Paying for Kids' College

[AdrianC]

I read a Q&A recently with Warren Buffett, and one of the things he talked about was the importance of having his college paid for by his parents, and doing the same for his own children.

My wife and I came out of college with little debt. I went to school in the UK and back then it was government paid, even living expenses. My wife went to school in the US, mostly paid for by her parents. We both got well paying jobs out of college and immediately started saving. It's a huge advantage.

We plan on funding college for our three kids. There'll be rules of course. It won't be a free ride. I'd want their studies to be useful and vocational based (I'm an engineer, wife is an accountant). The study of French Renaissance literature would be on their dime.

[Mr. Green]

Were you intending for there to be a question in there, perhaps if other people who FIRE'd already included college expenses in their scenario?

[tobitonic]

Presuming this is a question (as in, what are others doing?), we also plan on funding college for all of our kids. We currently have two and might have / adopt two more.

In our case, it would be a free ride. Our parents paid for us without stipulations, and we'd naturally do the same for our kids.

[AdrianC]

Presuming this is a question (as in, what are others doing?), we also plan on funding college for all of our kids. We currently have two and might have / adopt two more.

In our case, it would be a free ride. Our parents paid for us without stipulations, and we'd naturally do the same for our kids.

Intended as a discussion topic if people are interested.

I applaud your intent.

My brother/sister in law have two in college, one about to be. They fund 50% - they want the kids to have "skin in the game" - though I think their finances would not allow full funding in any case.

A free ride without stipulations could be expensive, depending on the school. Our nephew is considering out of state schools. There are perfectly good in state schools with half the tuition cost. Going out of state seems like needless money wasting to me.

[La Bibliotecaria Feroz]

Presuming this is a question (as in, what are others doing?), we also plan on funding college for all of our kids. We currently have two and might have / adopt two more.

In our case, it would be a free ride. Our parents paid for us without stipulations, and we'd naturally do the same for our kids.

My education was paid for freely, and I actually wish I had gotten more guidance. Neither of my parents had finished college at the traditional age (mom went back later, dad never finished) and I'm not sure they realized how at sea I was as far as career choices. I flopped around for years with my English degree. (Taught community college, went to grad school for a while, taught in a private middle school without certification, eventually went to library school.)

I'm not saying there should have been rules, or that they should have told me NOT to do English, but some semblance of guidance would have been extremely welcome. I love my job but it pays, like, nothing and I often wonder if I should have been actuary or something instead.

[mxt0133]

I am more with the camp that believe in 'putting on your own life jacket first'.  Coming from a culture where the parents become dependent on their children, my parents have prioritized ensuring that their children will not have to support them when retire.  Ironically, they have no plans of stopping work because they don't know what else to do. They supported us in college by providing room and board.  They also purchased us used cars but we had to pay for gas, insurance, and maintenance.

There are a few reason I am prioritizing retirement savings now vs college savings:

1) I don't know how long I will be able to work to earn money, they give loans for college but not for retirement

2) The state I live in does not give tax breaks for 529k contributions, the money I have after maxing out my taxed advantage accounts goes mostly in vanguard funds and some for their education now.  We decided to have one SAHP vs having two incomes.

3) The current plan is to either be retired or FI by the time my oldest child gets to college.  This will give us options to control our earned income to maximize financial aid.  Earned income has a higher weight when calculating expected family contribution vs investments.  Retirement assets and primary residence are excluded when calculating EFC.

4) If we do choose to fund their education, it will be partial which we will cash flow with current income or have them take out loans and pay it for them.  College is an expensive a place to find what one wants to do or find themselves.  I would rather fund their living expense for a year either traveling abroad or volunteering to help them find what they really want to do with their lives.

[Cap_Scarlet]

I'd want their studies to be useful and vocational based (I'm an engineer, wife is an accountant). The study of French Renaissance literature would be on their dime.

So anything which is not vocational is not useful?

As an employer the candidate that stands out is the the one with the right attitude and breadth of intellectual ability.

[seattlecyclone]

We just had our first child so we haven't fully decided to what extent we're going to pay for college. We will give at least some money, and are planning to open a 529 account this year for that purpose.

