Paying for College?!

[COEE]

I'm still thinking of what I'll do with our daughter (7yo).

We will be FI around the time she goes to college.  I've thought about taking a menial job myself to pay for her school, to show her the sacrifice that would have been required of her to pay her own education (I think it will take about 2 years of a minimum wage job to pay for it).  I've also thought about continuing to work in my high wage job for a few months to pay for all 4 years of her school, but I don't think that would leave as much of an impact on her.

I won't pay for her housing - my house is 20 minutes from the nearest state school, and she is welcome to stay with us.  I will also not pay for travel, beer, pot, and/or condoms - she'll have to get her own job for spending cash.  I will probably insist she pay for her own wedding / house down payment / etc as well.  I just remember the burden as others have of having student loans that were looming and enslaving us for 5 years after graduating - even with decent paying jobs.

Of course this is all predicated on her getting good grades, being a good student, citizen, etc.

We currently just have what people gave us when she was born saved up for her in an ESA.  I don't really like the idea of saving to maybe use it on education someday in the future.  I'd rather cash flow it.

Okay - maybe I'll pay for condoms.

[ltt]

How do most of you weigh paying for your kids college or letting them take out loans and pay for it themselves?  Lets skip the college is not for everyone and focus on the question.

My parents paid for tuition and I paid for the rest.  I feel that we should do the same for our kids but my wife thinks they should have a free ride and we pay for tuition, books and rent.  Along with some spending money.

Looking at the cost of the local college they both want to attend it will cost $26,000/year plus any extras.  So for both of them that will be around $250,000.

We have saved $175,000 so far for college but I struggle with giving that up because it would move us to FI in 3 years if we didn't use that for college.  Otherwise we have about 8 more years.

I've read articles that say don't save for your kids college at your own retirement expense.  Just curious what most of you are doing and opinions on the question.

My husband would have probably been retired now if we weren't paying for college for our kids, but the money we had earmarked for college, we spent/are spending on college, and we had nowhere the amount you have.  If you've earmarked $175,000 for college for your kids, I find it somewhat odd that you now don't want to spend the money on education.

Will your kids receive scholarships?

Can they go to a community college for two years, and then the remaining two years at the local college to cut costs?

I think your numbers are a little high and to tack on $42,000 for extras is too much.

$26,000 for 4 years = $104,000 x 2 kids = $208,000.  $208,000 - $175,000 = $33,000 - the education tax credits amount to $2,500 per year per kid depending on how much is spent/and how much you and your wife make.  There is a phase-out number I believe for those tax credits.  So there should be $10,000 per kid over the 4 years.  So, now you are at $33,000 - $20,000 = $13,000 remaining divided by 2 kids = $6,500.  They can always take out a small loan for that amount if desired.

I have found out that college kids can be extremely resourceful and don't need all that much money once they are in college.  One son has been working a work-study on campus and summers and has been able to contribute toward his education. Our other son has been working part-time for the past few years.  They have also been able to earn spending money this way.  I would think that, more than likely, (and you haven't mentioned the ages of your kids), that they are going to want to earn their own spending money by working part-time in college.  Trust me, most kids want to be independent by that sophomore year and want to be earning and spending their own money. 

Do you or your wife receive any bonuses? We've also used my husband's bonus toward paying for college.

[BTDretire]

If your children don't have skin the game, then why would they work hard?

SITG - Skin In The Game - really important principle!
“Don't handicap your children by making their lives easy.” - Heinlein
We pay grade/behavior based allowance starting at grade 1 and requiring 50%savings rate of all allowance + earned money into 'college account'. The 12yr old is worth almost $2k now, and it'll climb rapidly now that he's picking up more odd jobs.
The kids will be expected to handle education expenses beyond HS. It'll be good for them. It's seldom been easier to afford higher education; they'll survive if they are motivated.

I’ve seen this a lot and I’m not buying it. Maybe it depends on the kid? Do your kids not work hard in high school because they don’t have skin in the game?

I wondered myself if I would change my habits going from junior college (free) to public university (not free and some paid by me), to private grad school (crazy expensive but reimbursed by employer). In each instance I worked reasonably to really hard independent of the cost of sitting in that classroom. The motivation cane from within.

  Hmm... I'm a skin in the game type, but in my daughters case she didn't have skin in the game in HS and graduated 4th in a
pretty good and pretty large school. This allowed her to go to college tuition free because of her grades. She joined many clubs to pad her extracurricular activities. Then she got a Masters on us, as added insurance to help her get into a Dental college, she got in by the skin of her teeth the first go around.
Thank God for that, she was determinded and I would have hated having to see her wait another year.

[TheWifeHalf]

When our 3 kids were born, Ohio had a program that we could buy college credits at the current price, and they would be equal to credits when they went to an Ohio school. Our thinking was, you want to go out of state, you're on your own.
Also, we didn't have to pay income tax on any money spent buying the tuition credits, ever.

We bought enough credits for a little over a year for each kid.
Luckily, the credits could transfer between kids.
The local community college gave 2 years free to any kid that maintained a 3.0 in high school.
So our oldest son went 2 years to another CC while in high school, then switched to the one with 2 free years (he had it all planned - he wasn't good enough to play on a big college golf team, but he was a star at the free cc.)  His Dad and I thought he'd go on to a 4 yr, but nope, he got a job.

Our youngest joined the Navy, came out educated.

So the 2 boys gave their tuition credits to their sister. She went 2 years at the free CC and then went to nursing school. She's an RN

Plus a few of the credits no one needed, so we paid taxes on the ones that were left, and got the rest of the money.

The kids were all raised with the idea that school doesn't end with high school, and with the idea that they would be partly responsible for paying for part of it.
We were lucky, we have 3 smart kids that were fortunate being born when they were. College was still manageable, and mortgage rates (all 3 have houses) were under 3%.

