Paying a college kid to keep scholarship eligibility?

[March]

We're about to send a kid to college who will start out with a free ride. We want to make sure he keeps eligibility. He's saving us tons of money, so we're inclined to share some of that savings with him.

Has anyone tried incentive methods, such as paying a flat fee per semester if the grade point is within eligibility range with bonuses for As and deductions for Bs, etc.?

[branman42]

I would say that it should be on him to keep the full ride.

I do have a question - is it a full tuition scholarship or full tuition, room, and board?

If it is full tuition, I definitely think it is appropriate to help subsidize his living costs, and just let him know that it is while he is in college. If he loses his scholarship, he either leaves college or chooses to use loans to pay for it if/until his eligibility is restored.

If it includes room and board, make sure you take into account that if you claim him as a dependent, his scholarship is subject to the kiddie tax, making it taxed at your rate. In this instance, I would give him a much smaller allowance than the first scenario, and pay for the taxes he must pay on that scholarship.

If it includes room and board, see if he can receive it for living off campus. This can be a great deal in LCOL areas.

I currently receive a full ride with room and board, and I have always lived off campus. It cost less for rent and food for the whole year than I received in one semester from my scholarship, and I had a much nicer place than the dorms. Due to the layout of my campus, I was actually closer to my main building than the dorms!

I am happy to answer any other questions you have as well:)

[nereo]

FWIW, I had a similar situation with my parents

Basically the arrangement went like this:
My parents agreed to pay 80% of my college costs (tuition, room, board & books). 
I had to cover the remaining 20% and for all 'spending' money (going out, entertainment etc)
As part of the deal I had to keep my GPA above 3.0 and stay on track to graduate

During my 4 years I had both an academic scholarship and a partial athletic one.
The deal that we made was that my scholarships would first reduce my contribution (the 20%), and then my parents split any remainder with me 50/50.

The end result was that I basically paid nothing for my undergraduate but felt I had to work hard to maintain my scholarships. 
I 'banked' about $5k/year, and my parents 'saved' a similar amount. FWIW this was about 15 years ago and my total school costs (in-state) were roughly $25k.
It worked out really nicely for both myself and my parents, and I plan to extend a similar rdeal to my kids if/when that comes about.
YMMV.

[mxt0133]

They way my parents handled this with my brother and I when we got scholarships were to allow us to live at home.  They really didn't have money saved for college nor did they really have a plan on how to help us to go/finish college.  But they did give us room, board, and books with an allowance even though we both worked for spending money.  They even bought us cars so that we had transportation to college, but had to pay for insurance, gas, and maintenance.

When it times for my kids, I have one 529k that I am putting money into to cover maybe one year of college for each child.  The plan is to cash flow one year, have the child be responsible for another year, and either get scholarships/AP/dual enrollment for the remainder.  The hope is to not pay 'retail' for college and exhaust all possible options before taking out loans, if they even decided to go to college.

[AmberTheCat]

its sometimes hard to keep those scholarships based on GPAs. I get your thoughts about keeping up that GPA. It saves so much $$. College GPA is different than our high schools; an "A-" isnt an A or 4.0; it's a 3.67.  That was a shock to our kiddos!

I have one kid with a full tuition scholarship, based on maintaining a 3.5. His GPA has slowly decreased as his classes have gotten harder. He has 3 semesters left; i'm pretty sure he'll stay over the 3.5.  In some of his classes he's happy with a B+; yet that's a 3.33; and will ruin his GPA. it's tough!

no, we have not "paid" to keep the GPA high.  We've ingrained in him how he's getting through without loans. We've encouraged him not to work during the school year to focus on grades. We've paid for his housing; his oldish car/transportation, & his phone. We try to verbally praise him in front of relatives. But that's it -- because we have another kid currently in college, and 2 more to go, we just can't pay them to keep scholarships; no extra.  I have known some parents who get their kids nice cars when they get scholarships, or let them go abroad. Those are some other ideas besides paying. 

[GizmoTX]

We had an irrevocable trust set up for DS' education; he knew that all scholarships that he earned meant that the trust didn't have to spend it, giving him more to benefit from later. So in effect, paying him to keep them.

[NoStacheOhio]

We're about to send a kid to college who will start out with a free ride. We want to make sure he keeps eligibility. He's saving us tons of money, so we're inclined to share some of that savings with him.

Has anyone tried incentive methods, such as paying a flat fee per semester if the grade point is within eligibility range with bonuses for As and deductions for Bs, etc.?

I don't know what your parenting style has been up to this point, but most of the research points to external motivations being ineffective (or even actively harmful) to building resilient, capable adults. Basically, you want your kid to succeed because they want to learn and do well in college, not because you're paying them. I would have a serious conversation about what would happen in case they lost their scholarship, whether that means transferring to a cheaper school closer to home, debt, etc. Not that these are things you would be doing to them, but rather inevitable and natural consequences for not working hard enough.