I'm not sure about just paying the full cost for whatever school he might want to attend, though. I like the thought of raising him with an eye for getting a good amount of value for his money, and I think it's much easier to look at picking a college through that lens when you have some of your own money at stake. Again, this is all very preliminary, but I'm leaning toward giving him enough for tuition at a state school. He would be responsible for earning money through summer jobs and/or scholarships to cover room and board, and would thus have every incentive to minimize costs in that area. If he wants to go to a more expensive school, the same deal would apply: if he feels a higher-tuition school is worth the extra money, he'll have to find a way to pay the extra cost.

I agree with the "put on your own life jacket first" philosophy to a certain extent. However when you think about letting the money compound for 18 years, it doesn't really seem like four years of tuition at a state school will cost all that much in present dollars. As someone who is starting parenthood pretty close to FI already, I'm looking at working an extra few months to give my son a few years' head start financially. Seems like a good deal to me. Everyone's situation is different though.

[maizefolk]

Posting to follow. Recently confronted the fact that there are two small kids I may have to help through college in around 15 years if they're going to get help from anyone.

I'd want their studies to be useful and vocational based (I'm an engineer, wife is an accountant). The study of French Renaissance literature would be on their dime.

So anything which is not vocational is not useful?

As an employer the candidate that stands out is the the one with the right attitude and breadth of intellectual ability.

Not AdrianC, but you highlighted the wrong word. The key word is and. If they wanted to say anything not vocational is not useful they could have said  "useful, in other words vocational."

"useful and vocational based" means there are potentially four categories: not useful and not vocational (their example was french renaissance literature), useful but not vocational (I'd put majoring in physics/biology/computer science etc in this category), vocational but not useful (for example many vocational IT programs don't seem to have any luck at all getting their grads hired), and both vocational and useful (engineering/accounting/nursing and so on).

Now if you want to have an argument about which specific majors should be considered useful or not, you certainly can. But that has been argued to death already and I doubt anyone's opinion is going to be changed.

[PhysicianOnFIRE]

I am funding 529s generously for my 2 boys.  There should be enough to cover expenses for undergrad and grad / professional school at a state school. 

I have no idea what they will want to do with their lives, but I do know that the average med school grad today has $180,000 in debt.  In 20 years, it will most likely be a lot, lot higher.

There was a similar thread recently: http://forum.mrmoneymustache.com/ask-a-mustachian/college-savings-how-much-and-why/msg970048/#msg970048

[tobitonic]

Presuming this is a question (as in, what are others doing?), we also plan on funding college for all of our kids. We currently have two and might have / adopt two more.

In our case, it would be a free ride. Our parents paid for us without stipulations, and we'd naturally do the same for our kids.

Intended as a discussion topic if people are interested.

I applaud your intent.

My brother/sister in law have two in college, one about to be. They fund 50% - they want the kids to have "skin in the game" - though I think their finances would not allow full funding in any case.

A free ride without stipulations could be expensive, depending on the school. Our nephew is considering out of state schools. There are perfectly good in state schools with half the tuition cost. Going out of state seems like needless money wasting to me.

Thanks : D I definitely agree that an in-state state school is more financially friendly than an out-of-state state school, but the math isn't always the same when looking at high end private schools.

I got into a pair of those back in the day, and one suggested I'd get done with 16k in loans. I went with the other and graduated with 2k in loans. Of course, a few of the state schools were offering full rides, but it all worked out because I went to a completely different grad school and met my wife.

I'm not saying we'll push our kids toward those kinds of schools; to the contrary, we'll definitely lay out the advantages of going local with them. I just mean we wouldn't say "NOOO!" offhand if one of our brood said they wanted to apply to a particular school.

Our approach will probably be to save up a pile of money and then divide it by the number of children we have, and go over the numbers with them so they can see how many expenses they'd have covered with school A vs school B vs...etc. And naturally, as they grow older, we'll have lots of conversations about professions, money management, and how to be happy in life.

[Livewell]

We are funding about $25k each for our kids via 529, and fortunate to be able to do so.  They may or may not have all the money they'll need, will depend on compound interest.   

Likely given how expensive college is they will end up having to pay for some of it themselves but that's a valuable responsibility for them.  If they manage the 529, they should be ok.   Giving them a helping hand so they don't come out too debt ridden is our goal.