[Adam Zapple]

I'm not sure whether "skin in the game" is a motivator or not, but I tend to think it may motivate some kids.  My parents paid my full tuition/room/board.  As an immature 18-22 year old, I understood that I needed to do well in college and was able to get good grades but did not care much about actually learning anything.  I found the easiest way possible to get through my classes and did not challenge myself.  At that time, I had absolutely no concept of money or the sacrifice my parents made to pay for my schooling.  Nor did I have any real understanding of the real world, what career I wanted to pursue or what I wanted to do with my life. 

I wonder how many kids have a true appreciation for the difference between, say, $15-20K in student loans and $100K+ in student loans and can really understand the burden of debt until they are actually paying it down.  I don't think I would have truly been able to grasp it at that time in my life so not sure if "skin in the game" would have done much for me...hard to say.

[lemonlyman]

My parents didn't contribute to my college education. I have no intention of contributing to my children's. The process of choosing a viable degree, a reasonable school, and a plan for payment are all valuable life skills for adults, which is what they'll be. If they are driven, they'll get it done. If they aren't, I think the money would be better utilized elsewhere anyways.

Before college and adulthood, if they want to entertain extra educational endeavors (events, camps, alternative styles), I'll gladly pay for them.

[Much Fishing to Do]

I'm not sure whether "skin in the game" is a motivator or not, but I tend to think it may motivate some kids.  My parents paid my full tuition/room/board.  As an immature 18-22 year old, I understood that I needed to do well in college and was able to get good grades but did not care much about actually learning anything.  I found the easiest way possible to get through my classes and did not challenge myself.  At that time, I had absolutely no concept of money or the sacrifice my parents made to pay for my schooling.  Nor did I have any real understanding of the real world, what career I wanted to pursue or what I wanted to do with my life. 

I wonder how many kids have a true appreciation for the difference between, say, $15-20K in student loans and $100K+ in student loans and can really understand the burden of debt until they are actually paying it down.  I don't think I would have truly been able to grasp it at that time in my life so not sure if "skin in the game" would have done much for me...hard to say.

This is a good point re: "skin in the game" and loans, my first couple years of school my parents helped a lot. After that I took out a lot of loans (or what was a lot back then, nothing I guess compared to now).  Neither really effected my approach I don't think (had ups and down thru both), as at neither time did I really comprehend what that amount of money meant.  I guess if I had worked ten years out of high school first and then gone back and paid in cash (or borrowed then) would I have really been affected by the skin in the game argument because I'd understand what each $1k really represented. 

[FindingFI]

My college was paid for via a combination of parental support, me working, scholarships, and a small amount of loans. Looking back, I wouldn't have it any other way. It is unbelievable how many college kids don't work at all, and graduate having never had any kind of job. College is about learning life skills, and having a job in addition to studying (or at least in the summers) is a way to learn time management, budgeting and money management, the value of money, and the interpersonal skills that come with working with different types of people. I only worked about 15-25 hours a week during the school year

Of course I wanted to do fun stuff like study abroad, so I ended up taking about 4K in loans. These were federal loans, so they had reasonable interest rates, and the interest was deferred until after I graduated. It was very little money, but it still took me 5 years to pay it off, because I made very little money what with going joining the peace corps, then traveling for a year, and then going to grad school. And because paying off debt is hard! But, just that small experience with a little bit of student debt made me not want to take on any more, so I figured out a grad school path that was fully funded. And when I was awarded a three year National Science Foundation grant (making me a relatively well paid grad student who didn't have to teach), the first thing I did with my first check was pay off that remaining bit of student debt. I still remember how good it felt, and it was such a small amount of debt comparatively.

All of this is to say, not paying for everything is not necessarily the deprivation parents think it is.

My experience was very similar.  From the start my parents agreed to pay tuition, room, board, and books for 2 years anywhere we wanted to go and everything else was up to us kids.  So my education was paid for in part by them, some scholarships, jobs I worked in school (part-time and summers), and some loans.  Totally agree about it being the perfect time for learning life skills like managing money.

The single biggest thing that my parents contributed in terms of my college education was sitting me down with a loan calculator when I was trying to decide where to go.  I had my heart set on the expensive, out-of-state school where I had received no financial aid.  I had also been accepted to the well-ranked, in-state school with scholarships.  They showed me how much it would cost to pay back my loans at the fancypants school compared to the salary I could expect, and I was shocked!  Until that moment, no one had ever put the enormous scale of student loans and the massive impact they could have on post-graduation life into perspective.  Everyone, literally everyone, else treated student loans repayment as an after thought.  So I went in-state and graduated with a modest $17k in loans that I repaid during a fully-funded graduate degree instead of being saddled with $100k+ in loans which would have set me on a severely different path in life.

ETA: A quick note on starting at a junior/community college and transferring to a 4-year university... Confirm what will transfer in advance!!! I had a few friends try to go this route with engineering degrees and it didn't work out well.  Only 1/4 of their credits transferred so they went to school for 5.5 years for 4 year degrees.  No idea how it works in other fields, or at other schools. YMMV

[mak1277]

Skin in the game wasn't motivating for me personally.  I skipped just as many classes when I was paying for my education (through loans) as I did when my parents were paying.

[Retire-Canada]

I've read articles that say don't save for your kids college at your own retirement expense.  Just curious what most of you are doing and opinions on the question.

My mom had no money to give me when it was time for university and my dad is a SOB, but had $$. So I looked at my options:

1. Take money from dad
2. Student loans for 100% of costs
3. Coop program where I'd earn money to offset costs and get experience to enhance post-school employability
4. Free tuition and pay to go to school with military

I said FU to #1 and got everything lined up for the other options. I ended up going with #4. It was the best deal. Great education and having grown up a momma's boy after my parents divorced I figured it wouldn't hurt to get my butt kicked a little and prepare myself for the real world.

