaway from all of this is that I want to really make sure that they’re ready. Because man would it suck to spend a quarter of their college fund only for them to have redo those classes because they failed out.
I think your macro point is also true. My husband & I were both fantastic students, and very self motivated. We've had a lot of adjustments on our expectations, particularly when it comes to our older son. We crossed that bridge largely in 8th grade, but still have moments where we have to remind ourselves that there is nothing wrong with taking more time, starting slower, etc. It would be much worse to pay for a four year school & then fail out right away. We know multiple parents that this has happened too, and they are angry/upset/disappointed. Worse, the kids often are so ashamed & frustrated that they don't always want to continue schooling at a community college or ever. It's a terrible situation.
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Amen, @CrustyBadger . On top of that, if you have executive functioning issues, often that type of time & organizationally intense projects results in kids shutting down. It's not a great solution for all types of kids.
Young adults with executive functioning challenges are often well-served by taking a gap year to mature, work, and take their time with college applications. At least that is my observation from seeing some very bright kids go off to college and totally flame out. An extra year or two to mature and they usually go back and are successful. They just weren’t ready at 18.
It can be really hard for some high-achieving parents to accept this alternate approach (or any alternate approach). We’re so trained to believe there is one very rigid path to success and any deviation from that path will certainly lead to failure. I personally feel like that’s silly but I understand that it’s hard to let go of the idea that there is only one true way to be successful.
I'm unsure if this is directed at me, since you quoted me, but I agree. I noted above that a gap year, or first attending community college was something we were considering for one of our kids. Ultimately it's his decision, but at the current rate (he's 15), I do not seeing going off to a four year school in three years as a successful plan.
Mostly it was a general comment on EF as it relates to preparedness for college. Tying it back to the original topic (will you pay?): the parents of these kids expressed some regrets that they didn’t give their kids more space to mature before starting. A few of them shelled out pretty big $$$ only to have that first year be sort of a ‘lost’ year.
I do plan to pay for at least part of my kids’ college so my takeaway from all of this is that I want to really make sure that they’re ready. Because man would it suck to spend a quarter of their college fund only for them to have redo those classes because they failed out.
I think your macro point is also true. My husband & I were both fantastic students, and very self motivated. We've had a lot of adjustments on our expectations, particularly when it comes to our older son. We crossed that bridge largely in 8th grade, but still have moments where we have to remind ourselves that there is nothing wrong with taking more time, starting slower, etc. It would be much worse to pay for a four year school & then fail out right away. We know multiple parents that this has happened too, and they are angry/upset/disappointed. Worse, the kids often are so ashamed & frustrated that they don't always want to continue schooling at a community college or ever. It's a terrible situation.
This is more or less what happened to me and my two sons. We all started out great at our various schools, but none of us were really mature enough or directed enough, so we lost a year or two in various ways. At the end of the day, I graduated at 23 and had a good career from which I was able to FIRE at 46.
The nice thing about it is I can tell my sons that what they went through is totally fine and things will probably work out for them too. The older son switched schools and majors, graduated with basically straight A's and got a good job right out of the gate. The younger son was fortunate to take a gap year that coincided with COVID, and started back this week in summer school.
It does seem from my limited perspective that on average young men may need another year or two. Young women are more likely to be ready. My youngest had a better freshman year than their brothers. But even they applied to switch schools, something we're now waiting to find out how that's going to turn out.
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My oldest just finished her first semester at a public college. I paid $5,000, she paid $500.
It worked out well enough so we'll do it again.
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Sort of late on this thread but my kids used the military to pay for their undergraduate degrees.
One from a military academy and the other via a ROTC scholarship (campus-based) to a $$$ out-of-state private school.
The latter plans to come back home to fulfill their military obligation in the Guard. Our state also covers graduate tuition for military members at its public schools.
Here in the USA there is a lot of military money for college...ROTC scholarships, military academies, enlist & use the GI Bill afterwards, even joining the Guard covers tuition in many states at public schools.
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"I just watched my son go through the college application process last year, and saw what was required in hunting down and applying for scholarships. It requires intense organizational skills and good writing ability, as well as a good dose of self esteem. Kids who do not have string writing skills can get overwhelmed with the amount of essays required in applying for colleges plus the extra scholarship applications, especially if they are applying to multiple colleges because they are chasing merit aid. "
I agree, getting to college can be extremely hard for a child that lacks self esteem, or suffers from anxiety. We can't even talk about college with my high schooler, she gets anxious and flustered. I fear it'll be extremely hard to get her to apply for scholarships, which would ultimately help US in funding her college. Because yes, and many posters may disagree, paying for your child's college IS a parent's obligation to help them get a good start in their career. Anyone who is comfortable with your child starting out with a 100+k student loan - I don't know how you can sleep at night. You may argue that there are cheaper educational choices out there - but excuse me, having a good college name on your resume does give you a tremendous advantage in the job market, and even more do the academic and social connections that you make while at school.
What I want for my child is that she can graduate from a good college with no debt. We've been saving in a 529 fund and plan on paying for full 4 years at the flagship state university here; if she's lucky to get into an even more desirable school - well, we'll be super proud and we'll figure the finances out.
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Just a side comment from someone who works with undergrads daily.