I would frame any allowance/stipend you provide as "living expenses" similar to the money you've spent while they were younger.

I would also work really hard to set your student up for a successful first year (even if it means an extra time in school). Because of my major, I was overloaded on courses every semester and it nearly broke me. Looking back, I would've been much better off with fewer courses and more time to spend on them. A little bit of failure is a good thing, but not when the failure means losing a big scholarship because someone pressured you into taking on too much. The first year of college is a huge change, even for someone with maturity.

Lots of schools have reciprocity for the GenEd requirements (the classes everyone takes, regardless of your major). Hopefully you have a community college nearby, see which of those classes you can knock out over the summers. It's not free, but it's cheap and takes a huge stress load off. I took one to three classes during all three of my undergrad summers, and it was an excellent decision.

[Dee18]

As a college professor, I appreciate that you want your child to do his best.  But I would consider the realities of the situation.  Sadly, many colleges and universities award first year scholarships knowing it is statistically unlikely (maybe even impossible) that all will retain them.  (That is why when making a school choice it's important to look at % of students receiving merit aid in later years).  I would factor into your decision what the average grades are for his major.  As this article points out, the average gpa for education majors is a 3.36, the average for engineering is 2.9.
https://blog.prepscholar.com/average-college-gpa-by-major
I see many students take easier classes or change a major because they can't get all A's in their initial, harder choice.  Often the switch is from a major that has many job openings, to one that has a much higher gpa average, but no job openings down the road.

[former player]

We're about to send a kid to college who will start out with a free ride. We want to make sure he keeps eligibility. He's saving us tons of money, so we're inclined to share some of that savings with him.

Has anyone tried incentive methods, such as paying a flat fee per semester if the grade point is within eligibility range with bonuses for As and deductions for Bs, etc.?

I don't know what your parenting style has been up to this point, but most of the research points to external motivations being ineffective (or even actively harmful) to building resilient, capable adults. Basically, you want your kid to succeed because they want to learn and do well in college, not because you're paying them.

Agree with this: you already have an intelligent and motivated kid: offering monetary incentives might well have a perverse effect.  I wouldn't mention money for the time being.

Instead I would talk to him about the change to being at college and about coping strategies.  Let him know that college is different from high school, and part of the experience is learning to adapt and thrive in that new environment.  He's obviously been at or near the top in school: he's joining a different cohort now and it may take a little time for him to find out where he fits into it: as long as he puts in his best efforts you will be proud of him.  The college will want him to succeed, and will provide assistance to students to help them do that: student advisers, learning advisers, and so on, and he should take advantage of them if he thinks he needs them: there is no shame in that.  Tell him you understand that this is a big step towards adulthood but that you are still there to provide support if he needs it.

Keep the money he's saved you: you may need it for other kids, you may need it for yourselves, you may want to give it to him later as moving expenses to his first job or a deposit on a house.  You will find a way to share it with him at the appropriate time.

[March]

Thanks everyone for the advice! You've given me and my wife a lot to work with!

[secondcor521]

Lots of good advice already.

If you do decide to offer any form of incentive, I recommend spending some time with your kid making sure that the incentive is working the way you want it to.  Do they understand the incentive?  Does the incentive actually motivate them?  Is it creating the right amount of proportional effect?  Are there unintended consequences?  If there are siblings, is the offer in the ballpark of being reasonable and fair to the siblings?

[CindyBS]

We are giving our children a set amount of money called the "start of life fund".   It has rules for spending - we must approve all withdrawls, you have to get some sort of degree or vocational training that will lead to a viable job, and you are expected to move out by 23 at the latest.  We are ok with this money also being used for things like a used car, or transportation to/from school, books or other college related expenses that are not things like spring break trips, booze or pizza money.  Any money left over from the fund after college or what not can be used towards a downpayment on a house or something similar.

Under this system, our kids are incentivized to apply and get scholarships and avoid costly colleges because that will lead to more money for other things (car, house payment, etc.) and both of our kids are getting the same money, regardless of which college they attend.   

[AmberTheCat]

to CindyBS: i like your approach! how'd you figure out how much $; how many kids do you have? 

[Mezzie]

Like the professor above said, some majors are harder to keep a high GPA in than others. The first year or two should be okay what with the majority of classes being gen ed, but after that, the chance of losing that scholarship rises exponentially. Save your money for then; don't reward when things are easier and then face a financial hardship down the road.

My suggestion to ensure your kid has skin in the game is this: if he loses the scholarship, then you will match the amount he is able to earn via work and scholarships to pay for school. That will encourage him to continue looking for non-parental, non-loan funding while still receiving your support.