All in all it was a good choice. I came out of it with savings and no debt. Education and experience on my resume that allowed me to do anything I wanted in my field and beyond. I was proud to have not needed any money from my parents after I was 17 and I established a clear connection between analyzing a situation, making a good choice for the longterm and executing the plan.

So my advice is don't baby your kids. They are going to have to grow up at some point. The earlier the better. Let them figure out how to pay for school, how to evaluate the costs of various options and the how their choices affect their ability to pay the loans back. There comes a point in life where doing more for people is not helpful, but actually hinders them. Your support can come in the form of love and guidance during this process not writing cheques.

In the end I don't think there is anything wrong with providing some support once they've made a plan and they are executing it. Especially if it's performance based...whether that be grades, sticking to a budget, getting a PT job, etc.. whatever is appropriate for your kids. With all that money you saved you'll be in a much better position later on to help them should something happen and they actually need your help.

[CurrentDrunkFutureBrewer]

If college is the route future drunk wants to take, we would chip in under the following conditions:

-Pay 50% of their tuition as long as gpa is above, who knows, 3.0.  If whatever that gpa mark is not met - next semester our contribution is 0% until goal is reached.
-Live at home and commute.  Strongly advise them to purchase a good pillow in order to visit their friends to experience the weekend lifestyle without the price of admission.
-Attend an in state community college.
-Transfer after associates with a high enough gpa in order to discount tuition at an in state 4 year school.
 

[patchyfacialhair]

ETA: A quick note on starting at a junior/community college and transferring to a 4-year university... Confirm what will transfer in advance!!! I had a few friends try to go this route with engineering degrees and it didn't work out well.  Only 1/4 of their credits transferred so they went to school for 5.5 years for 4 year degrees.  No idea how it works in other fields, or at other schools. YMMV

Should be pretty easy these days. I have a degree in Business, and when I went to the local community college and picked a "major" one of them was "Business transfer." 60 credits of guaranteed transfer credits to be completed at the CC that will 100% be accepted at the state school 15 miles up the road.

I didn't take a single credit beyond that, and it worked pretty seamlessly. I think part of the issue is when kids don't do that research beforehand.

[intellectsucks]

ETA: A quick note on starting at a junior/community college and transferring to a 4-year university... Confirm what will transfer in advance!!! I had a few friends try to go this route with engineering degrees and it didn't work out well.  Only 1/4 of their credits transferred so they went to school for 5.5 years for 4 year degrees.  No idea how it works in other fields, or at other schools. YMMV

Should be pretty easy these days. I have a degree in Business, and when I went to the local community college and picked a "major" one of them was "Business transfer." 60 credits of guaranteed transfer credits to be completed at the CC that will 100% be accepted at the state school 15 miles up the road.

I didn't take a single credit beyond that, and it worked pretty seamlessly. I think part of the issue is when kids don't do that research beforehand.

This is very dependent on the transfer policies of the college you plan on transferring to, and your major at that college.  Some community college classes won't transfer, and some colleges/majors put a cap on how many credits you can transfer. Make sure that you talk to the admissions office at your final destination school, ideally before starting classes at the community college.

[OtherJen]

ETA: A quick note on starting at a junior/community college and transferring to a 4-year university... Confirm what will transfer in advance!!! I had a few friends try to go this route with engineering degrees and it didn't work out well.  Only 1/4 of their credits transferred so they went to school for 5.5 years for 4 year degrees.  No idea how it works in other fields, or at other schools. YMMV

Should be pretty easy these days. I have a degree in Business, and when I went to the local community college and picked a "major" one of them was "Business transfer." 60 credits of guaranteed transfer credits to be completed at the CC that will 100% be accepted at the state school 15 miles up the road.

I didn't take a single credit beyond that, and it worked pretty seamlessly. I think part of the issue is when kids don't do that research beforehand.

This is very dependent on the transfer policies of the college you plan on transferring to, and your major at that college.  Some community college classes won't transfer, and some colleges/majors put a cap on how many credits you can transfer. Make sure that you talk to the admissions office at your final destination school, ideally before starting classes at the community college.

This. I have a young friend who was recently burned by this, as she checked with the community college that the credits should transfer, only to find out that either they didn’t transfer to the 4-year college or only transferred as half-credit because they were considered less rigorous. It’s meant an extra year in undergrad for her (fortunately with a tuition scholarship). Always, always check with both schools.

[acroy]

If your children don't have skin the game, then why would they work hard?

SITG - Skin In The Game - really important principle!
“Don't handicap your children by making their lives easy.” - Heinlein

I’ve seen this a lot and I’m not buying it. Maybe it depends on the kid?

Some people are internally motivated, some are not.
The internally motivated do not need the extra motivation from SITG. The non-internally motivated... do.
So regardless of the kid, SITG guides/pushes for an outcome. This applies to all people in all tasks/situations, as the book of this name by Taleb explains very nicely. Disconnect SITG and chaos ensues.

[artemidorus]

I'm still thinking of what I'll do with our daughter (7yo).

We will be FI around the time she goes to college.  I've thought about taking a menial job myself to pay for her school, to show her the sacrifice that would have been required of her to pay her own education (I think it will take about 2 years of a minimum wage job to pay for it).  I've also thought about continuing to work in my high wage job for a few months to pay for all 4 years of her school, but I don't think that would leave as much of an impact on her.

One option I often see overlooked when discussing paying for college is taking a job at the college itself, be it the parents or the child themselves. I grew up in a college town and know MANY families that benefited from the fact that a university will typically give their employees and children of employees free tuition (usually with restrictions on how many years they have worked there prior to admission.) And for yourself and your children, the free tuition is not considered taxable income, although that could have recently changed.