Probably the greatest college-related financial gift a parent can give a child is to raise an adult who can stand on their own two feet when they're 18. Don't be their best buddy, and don't enable their teenage impulses. Teach them to navigate the world and have some grit. Babying a teenager is a parent consuming a child's future.
If a parent does the work of raising an adult, they can send them to the state flagship where full pop tuition is likely $15-20k, and they're never going to be seriously disadvantaged by that degree (bonus points if you happen to live in Michigan, California, etcetera). It's a sink-or-swim environment, but a kid who's ready for it can thrive and graduate in four years.
The alternative is to not do the work to raise an adult, and that puts a bunch of the burden for becoming a self-sufficient adult on the kid after they leave the house. Some flame out in state school. Some take seven years to graduate. Some go to a place with all manner of supports where the sticker price tuition is $50k+/year. All of these are extremely expensive options necessitated by people not raising their kids to function as adults. It translates a bunch of non-monetary costs for the parents during high school (conflict, angst, doubt, familial discord) into monetary costs for the child (student loans). Parents are essentially having colleges raise their kids to adulthood (i.e. parenting) at the child's expense (rather than their own), often crippling that child's financial life for the foreseeable future.
The point here is that "paying" for a child's education can be financial, but it can also be in the form of doing all the unpleasant stuff to get a kid ready for the world. Raising an independent kid who can hack it in a sink-or-swim environment can easily be worth 100k+ to that child.
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We will be covering two years of community college, anything else will be funded by our child working and paying cash.
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I'm just checking in to gloat. We work at an expensive private university and get tuition remission as part of our benefit package. A small part of me has been worried for years that something would go wrong, or our kid wouldn't get accepted, or the university would say we don't qualify or who knows what. But, I just logged into my son's account to check the bill and there is a big fat -25,000.00 listed for the Fall 21 semester! And it's tax free!
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Wow, @Spiffy - that is amazing! Definitely worth a gloat :-)
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I'm just checking in to gloat. We work at an expensive private university and get tuition remission as part of our benefit package. A small part of me has been worried for years that something would go wrong, or our kid wouldn't get accepted, or the university would say we don't qualify or who knows what. But, I just logged into my son's account to check the bill and there is a big fat -25,000.00 listed for the Fall 21 semester! And it's tax free!
Awesome news. This is the way to go.
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Trying to convince my son to go to a lower-ranked but still a state flagship University with a full ride National Merit Scholarship rather than pay a balance of $80K after scholarships at a higher-ranked state flagship University. We have the funds in his 529, so it's a matter of opportunity cost, no debt involved. He wants to study computer science. Any thoughts? Or convincing arguments?
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@PepperPotts - how is the difference between CS programs at both schools? Can you leverage some of that info to convince him? Congrats to him, btw, on the National Merit Scholarship! I also received one, & it changed my life. Ironically for this thread, it helped me attend a smaller private ($$$$) college vs our giant state university, and that was definitely the right step for me.
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We planned on saving for college as soon as our two children were born. They both have BAs they got in four years and have no debt. They are 30 and 33 and employed and grateful. I have seen their peers struggle with massive loan debt. My son took out a loan for a summer program and my daughter took out a small loan for her masters. For today’s youth, who knows what college financial aid will look like? We insisted that they maintain a B average and they did that with no problem. They also handled the admission process themselves and received good merit scholarships at smaller private schools that made the cost comparable to state university. For my daughter, we were able to negotiate a higher aid package by showing her preferred school a competing offer. Often the community or corporate scholarships you get are deducted from the total financial aid offer.
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Trying to convince my son to go to a lower-ranked but still a state flagship University with a full ride National Merit Scholarship rather than pay a balance of $80K after scholarships at a higher-ranked state flagship University. We have the funds in his 529, so it's a matter of opportunity cost, no debt involved. He wants to study computer science. Any thoughts? Or convincing arguments?
I'd advise to also research how competitive the CS majors are to get into, as well. My son has a quite a few friends that ended up having to switched universities after a couple of years because they couldn't get into the major because it was so competitive, even though they had the grades and pre-reqs. Another got into the major, but it's so hard to get a seat in the required CS classes that he ended up doing two super-senior years in order to get all the required credit hours to graduate (pandemic likely played into the need for a year six a bit, as well, but still good to keep in mind).
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Trying to convince my son to go to a lower-ranked but still a state flagship University with a full ride National Merit Scholarship rather than pay a balance of $80K after scholarships at a higher-ranked state flagship University. We have the funds in his 529, so it's a matter of opportunity cost, no debt involved. He wants to study computer science. Any thoughts? Or convincing arguments?
I'd advise to also research how competitive the CS majors are to get into, as well. My son has a quite a few friends that ended up having to switched universities after a couple of years because they couldn't get into the major because it was so competitive, even though they had the grades and pre-reqs. Another got into the major, but it's so hard to get a seat in the required CS classes that he ended up doing two super-senior years in order to get all the required credit hours to graduate (pandemic likely played into the need for a year six a bit, as well, but still good to keep in mind).
I'm worried about this. His favored school, Texas A&M, requires a 3.75 GPA for the freshman year to guarantee the first choice major, and CS is the most popular major, so it's competitive. The engineering school is also huge, and growing.