Also, and I say this as a teacher who has seen this happen, please make a decision soon so he knows what the deal is, and please don't make him feel bad if he loses the scholarship. Especially if this is a difficult major (say, science; grade inflation is rampant in the humanities, unfortunately), he could be doing wonderfully and still not meet the high GPA requirements. His ability to stick with it should be praised.

[CindyBS]

to CindyBS: i like your approach! how'd you figure out how much $; how many kids do you have?

2 kids.

Grandparents have given some money over the years and they have a 529s that both the grandparents and us have contributed to.  We decided on giving enough to make the total from all sources would equal $50K.  So, not enough to pay for everything, but a significant amount of help. 

We have a very strong college credit program at our high school (take classes and get dual college and high school credit, the state pays the cost).  Our kids are in G/T advanced classes and are being told to take those plus AP.  We know several college aged students in our community who graduated high school with 6-8 college credits that way. 

They will most likely need some loans or do some community college classes plus scholarships if they don't want loans.   The money is enough for them to have help, but they certainly are going to have to have some skin in the game.  It won't be a blank check or a free ride from us.

[Jaguar Paw]

 I cannot remember how much exactly, but my father paid me some money if I got really good grades in college. It was essentially an incentive to focus on school instead of earning money to take out pretty girls to a movie. It wasn't much, but saved me from having to work 15 hours a week at 8 dollars per hour. I ended up graduating with a 3.7 after being meh in high school. I think I have been a functioning adult for 11 years post college so it won't always scar your kid forever. 

[Goldielocks]

Two different approaches..
1)  My parents had the $$ to pay for my college, but I did not get anything other than a small  supplies gift, because of the scholarships that I got.  My summer work had to cover the gap in $'s for room and board and any spending money.    Their point was that they wanted an equal opportunity for sis and I, not equal money, and my scholarship did not take anything away from me, I just did not get anything extra from it.  Also, after I was married and did a masters 6 years later, I did not even consider asking mom and dad to contribute to it.

Fast forward 20 years

2)  My DD -- I told her in grade 10 how much we were saving for her tuition and books, but not for living away.  She was starting to feel anxious because many of her friends parents had zero plans to help them.   Move ahead 2.5 years and she has captured scholarships for half that money.   We are holding what she doesn't need for her, in case a masters is in her future, or she wants to start a business, or as a down payment.  The trick is that she can propose what to use it for, but if we disagree, she doesn't get it.  It is supposed to be a large step up in life, not a vacation / car fund.

So -- I guess I either did not think ahead, or I did not actually appreciate my parents' method.

[ixtap]

DH's parents waited until he graduated, then gave him what they had saved for his college. I don't know if they told him ahead of time that they would do this if he kept his scholarship or not.

[Cgbg]

My oldest has a full free ride. He’s graduating soon and has lived off campus for a couple of years. He’s an engineering major and had to keep a 3.0 to keep the scholarship. He took college math in high school (the classes one needs for an undergrad engineering education) plus a few other classes so walked in with some credits. That allowed him to take the minimum number of classes his freshman year. He understood that losing the scholarship would mean returning to his home state.

Once he made it through his first semester, he ramped up his number of classes and activities. He worked for a consulting firm the summer after his freshman year and then worked remotely for another one and a half years as he had time. He worked in non-engineering part time jobs at the school (playing piano for plays, writing for the campus newspaper, teaching a lab section etc). He’s had no issues with keeping his scholarship although he’s waxed and waned on the level of activities he’s been involved in depending on his class load.

We paid him several hundred a month for the first year; he waived that off after his freshman year. We pay for his phone. He can charge to our credit card but he generally pays me via Venmo immediately.

(He’s headed to a fully funded Ph.D program next fall; hasn’t made his choice yet but they’re all paid plus about a $30k/year stipend. He’ll be fine.)

Second kid is on an almost full ride, also engineering. He has to maintain a 3.5- much higher bar. He’s in his third year and works part time and lives off campus. We pay his rent and send him some spending $. We also provided a phone and a car. He climbs/skis a lot and buys his own gear. He cooks all his own food. He’s less communicative about his grades; I just see the $ kickback in his student account each term so I know he has achieved at least the 3.5 average. If he didn’t make the grade, I’d see some serious charges there.

(That kid will be working after graduation. I’ve had multiple cut-the-financial-cord conversations with him. It won’t be immediate but I won’t pay for much once he’s employed -other than continue to cover him on my insurance until he gets married or ages out.)

What we’ve done over the years is build up their 529 plans, even once they started college. We haven’t touched them- and will (sooner or later) turn them over to them to do what they see fit with- they can save them for future kids, cash in (and pay taxes $) or whatever. That’s their reward really.