And you'd be surprised how it affects the "skin-in-the-game" conversation. Almost every kid I knew that had this option worked their butt off to get into the school their parents worked at, as opposed to taking out $50K in student loans to go to just any old school.

My father-in-law is not a high school graduate and worked a menial job at a highly ranked private university, just because it was a job he could get. He put 3 children through college in the last 15 years, debt-free, at a school with a $40K+/year price tag. My best friend from high school only applied to one college, the one his parents worked at. They also put 3 kids through college in the last 15 years, debt-free, at a school with a $40K+/year price tag. And I knew several people that switched to taking full-time jobs at a school and did part-time degree programs for themselves, although this naturally slows down your career advancement.

These options aren't for everyone, but if you're already considering a menial job (for yourself or your child) to help pay off college, there's a MASSIVE benefit to taking that job at a college. It's worth considering for anyone not married to their current job.

[mm1970]

If your children don't have skin the game, then why would they work hard?

SITG - Skin In The Game - really important principle!
“Don't handicap your children by making their lives easy.” - Heinlein
We pay grade/behavior based allowance starting at grade 1 and requiring 50%savings rate of all allowance + earned money into 'college account'. The 12yr old is worth almost $2k now, and it'll climb rapidly now that he's picking up more odd jobs.
The kids will be expected to handle education expenses beyond HS. It'll be good for them. It's seldom been easier to afford higher education; they'll survive if they are motivated.

Because sometimes kids work hard because it's how they are wired and were trained.  And whether they are borrowing money or getting bankrolled by the parents, they work hard.  Whether they have skin in the game or not, they work hard.

It's a continuum, because you obviously have people who have skin in the game and still slack off.

[Jouer]

I don't have kids but I love what my in-laws did for my now wife. They paid for her university but each year they removed something they were paying for.

Year 1: paid for everything. tuition, room, food, books, expenses, everything
Year 2: no longer paid for expenses
Year 3: no longer paid for food
Year 4: removed something else (I guess I should be a better listener...lol)

After her first year, she got a job on campus that paid for the things her parents didn't pay for. She received the lesson of having to learn to manage money, the lesson of working for what you get....while not having to kill herself worrying about paying for the big stuff.

[TheWifeHalf]

One option I often see overlooked when discussing paying for college is taking a job at the college itself,

You just reminded me, our oldest had a job in the 'computer lab' part of the library I think.

He was full of funny stories:
He said that one night a gal came up to where he was sitting and asked "Where do I go if I'm need help with my computer?"

He said that was easy, he didn't even have to say anything, he just pointed up.
To the sign that said
COMPUTER HELP.

[Mississippi Mudstache]

Move to a state with free college? The State of Georgia paid tuition for me and my 3 siblings. All they require is that you maintain a 3.0 GPA.

Washington state's equivalent program only requires a 2.0, plus no felony convictions and a family income under $66,500/yr (for a family of five like mine).  But it's basically free college anywhere in WA for families with typical mustachian spending levels.

Sounds like another great program. I think Georgia's version (higher GPA requirement, no income phaseout) is more palatable for politicians the South where anything that smells of social welfare is looked upon as suspiciously as last week's meatloaf. I'm shocked that programs like this aren't more widespread.

Which other states offer free tuition to in-state students, and what are the requirements?

[Cooper62]

My oldest is starting college next month.  We have a good state school in our town and told her we'd pay full tuition and books and she could live for free at home.
She didn't like that option and wanted to live away at a different in-state public school.  She did very well in High School and earned a scholarship covering 60% of her tuition at the out of town public school.  The money we saved for the in-town school tuition is being used to cover the remaining 40% tuition plus some of the room and board at the out of town school.  She has an Indirect Federal Loan for $5,500/year to cover the remainder each year.  We may help her pay back the Federal Loan when she graduates.  She is expected to cover her own spending money and worked last summer and this summer to do so.  She can also get a part-time job during the school year if she wants more spending money.  Study abroad is on her own dime.  Even though this is an in-state public school it is a lot of money each year.  Tuition, room and board are about $30,000/year. 

I had to pay my own way through college and my husband went the military route to get his paid.  She took her studies seriously in high school so I'd like to make things easier for her than we had it.  She is an engineering major which I know will be a challenging program.  I want her to have time to succeed in this program and not have to work 30 hours week on top of a demanding major.  I feel parents should help with the college education as much as they can if their child is also working hard.  As I grew up my parents talked about the importance of education and going to college but when the time came there was no money for me.  She did what we told her to by working hard and earning some scholarships so I feel in return we should contribute as much as we can.

[MrSeven]

We have 4 kids with our first out of the house. I strongly believe that kids need to learn the value of money before they leave the house, otherwise its like throwing them into the world financially unprepared.

We teach our kids from a very young age that they need to pay for college. We tell them for every dollar they put into a college fund we will match it. My first son took it an ran with it. Started his own lawn mowing business in middle school and graduated high school one year early with ~$50K saved up. I still remember summers when he would come up and say, "dad I am putting $2000 into the vanguard account and I need you to match it." He has managed a checkbook for years, learned the value of putting money in low cost index funds, hired friends to help during the school year transition, and learned principles of losing checks and not having customers pay. He is very well prepared for the world and certainly understands the value of money and how much school costs. He studied aggressively for the ACT and got a full ride tuition scholarship. I have no doubt he will be fine in paying for college and taking care of himself in the future.

Our second son is doing the same thing; just finished 9th grade and has about $25K saved up. He has learned not to spend money on lunches even though all his friends do (they leave high school with cars their parents pay for and go out to eat on their parents dime). Again, he has gained valuable lessons about money, work, cash flow (as he has employees).

By the way, they pull their lawn mowers and equipment on a trailer using a bike. The neighborhood sees them consistently and they get asked to do work all the time.