[Sarnia Saver]

A co-worker of mine had an interesting strategy to paying for his kids full ride in college.  He made them take out a line of credit in their name and forced the kid to charge everything to it.  At the end of the semester with passing grades he would pay off the original balance of the tuition and books, leaving the kid to pay for the interest charges and anything else that was charged to the line of credit throughout the year.  He bought a four bedroom house close to the college and rented out 3 rooms (with 12 month contracts) which covered the cost of the mortgage, leaving his daughter to live for only 1/4 the cost of utilities/internet/etc.  After his daughter was finished school he was able to sell the house for a bit more than he bought it.

Seems like a pretty solid plan.  Taught his daughter the cost of borrowing money without the unfortunate side effect of being tens of thousand in debt and allowed him to save up/work overtime throughout the year to pay for it. 

[AdrianC]

I'd want their studies to be useful and vocational based (I'm an engineer, wife is an accountant). The study of French Renaissance literature would be on their dime.

So anything which is not vocational is not useful?

As an employer the candidate that stands out is the the one with the right attitude and breadth of intellectual ability.

Learning how to think critically is exceedingly useful, which they could get with a degree in philosophy. It's not very marketable, though. After working for a few years as a hotel clerk they could go back to school and learn some marketable skills.

[AdrianC]

Not AdrianC, but you highlighted the wrong word. The key word is and. If they wanted to say anything not vocational is not useful they could have said  "useful, in other words vocational."

"useful and vocational based" means there are potentially four categories: not useful and not vocational (their example was french renaissance literature), useful but not vocational (I'd put majoring in physics/biology/computer science etc in this category), vocational but not useful (for example many vocational IT programs don't seem to have any luck at all getting their grads hired), and both vocational and useful (engineering/accounting/nursing and so on).

Now if you want to have an argument about which specific majors should be considered useful or not, you certainly can. But that has been argued to death already and I doubt anyone's opinion is going to be changed.

This is an internet message board. I'm not trying to write prose that will stand up in court. If you're not sure what I meant why don't you ask?

All of my kids are interested in biology. If they all go on to study biology or zoology I will be very happy to pay 100%.

[StetsTerhune]

Learning how to think critically is exceedingly useful, which they could get with a degree in philosophy. It's not very marketable, though. After working for a few years as a hotel clerk they could go back to school and learn some marketable skills.

I really hope my kids don't have to be making decisions based on what is "marketable." I'd love to be able to give my kids enough money so they can do, to paraphrase warren buffet, "whatever they want, but not be able to do nothing." I'm all for my kid actually being competent and capable of having square job. But I really hope they don't need to make life decisions based on what will best signal to some middle manager that they're competent and capable of having a square job.

[FurtherJourneys]

We have an almost 2 year old daughter and started putting money aside for a 529 right after we found out I was pregnant. We are saving aggressively ($400 a month) into it because we are targeting FI in January of 2017. My husband will quit his job and I will continue to work part time bc I like it. Once my husband quits we will either stop adding to the 529 or only add into it when we have a surplus of cash. We're planning on having around $12,000 in her account and just letting it grow.

Thanks to a full academic scholarship, a part time job, and deciding to join the ANG I was able to graduate with only a $3,000 loan for a study abroad experience that was worth every penny. I would have never joined the military without needing to pay for school, and as a midwestern girl from a small town that experience really helped me gain confidence and people skills. My husband's parents covered the first year of his engineering degree and he worked/took out loans for the rest.

I think it is impossible to know what education will look like in the future or how much it will cost. I'm happy that we will be able to help our daughter pay for her schooling (if she chooses to go), but I'm not expecting to pay for all of it. I will also not dictate what she studies, my husband knew at 10 what he wanted to do, while I took a more meandering path. Every experience and job along the way gave me skills that I am now using. I am going to trust that our good example and some frank conversations about money will help her to make the right decision for her. Even if that decision isn't the one we would want her to make.

Our goal is to raise her to be the boss of her life, not a worker bee in the hive.