I have a lot of friends that just tell their kids college is covered. Its a crap-shot ... some appreciate it and some completely take advantage of it. I come from a family with a 11 kids and had to pay for my own car, clothes, and school. I wouldn't trade it for anything as it taught me what the real world is like before jumping out on my own!

[Mezzie]

I worked full time and overtime while in school. My parents paid for books when I was at community college and lived at home. When I transferred and moved out, it was all on me. The important thing is that my parents were very clear for as long as I can remember that they could only help by paying for books for a couple years and offering free rent while we were in school. If we dropped out, we'd have to move out or pay rent. Since I knew that from the start, I started saving early on. It all worked out, though it was stressful and I had a very tight food budget.

I would offer the same plus X amount in tuition costs, where X is a solid number, not a percentage, so my kids (that I don't have) could plan accordingly. I would not feel comfortable paying for an adult's living expenses (though free rent at home would be offered) because I would not have been comfortable receiving such. It was necessary for my sense of independence that I was responsible for my own food, transportation, tuition, and entertainment (and, after I transferred, books and rent).

I think there are a lot of ways to approach this. The only wrong way is to not discuss it with your kids early on.

[nereo]

I think there are a lot of ways to approach this. The only wrong way is to not discuss it with your kids early on.

I agree.

[CrustyBadger]

Which other states offer free tuition to in-state students, and what are the requirements?

New York State has the Excelsior Scholarship, for students from families earning $125,000 or less (by 2019)

https://www.ny.gov/programs/tuition-free-degree-program-excelsior-scholarship

They say that income limit would include 75% of families with college aged children in New York State.

[enFuego]

I am a big fan of the notion of having skin in the game, but also know it depends on the student the definition of skin can mean different things.

I am the youngest of four. My parents cash flowed my older three siblings to go to college, two of them to expensive private colleges. My dad had to retire early due to health concerns and the spigot dried up instantly. I started at a private college with healthy financial aid and minimal loans due to my parents loss of income but the aid dried up quickly so I made my first real life decision to transfer to a state college, against my parents recommendations.  I lived at home and worked 30 hours per week at the same time. In hindsight that workload took away some from my ability to really focus on my education. But I was immature when I started college and lacked real focus and drive, and the effect of that hardship went a long way to developing grit in me.  It forced me to mature very quickly and I feel played a major role in developing my life skills and helping me build a career. I wouldn't trade that maturity for a free ride at all.  It made all the difference.

My wife's parents paid for state college for their kids but both were mature and are extremely conscientious students. They both worked while in college and never needed any extra skin in the game.

We are taking a similar approach with our children because we want to launch them into adulthood with a degree and not burdened by debt.  The expectation is that we pay state tuition and room/board. Any additional tuition, spending, gas, trips, books are all on them. DS1 started out of state and he quickly realized the loans were not worth it so transferred in state. That was his first real adult decision of significance. DD goes to a private university but earned most of the difference in guaranteed scholarships because she worked extremely hard in high school. She's on the hook for working during the semesters and summers to pay the remainder.  Both are/will be college debt free (and frugal).

We want to do the same for each our kids. But they're not all the same. They have different strengths and skills and weaknesses. And so each needs a little different version of the same treatment. But they all will earn it one way or the other, and develop some grit along the way. YMMV

[TheWifeHalf]

It's nice to read there are states that value kids getting a college education and will fund at least part of it. (I don't make a note of keeping up with such things because it just doesn't apply to us.)

[Kay-Ell]

I agree with others who say that we will know our kids well enough by the time they are college aged to know what will incentivize them, where they need additional support and where they need to be pushed.  My ultimate goal is a parent is to raise a kind, well rounded, capable and happy person.  If collee is a part of that, I should have about 100k set aside for my daughter by the time she's 18.  That's enough to cover 4 years of tuition, room & board, books and some expenses at either of our in state school.  I don't personally believe she would be best served by having me handle all of the money and just pay for everything.  I feel like learning about money, having a budget, and feeling both a small level of financial stress and a healthy dose of financial reward and accomplishment is as important to a well rounded education as anything she'll be studying on campus. 

Some ideas to help in that direction:

Starting in high school, I plan to familiarize her with her investment account.  I'd like to encourage her to get summer jobs throughout high school.  I'd like to get her started taking classes at a community college while still in high school, even if only fun electives.  I'd like to encourage her to weigh the ROI of various degrees and universities including trade schools and more expensive out of state schools.  I will likely encourage her to keep her education costs within that 100k rather than taking out loans to fund a more expensive education, but I won't be against it if she makes an informed decision to go to a more expensive out of state school.  I'd obviously like to encourage her to apply for grants and scholarships, to get the best deal possible on her chosen education.  Once she's in college, I absolutely want her to have whatever level of support she needs to succeed.  If she's not struggling with her studies, I'd like to see her have a part time job on campus.  And I may make this a requirement for her to pay her own expenses.  I may intelligently buy a condo near campus and have her learn to manage roommates, paying utilities and HOA fees, etc. with the understanding that her work on that front covers her housing expenses.  Then at the end of four years, I'd be really proud and happy if she had a good amount left over to give her a head start on wealth building.



 

[10dollarsatatime]

My parents didn't help me pay for college.  At 18, we were allowed free room and board as long as we were going to school, so that helped.  I got scholarships throughout, and my grandfather helped pay some of my tuition, but I still graduated with $14,000 in student loan debt.  This was mostly because I had no idea how to manage money at that point in my life.  And also because I moved out at 20, when I couldn't take living at home anymore.  My parents made too much for me to qualify for any grants, and they did actually laugh at me when I showed them what FAFSA said they could be contributing.  I didn't expect it anyway... I showed it to them as a joke.  The one thing they did that upset me a bit was when putting my school expenses on their taxes, it upped their refund by nearly $1500... and they didn't share it with me although I was paying for those expenses myself.  I still haven't decided if I'm justified being upset by that.  I think I had even moved out at that point, so the rent free thing didn't apply.

I'm still formulating what I will do with my future spawn...  I DO want them to have some skin in the game, but I don't want school to be as stressful for them as it was for me. 

[use2betrix]

Do you parents footing huge bills at expensive colleges have any concern or feel like you have any say in what they choose as a major? There are a lot of majors out there that are a terrible return on investment, and yes, I realize there’s more to a major than money.

I do like the idea of the child having some skin in the game and make sure they fully understand the costs, finances, and consequences.

[ltt]

Do you parents footing huge bills at expensive colleges have any concern or feel like you have any say in what they choose as a major? There are a lot of majors out there that are a terrible return on investment, and yes, I realize there’s more to a major than money.

I do like the idea of the child having some skin in the game and make sure they fully understand the costs, finances, and consequences.

Yes, I've read parents don't feel like they have a say, but we've always added our 2 cents worth.  Our first child is working towards a major in one of the STEM areas.  This is an area that they've always wanted to go into.  Our second child is working towards a degree where they may have more difficulty getting into their field, but it's at a community college.  Both went to their respective colleges with our blessings in their respective fields.

[ltt]

My parents didn't help me pay for college.  At 18, we were allowed free room and board as long as we were going to school, so that helped.  I got scholarships throughout, and my grandfather helped pay some of my tuition, but I still graduated with $14,000 in student loan debt.  This was mostly because I had no idea how to manage money at that point in my life.  And also because I moved out at 20, when I couldn't take living at home anymore.  My parents made too much for me to qualify for any grants, and they did actually laugh at me when I showed them what FAFSA said they could be contributing.  I didn't expect it anyway... I showed it to them as a joke.  The one thing they did that upset me a bit was when putting my school expenses on their taxes, it upped their refund by nearly $1500... and they didn't share it with me although I was paying for those expenses myself.  I still haven't decided if I'm justified being upset by that.  I think I had even moved out at that point, so the rent free thing didn't apply.

I'm still formulating what I will do with my future spawn...  I DO want them to have some skin in the game, but I don't want school to be as stressful for them as it was for me.

I find it interesting that somewhere along the line, our culture has somehow turned it into the parents being responsible for their children's college tuition, room, and board.  If you wanted to go to school, you worked and then came up with the money to go.  I also don't like the fact that somehow college is mandatory now.  They have "college week" at school in the 5th grade.  It's insane.

By the way, we set aside the education tax credit/s received and it went directly towards our childrens' college education.  We also took my husband's bonuses to be used toward education, wrote checks along the way, along with money we saved, and outside scholarships.

[jlcnuke]

How do most of you weigh paying for your kids college or letting them take out loans and pay for it themselves?  Lets skip the college is not for everyone and focus on the question.

/snip


I've read articles that say don't save for your kids college at your own retirement expense.  Just curious what most of you are doing and opinions on the question.

Well, first off, if they can't get any grants/scholarships based on merit etc, then they probably aren't going (or at least not on my dime) as that would indicate either a lack of effort associated with school and/or finding money for college or an inability to perform well enough academically for college to make sense. So I know you wanted to skip the college isn't for everyone, but I figured I had to mention that as a baseline for discussing the rest.

Now that I've established that their grades and effort in finding scholarships *should* have resulted in college already being affordable (assuming they aren't trying to go to a ridiculously expensive private school, which is a completely different conversation), then we're looking at school costing significantly less than "advertised" prices would lead you to believe.

Then, we have the choice of "how" to do college - community college with $0 debt is easy to pull off for the first two years, I'd probably pay for most of that and let them live at home for free if that were their choice. Public school in a "reasonable" state, after scholarships etc, should result in a total bill (tuition, fees, room and board included) of less than $15-20k/year. I'd pay half and let them pay the other half or take out loans for it, their choice but I'd strongly encourage them to work enough to pay for it (whether private job, university work-study, etc) out of pocket.

If they insist on out-of-state or otherwise overly expensive schools, then they'd get the same support as the public school option above, or ~$10k/year to help them out and an extensive discussion on how to do a cost-benefit analysis to ensure they understand what kind of benefit they might get for the massive amounts of debt they're about to voluntarily take on.

[SilveradoBojangles]

My college was paid for via a combination of parental support, me working, scholarships, and a small amount of loans. Looking back, I wouldn't have it any other way. It is unbelievable how many college kids don't work at all, and graduate having never had any kind of job. College is about learning life skills, and having a job in addition to studying (or at least in the summers) is a way to learn time management, budgeting and money management, the value of money, and the interpersonal skills that come with working with different types of people. I only worked about 15-25 hours a week during the school year

Of course I wanted to do fun stuff like study abroad, so I ended up taking about 4K in loans. These were federal loans, so they had reasonable interest rates, and the interest was deferred until after I graduated. It was very little money, but it still took me 5 years to pay it off, because I made very little money what with going joining the peace corps, then traveling for a year, and then going to grad school. And because paying off debt is hard! But, just that small experience with a little bit of student debt made me not want to take on any more, so I figured out a grad school path that was fully funded. And when I was awarded a three year National Science Foundation grant (making me a relatively well paid grad student who didn't have to teach), the first thing I did with my first check was pay off that remaining bit of student debt. I still remember how good it felt, and it was such a small amount of debt comparatively.

All of this is to say, not paying for everything is not necessarily the deprivation parents think it is.

My experience was very similar.  From the start my parents agreed to pay tuition, room, board, and books for 2 years anywhere we wanted to go and everything else was up to us kids.  So my education was paid for in part by them, some scholarships, jobs I worked in school (part-time and summers), and some loans.  Totally agree about it being the perfect time for learning life skills like managing money.