[dogboyslim]

We have 3 kids and plan to fund up-to the equivalent of tuition/books/room & Board of the major public university in our state.  Our financial portfolio is such that there is pretty much zero chance our kids get any sort of need-based aid, so it will either be loans, scholarships or cash.  We are still trying to decide if we will restrict payment based upon study topic, but we will certainly suspend support for poor grades (Defined as cumulative GPA < 3.0).

I'm interested in how much people are saving for this.  Based upon the current 4-6% inflation in college costs, I'm looking at needing some $400k to cover the 3 kids for the 10 years starting 7 years from now, assuming each kid finishes in 4 years.  I'll say it's quite daunting to consider that along with our other financial goals.

[Mr. Green]

I suspect my position on this will depend on my kids' disposition. I believe that not having any help is one of the big reasons I developed such a strong work ethic and pretty much all the literature/surveys I've ever read support this notion. The current trend of rising college costs means that by the time my kids are college aged, it will be a phenomenally expensive proposition. Not many 17/18 year olds really know what they want to do but the idea of dropping 200k+ for an education in a field with dim employment prospects isn't exactly an intelligent decision. Plus, the internet is changing the way learning happens and the traditional college route isn't the only path to better career and life choices anymore. College isn't the separator it once was in a number of fields, particularly software engineering, which is going to be the main white collar job of the next generation.

At the same time, I was incredibly fortunate in college with scholarships and jobs that allowed me to graduate with very little debt and I believe little debt also helped me early in life. My hope would be that by the time my kids are that age we will have taught them the value of money, as well as the idea that there are paths beyond the typical ones. I think if my kids display strong work ethic and a willingness to make their own way, but the cost of school is still an obstacle, we would anticipate easing that burden. If my kids were more cavalier and didn't understand what they were undertaking I would probably leave it all on them, because the sooner they learn that lesson the better off in life they will be, unless they end up in the unfortunate subset of people who never learn that lesson.

[flyingaway]

I would not want to have kids if I did not want to provide them with food and education, when I can afford the costs.

First kid went to an Ivy league university, annual cost was about $75K, paid in full by reducing our 401K contributions. (Well worth it. His first year salary + bonus was $185K). Second kid goes to a state university, annual cost is about $30K. (This looks easy after the first kid). We never saved any money specially for education, just paid it on the go.

[AdrianC]

Learning how to think critically is exceedingly useful, which they could get with a degree in philosophy. It's not very marketable, though. After working for a few years as a hotel clerk they could go back to school and learn some marketable skills.

I really hope my kids don't have to be making decisions based on what is "marketable." I'd love to be able to give my kids enough money so they can do, to paraphrase warren buffet, "whatever they want, but not be able to do nothing." I'm all for my kid actually being competent and capable of having square job. But I really hope they don't need to make life decisions based on what will best signal to some middle manager that they're competent and capable of having a square job.

They may have a love of French literature. That's fine as a hobby. For earning a living they do need to consider marketability.

I want my kids to learn marketable skills and abilities so they don't spend their lives answering to some middle manager, and especially in a low-paying no-prospects job. I want them to be professionals and entrepreneurs. But it's up to them, of course.

My dad ran a couple of small businesses. Just as soon as I was able I did the same.

[AdrianC]

Our goal is to raise her to be the boss of her life, not a worker bee in the hive.

Yes! And she can't be the boss if she lives paycheck to paycheck working as a barista.

She needs to compete in the global marketplace. She needs drive, determination, intelligence, and marketable skills.

[Mr. Green]

I want my kids to learn marketable skills and abilities so they don't spend their lives answering to some middle manager, and especially in a low-paying no-prospects job. I want them to be professionals and entrepreneurs. But it's up to them, of course.

My dad ran a couple of small businesses. Just as soon as I was able I did the same.

Unless they pursue a business degree, a college isn't going to teach them entrepreneurship. Parents are a much better driver for them picking up that trait. My parents owned businesses when I was young. I'm sure that has played into my makeup. It looks like you've already got a leg up since your an entrepreneur. If your kids really get the bug, college often times just gets in the way of someone looking to become successful in business. A kid starting a business at 18 could know more about business by 21 than the professor teaching his classes. If they just want to be a professional, that's a different story.