The single biggest thing that my parents contributed in terms of my college education was sitting me down with a loan calculator when I was trying to decide where to go.  I had my heart set on the expensive, out-of-state school where I had received no financial aid.  I had also been accepted to the well-ranked, in-state school with scholarships.  They showed me how much it would cost to pay back my loans at the fancypants school compared to the salary I could expect, and I was shocked!  Until that moment, no one had ever put the enormous scale of student loans and the massive impact they could have on post-graduation life into perspective.  Everyone, literally everyone, else treated student loans repayment as an after thought.  So I went in-state and graduated with a modest $17k in loans that I repaid during a fully-funded graduate degree instead of being saddled with $100k+ in loans which would have set me on a severely different path in life.

ETA: A quick note on starting at a junior/community college and transferring to a 4-year university... Confirm what will transfer in advance!!! I had a few friends try to go this route with engineering degrees and it didn't work out well.  Only 1/4 of their credits transferred so they went to school for 5.5 years for 4 year degrees.  No idea how it works in other fields, or at other schools. YMMV

That is so great that your parents did that for you. So often parents teach their kids nothing about money, interest, debt, etc.

[SilveradoBojangles]

I don't have kids but I love what my in-laws did for my now wife. They paid for her university but each year they removed something they were paying for.

Year 1: paid for everything. tuition, room, food, books, expenses, everything
Year 2: no longer paid for expenses
Year 3: no longer paid for food
Year 4: removed something else (I guess I should be a better listener...lol)

After her first year, she got a job on campus that paid for the things her parents didn't pay for. She received the lesson of having to learn to manage money, the lesson of working for what you get....while not having to kill herself worrying about paying for the big stuff.

This is actually what my parents did. The first year they paid for everything so I could live in the dorms and adjust to college life without having to work, and then began scaling that back. By the last year I was paying for everything on my own. Note that this was in part because I could have graduated in 3 years but didn't want to. Because that 4th year was 100% optional it was on me to pay for, which seemed fair.

[nereo]

If your children don't have skin the game, then why would they work hard?

SITG - Skin In The Game - really important principle!
“Don't handicap your children by making their lives easy.” - Heinlein

I’ve seen this a lot and I’m not buying it. Maybe it depends on the kid?

Some people are internally motivated, some are not.
The internally motivated do not need the extra motivation from SITG. The non-internally motivated... do.
So regardless of the kid, SITG guides/pushes for an outcome. This applies to all people in all tasks/situations, as the book of this name by Taleb explains very nicely. Disconnect SITG and chaos ensues.

@acroy - I agree that kids run the spectrum from strongly internally motivated to entirely non-internally motivated, but where I disagree is with the notion that students need to be paying for college our of their own pocket to have skin in the game (SITG).

I'd argue that for the self-motivated/internally-motivated student, their entire world and their measure of self-worth is tied to their performance in college.  In other words, they already have a ton of SITG - in the form of grades, progression, internships, etc.
Obviously this does not describe everyone but it certainly described me and most of my friends during my undergrad years (not surprisingly, almost all of us went on to advanced degrees and are in career professions now). FOr those sorts of students, providing for some or all of our tuition didn't alter our approach or motivation.  I earned several partial scholarships throughout my studies, and my parents paid for base expenses  (tuition & on campus housing) but nothing extra.  Those semesters where I had additional financial support from scholarships didn't reduce my focus - instead I felt liberated to drop my part-time job and take more credits and work in the lab more.

tl;dr - every kid is different, but money isn't the only kind of SITG. Many (most?) serious students already have their whole selves invested in their progress, perhaps too much SITG.

[albireo13]

We have 5 kids, 2 still in college.  No way we could pay for all their college.
Our thoughts:
* try to cover 2 years out of 4 yr program.  any graduate school is on them.
* try to keep their student debt to $50max, for each of them.  This means encouraging state schools

We have a good income and hadn't saved a lot for college help.  This means of course, no real aid for the kids for college.
Still, I think we will be out > $200K when done.

I think it's important for the kids to have "skin in the game".  However, if they had to cover all their costs they could easily end up with loans
> $100K .    This kind of debt, starting out, is crippling.   It also means the kids often have to move back home for a few years, to help with paying down the debt.

[Eric222]

My parents paid for all college expenses minus spending money for the first four years for a public school for their kids.  I lucked into a full ride, so they gave me all of the emotional support I needed for the next 20 years.  (I highly suspect they would have done that anyway. ;)). 

I am where I am today (and so are my siblings) because my parents did a good job of balancing providing help and unconditional love, but not giving us the impression that we had blank check to go screw up.  While my parents didn't pay for college, they did loan me a large amount of money during my divorce and custody battle - which I can't be thankful enough for.

I owe my parents a lot.  I want my kids to have the same opportunities and support that I had (monetary and otherwise).  My ex and I are each going to pay 50/50 for everything at a state school (minus spending money) for four years.  If my ex can't/won't/changes her mind, I'll pay for all of it (I'll be shocked if that happens though). 

I am incredibly privileged - how can I provide any less for my kids? (Financial support as appropriate, emotional support until the day I die.) 

(Note:  I'm not equating paying for college with emotionally supporting your kids - it's just inexorably linked for me because of my experiences.)

[Adam Zapple]

We have 4 kids with our first out of the house. I strongly believe that kids need to learn the value of money before they leave the house, otherwise its like throwing them into the world financially unprepared.

We teach our kids from a very young age that they need to pay for college. We tell them for every dollar they put into a college fund we will match it. My first son took it an ran with it. Started his own lawn mowing business in middle school and graduated high school one year early with ~$50K saved up. I still remember summers when he would come up and say, "dad I am putting $2000 into the vanguard account and I need you to match it." He has managed a checkbook for years, learned the value of putting money in low cost index funds, hired friends to help during the school year transition, and learned principles of losing checks and not having customers pay. He is very well prepared for the world and certainly understands the value of money and how much school costs. He studied aggressively for the ACT and got a full ride tuition scholarship. I have no doubt he will be fine in paying for college and taking care of himself in the future.