This is a big reason why FI is important to me. I want my children to grow up watching me pursue what it is I want to, as an entrepreneur, even if my aim is not to become a big successful businessman. They will learn life skills and ideas for success from seeing that at an age when they're impressionable and their brains are like sponges. That's what will inspire them to create something of their own, instead of working for someone else to build that guy's dreams. Without that example, by the time they are college aged, the marketing machine and stereotypes have already invaded their brains and have likely significantly reduced the chances of my kids developing their entrepreneurship muscle.

[AdrianC]

I'm skeptical that a business degree teaches entrepreneurship. Understanding a business isn't hard. A business degree seems (to me) to be the default degree when the kid can't decide what to do or found science or engineering to be too much work.

I agree, parents are where the kids often get that trait. And if one of our kids had a great business idea and decided not to go to college I would be open to swapping the 529 for start up capital. I'm just not sure how well an 18 year old will do in business. It's better to get some real-world experience first.

[Mr. Green]

I'm skeptical that a business degree teaches entrepreneurship. Understanding a business isn't hard. A business degree seems (to me) to be the default degree when the kid can't decide what to do or found science or engineering to be too much work.

I agree, parents are where the kids often get that trait. And if one of our kids had a great business idea and decided not to go to college I would be open to swapping the 529 for start up capital. I'm just not sure how well an 18 year old will do in business. It's better to get some real-world experience first.

I would agree with your sentiment regarding the business degree. The only thing it will do is teach them to better understand accounting, cash flow, essentially the money side of the business but many of those concepts won't become the most beneficial until there was some success and enough money flowing through the business that inefficiencies can develop.

The only way to learn is through try, fail, and adjust. Sprinkle in reading, learning, and some mentorship and that's all there is. I know a number of my peers who weren't "smart enough" to go to college and ended up in business for themselves and at 30, if you compared them to the kids with a college education, you'd question the value of college. Of course not all of them succeed in business but that's where the learning, mentorship, etc. come into play.

[AdrianC]

The only way to learn is through try, fail, and adjust. Sprinkle in reading, learning, and some mentorship and that's all there is. I know a number of my peers who weren't "smart enough" to go to college and ended up in business for themselves and at 30, if you compared them to the kids with a college education, you'd question the value of college. Of course not all of them succeed in business but that's where the learning, mentorship, etc. come into play.

My younger brother quit school at 16 and worked in the family business. Now he owns it. He's been very successful. College isn't necessary for financial success.

[arebelspy]

I am strongly against paying for college for kids (as discussed elsewhere on the forums).

I think it's detrimental to them in multiple ways as well as unnecessary.

To each his own--if you think it will benefit your children, do it.

I happen to think it's harmful, and would not do that to my child.  I will encourage them to go to college, if they want to (I'm not an anti-college zealot), and will support their efforts for getting scholarships, grants, and loans, as well as jobs to help pay for it.

They will know all this all while growing up to be prepared to make it as an adult when they reach that time.

I realize others may strongly disagree with this; I've debated it with people here on the forums several times.  Just throwing out my opinion.

To each his own.  :)

[AdrianC]

I happen to think it's harmful, and would not do that to my child.

Do you have children?

[arebelspy]

I happen to think it's harmful, and would not do that to my child.

Do you have children?

My first child was born a few weeks ago.

I admit that perhaps my views will change, but since it's based on logical (and scientific) reasons, I really doubt it.  Scientific studies would be the only reason why they would.

If it did change, it definitely wouldn't depend on major, but would be a no-strings attached thing. 

That type of manipulation via money makes me feel skeevy.

On top of that, we know a money making major isn't required for success, nor happiness. I was a philosophy major. My wife was an English major.  We both enjoyed the hell out of those majors, and our careers, and still FIRE'D before 30.

So if your plan works for you, great, go for it!  I just have a different view on the two main parts of your plan (paying for it, and forcing them to have a "profitable" major, if I did), and you asked for opinions. :)

[AdrianC]

Congratulations! Welcome to parenting. It's a wonderful adventure.

What scientific studies have there been showing the detrimental effects of providing a college education for your kids?

Anecdotal: Warren Buffett, my wife and myself all had our college educations provided for us (and we all worked some through college), and we all turned out OK.

[arebelspy]

No time/interest to debate it now, just providing another viewpoint.

If you're genuinely interested, feel free to look up my prior posts on the topic.

Short answer: no scientific data on that topic, per se, because you can't do a controlled experiment on it, but I believe it falls under economic outpatient care--read The Millionaire Next Doors chapters on "helping" your adult children via money gifts.

Anecdotal: Plenty of people who had their college paid for did very well.  And plenty of people who had to do it themselves did as well.  I know people in college who didn't take it seriously because they had no "skin in the game"--parents were paying. Others who had to pay their own way, via loans and/or working and knew the value of it.  I think this is more likely the case than the one who has it all paid for, for them, and does great despite that.

[lifejoy]

Presuming this is a question (as in, what are others doing?), we also plan on funding college for all of our kids. We currently have two and might have / adopt two more.

In our case, it would be a free ride. Our parents paid for us without stipulations, and we'd naturally do the same for our kids.

My education was paid for freely, and I actually wish I had gotten more guidance. Neither of my parents had finished college at the traditional age (mom went back later, dad never finished) and I'm not sure they realized how at sea I was as far as career choices. I flopped around for years with my English degree. (Taught community college, went to grad school for a while, taught in a private middle school without certification, eventually went to library school.)

I'm not saying there should have been rules, or that they should have told me NOT to do English, but some semblance of guidance would have been extremely welcome. I love my job but it pays, like, nothing and I often wonder if I should have been actuary or something instead.

It's kind of hilarious how similar my path has been! Did the English degree, flopped straight into library school. Still meandering about. It might have been nice to do a degree that lends itself well to an obvious and direct (and high paying) career path, but I wouldn't trade the English degree for anything. It taught me critical analysis, how to express myself clearly, and it was one of the most enjoyable times in my life.

:D


Sent from my iPad using Tapatalk

[mamagoose]

I am strongly against paying for college for kids (as discussed elsewhere on the forums).

I think it's detrimental to them in multiple ways as well as unnecessary.

To each his own--if you think it will benefit your children, do it.

I happen to think it's harmful, and would not do that to my child.  I will encourage them to go to college, if they want to (I'm not an anti-college zealot), and will support their efforts for getting scholarships, grants, and loans, as well as jobs to help pay for it.

They will know all this all while growing up to be prepared to make it as an adult when they reach that time.

I realize others may strongly disagree with this; I've debated it with people here on the forums several times.  Just throwing out my opinion.

To each his own.  :)

You took the words out of my mouth. We feel paying for college is the first step in adulthood, learning how to get from Point A to Point B, putting one foot in front of the other, etc. I paid my own way and have a great sense of pride from the experience.

[dogboyslim]

I think it's detrimental to them in multiple ways as well as unnecessary.
...
I happen to think it's harmful, and would not do that to my child.  I will encourage them to go to college, if they want to (I'm not an anti-college zealot), and will support their efforts for getting scholarships, grants, and loans, as well as jobs to help pay for it.

I don't have a problem with you having a contrary opinion.  I don't even want to suggest you are wrong.  Who knows?  My reasoning for saving is that a great deal of the financial aid package for my children will be determined based upon my income and wealth, and they would be disadvantaged because the FAFSA will say they don't need help.  I plan to save the total mentioned above.  What I actually end up paying for them is still very much TBD.

[La Bibliotecaria Feroz]

I don't feel like I have a choice.

My kids' college will be paid for. Not by me, out of my grandfather's wealth. They already have low-five figures each (they're in preschool).

If any portion of the wealth every ends up in my bank account, I will be expected to use it to pay for my grandchildren's education. And so on.

Now, they can't force me, and I suppose I could turn the money down... but that seems churlish. And since my education was paid for, it seems unfair to my kids. Not sure if breaking the cycle is either possible or desirable.

Here's what I WILL do:
1. NOT fill out any applications for my kids. My mom filled out my brother's college apps. He was thrown out after his first semester and still has no degree (age 32), although he has worked steadily and is self-supporting.
2. Guide them in choosing where to go.
3. Make sure they understand that the $$ is finite and that taking out loans is not an option.
4. Teach them to live with a budget before they go.

[arebelspy]

Here's what I WILL do:
1. NOT fill out any applications for my kids. My mom filled out my brother's college apps. He was thrown out after his first semester and still has no degree (age 32), although he has worked steadily and is self-supporting.
2. Guide them in choosing where to go.
3. Make sure they understand that the $$ is finite and that taking out loans is not an option.
4. Teach them to live with a budget before they go.

All great ideas.

[onlykelsey]

I am strongly against paying for college for kids (as discussed elsewhere on the forums).

I think it's detrimental to them in multiple ways as well as unnecessary.

To each his own--if you think it will benefit your children, do it.

I happen to think it's harmful, and would not do that to my child.  I will encourage them to go to college, if they want to (I'm not an anti-college zealot), and will support their efforts for getting scholarships, grants, and loans, as well as jobs to help pay for it.

They will know all this all while growing up to be prepared to make it as an adult when they reach that time.

I realize others may strongly disagree with this; I've debated it with people here on the forums several times.  Just throwing out my opinion.

To each his own.  :)

You took the words out of my mouth. We feel paying for college is the first step in adulthood, learning how to get from Point A to Point B, putting one foot in front of the other, etc. I paid my own way and have a great sense of pride from the experience.

I'm somewhere in the middle.  I'd like to be in a position to keep my kid(s) from crushing debt, but definitely not put them through on my own dime.  I think economic outpatient care is an interesting way of looking at this.  Friends whose parents put them through the ivy league school we went to with me are still funding them now, and we're pushing 30 at this point.  That said, cosigning on loans or offering to pay 50% the tuition if they work part-time seems like a good idea.  Especially advanced degrees result in crushing debt.  I put myself through 8 years of school and paid it off at 28, but only because I took a sort of crushing, brutal job that I was very lucky to get.

[bernardnb]

I know people in college who didn't take it seriously because they had no "skin in the game"--parents were paying.

I definitely know some people who did this, but as someone who did have their parents pay for college, I felt the exact opposite.  I better do damn good, so I'm not wasting their money.

[Cap_Scarlet]

We feel paying for college is the first step in adulthood

Seriously?

Then you have a very weird view on what you need to do to "qualify" for adulthood

[arebelspy]

We feel paying for college is the first step in adulthood

Seriously?

Then you have a very weird view on what you need to do to "qualify" for adulthood

I don't think there's any qualifications for being an adult, but I agree that if having your children forge out on their own, taking responsibility for their education and the costs thereof is a good first step.

[tobitonic]

Presuming this is a question (as in, what are others doing?), we also plan on funding college for all of our kids. We currently have two and might have / adopt two more.

In our case, it would be a free ride. Our parents paid for us without stipulations, and we'd naturally do the same for our kids.

My education was paid for freely, and I actually wish I had gotten more guidance. Neither of my parents had finished college at the traditional age (mom went back later, dad never finished) and I'm not sure they realized how at sea I was as far as career choices. I flopped around for years with my English degree. (Taught community college, went to grad school for a while, taught in a private middle school without certification, eventually went to library school.)

I'm not saying there should have been rules, or that they should have told me NOT to do English, but some semblance of guidance would have been extremely welcome. I love my job but it pays, like, nothing and I often wonder if I should have been actuary or something instead.

Oh, there'll definitely be guidance, but that's folded into our parenting. For example, we don't tell our 2 year old that candy and cake are bad, but we do eat a primarily plant-based, unprocessed diet most of the time and she knows things like cake or pretzels are things for special occasions (e.g., birthdays or trips to the grandparents'). She certainly can get upset about things, but she's yet to fuss about not being able to buy a candy bar while at the grocery store. We talk about all kinds of life things, and finances, careers, and so on will naturally be a part of that.

[MsRichLife]

We don't plan to pay for our son's university education. We also don't plan on insisting he has one.

His great-grandfather left him a $2500 dollar inheritance, and we add $20 per month. By the time he's 18, we plan to let him choose what he does with it. Use it for Uni, start a business, go overseas or buy a car if he doesn't have one already.

I fully expect that with the financial mentoring he'll get at home, he'll have plenty of his own money saved by then as well. I certainly did, and that was with less than exemplary role models.

[AdrianC]

I know people in college who didn't take it seriously because they had no "skin in the game"--parents were paying.

I definitely know some people who did this, but as someone who did have their parents pay for college, I felt the exact opposite.  I better do damn good, so I'm not wasting their money.

Exactly. If our kids don't think this way then we have failed as parents.

[AdrianC]

Short answer: no scientific data on that topic, per se, because you can't do a controlled experiment on it, but I believe it falls under economic outpatient care--read The Millionaire Next Doors chapters on "helping" your adult children via money gifts.

"...millionaires spend a large amount of their resources on their children's educations. What was the most frequently mentioned gift that millionaires received from their parents? Tuition!" - The Millionaire Next Door, Page 165.

[arebelspy]

Keep reading...

[AdrianC]

Well, I can totally get behind this:

"What can you give your children to enhance the probability that they will become economically productive adults? In addition to an education, create an environment that honors independent thoughts and deeds, cherishes individual achievements, and rewards responsibility and leadership. Yes, the best things in life are often free. Teach your own to live on their own. It's much less costly financially, and, in the long run, it is in the best interests of both the children and their parents.

There are countless examples of the inverse relationship between economic productivity and the presence of substantial economic gifts. Our own data, collected over the past twenty years, repeatedly support this conclusion. Independent of college tuition, more than two-thirds of American millionaires received no economic gifts from their parents. And this includes most of those whose parents were affluent."

[soccerluvof4]

We will pay for the equal of in state tuition for our 4 kids. The older two one has a full athletic out of State and the second a partial out of state so this makes it easier for us BUT in there case they know that the monies saved in 529's and other sources over and beyond have been rolled down to the younger two (not really true yet but they think so). You never know but i feel good there commitments will hold up. But we also have said that they will need to work during school and if they don't get good grades and put a great effort in then their on their own. The one with a full ride gets almost 5k a year in stipen so better graduate with cash in the bank.  I will say this was/has been my biggest internal self conflict as I see both sides so I wouldn't tell anyone else what they should do BUT if your going to do something just don't let it wreck your retirement plans.

[nancyjnelson]

I paid for my oldest child's college on the go.  The month after she graduated, I retired from my federal job (with 25 years in at age 50, I qualified for an immediate - albeit significantly reduced - pension).  I have a 529 for my remaining child that will almost cover tuition at the state school where she has been accepted.  I have taken a part-time job (14-20 hrs/week) at Home Depot (I am also learning a LOT about house maintenance and repair - a win for me) to pay for books, room and board.  My kid also has a part-time job.

I understand where many readers are coming from when they say they are telling their kids they have to finance their own college education.  That said, the expenses associated with a college education (and the expenses associated with failing to get one) have shot up immensely, and the economy has changed for the worse. 

If your kid isn't lucky enough to want to go into one of the skilled trades (electrician, plumber, etc), there is little out there for them with just a high school degree.  One example is the federal agency where I used to work - we rarely hired office assistants (formerly called secretaries) who did not have a college degree. And financing a college degree is more difficult - my dad managed to do it by working a full-time job in the summer, and part-time jobs during the school year.  Unless you are lucky enough to live in a town with a good community college or university and parents who are willing to have you live with them, this is no longer possible.

I've read it before on this forum, but college debt is the worst kind of indentured servitude.  I don't know whether my kids are going to be successful at what they dream of doing, but I at least want to give them a chance to try.

 

[dabears847]

I'm personally hoping to cover a portion or all of college for the kids which has been hard to plan for with the calculator simulators. My income is going to drop big time once I fire and this will offer huge opportunities to grants and schooling discounts previously not available. I remember being so overwhelmed doing it on my own, so I will look to help more with the process. Plus I worked full time and went to school full time.

1. Lower Income
2. Grants - I will help
3. Scholarships - I will help
4. Savings Personal Investments 
5. In State Only, preferably Community College 2years then State College 2years

For savings, I'm hoping that I or the kids would qualify for subsidy loans at a long term low rate. This will reduce Fire calculator risks of failure by spreading out the payment vs. a lump sum payout.

Thoughts?

[flyingaway]

I am strongly against paying for college for kids (as discussed elsewhere on the forums).

I think it's detrimental to them in multiple ways as well as unnecessary.

If your kid will go to an Ivy league school, then your MMM life style will almost make sure that he/she does not need money from you, if your taxable income is low enough. Their scholarships are most need-based.