Our second son is doing the same thing; just finished 9th grade and has about $25K saved up. He has learned not to spend money on lunches even though all his friends do (they leave high school with cars their parents pay for and go out to eat on their parents dime). Again, he has gained valuable lessons about money, work, cash flow (as he has employees).

By the way, they pull their lawn mowers and equipment on a trailer using a bike. The neighborhood sees them consistently and they get asked to do work all the time.

I have a lot of friends that just tell their kids college is covered. Its a crap-shot ... some appreciate it and some completely take advantage of it. I come from a family with a 11 kids and had to pay for my own car, clothes, and school. I wouldn't trade it for anything as it taught me what the real world is like before jumping out on my own!

I love this.  You've done well with your kids.

[acroy]

@acroy - I agree that kids run the spectrum from strongly internally motivated to entirely non-internally motivated, but where I disagree is with the notion that students need to be paying for college our of their own pocket to have skin in the game (SITG).

I'd argue that for the self-motivated/internally-motivated student, their entire world and their measure of self-worth is tied to their performance in college.  In other words, they already have a ton of SITG - in the form of grades, progression, internships, etc.
Obviously this does not describe everyone but it certainly described me and most of my friends during my undergrad years (not surprisingly, almost all of us went on to advanced degrees and are in career professions now). FOr those sorts of students, providing for some or all of our tuition didn't alter our approach or motivation.  I earned several partial scholarships throughout my studies, and my parents paid for base expenses  (tuition & on campus housing) but nothing extra.  Those semesters where I had additional financial support from scholarships didn't reduce my focus - instead I felt liberated to drop my part-time job and take more credits and work in the lab more.

tl;dr - every kid is different, but money isn't the only kind of SITG. Many (most?) serious students already have their whole selves invested in their progress, perhaps too much SITG.

Agree. We're using money to guarantee all the kids have SITG. as you say, this is not needed for the internally motivated, and that's fine, they don't need the motivation, they already have it.

BTW we are presenting college as an 'option' to our kids, not as a 'requirement' or even a strong expectation. Bat that is another matter entirely! :)

[mathlete]

If I have children, I'm paying for their college. As good paying, low skill jobs dry up and competition gets more fierce, having a college degree will be more and more like having a high school degree in the job market.

I wouldn't expect my kids to pay for their high school, and so I won't expect them to pay for their college.

[tct]

I don't worry to much about college costs.  Most mustachian style families will qualify for huge amounts of financial aid because they look poor. 

Since FAFSA considers your financial assets in addition to income, I would think most mustachian families would not qualify for financial aid. I researched this on these forums some time back, but maybe I missed something. Are you aware of a way to shield assets such as rentals/other non-retirement accounts from being considered in the FAFSA application?

[PoutineLover]

My parents helped me pay for university by saving up for me and my sister when we were growing up, and they always kept us up to date with how much money we would have available. They put most of our gifts and tax credits in those accounts and got the government matches that were available. I paid for the rest through a combination of grants, loans, my own savings and a part time job. I never asked for money and other than the RESP savings they only paid for flights home at Christmas. I chose to move away to go to a better school and for the experience and would not change a thing, even though it cost more. My sister works even harder than I did, she's had at least two jobs from age 14 and will graduate with no debt and already has a significant retirement fund. I'm grateful to my parents for the help but mostly for teaching me important lessons and prioritizing independence and self sufficiency.
I would like to do the same for my future kids, and I would make sure to teach them the value of saving and investing from a young age, like my parents taught me. I'd definitely put money aside for them but I wouldn't sacrifice my own financial well being to give them an easy ride. I wouldn't insist on university, but for reasonably intelligent kids I still think it's the best path to lifetime wealth and opportunities.

[sol]

I don't worry to much about college costs.  Most mustachian style families will qualify for huge amounts of financial aid because they look poor. 

Since FAFSA considers your financial assets in addition to income, I would think most mustachian families would not qualify for financial aid. I researched this on these forums some time back, but maybe I missed something. Are you aware of a way to shield assets such as rentals/other non-retirement accounts from being considered in the FAFSA application?

Yes, and I just started a thread about it last week.

Rental income only counts against you as net operating income, not gross rents.

The fafsa simplified needs test excludes your assets.  You can qualify by having anyone in your family in the FRPL program within the past two years.  For my family, that means we have to show less than $54,427 of income on at least one tax return.  Easy!

There used to be an alternative requirement to file a 1040ez or A, which would have precluded people with rental income, but those two forms don't even exist anymore since the TCJA last year.

[tct]

I don't worry to much about college costs.  Most mustachian style families will qualify for huge amounts of financial aid because they look poor. 

Since FAFSA considers your financial assets in addition to income, I would think most mustachian families would not qualify for financial aid. I researched this on these forums some time back, but maybe I missed something. Are you aware of a way to shield assets such as rentals/other non-retirement accounts from being considered in the FAFSA application?

Yes, and I just started a thread about it last week.

Rental income only counts against you as net operating income, not gross rents.

The fafsa simplified needs test excludes your assets.  You can qualify by having anyone in your family in the FRPL program within the past two years.  For my family, that means we have to show less than $54,427 of income on at least one tax return.  Easy!

There used to be an alternative requirement to file a 1040ez or A, which would have precluded people with rental income, but those two forms don't even exist anymore since the TCJA last year.

Thank you for taking the time to respond Sol. The information in that thread is extremely valuable and exactly what I needed.

[nereo]

I don't worry to much about college costs.  Most mustachian style families will qualify for huge amounts of financial aid because they look poor. 

Since FAFSA considers your financial assets in addition to income, I would think most mustachian families would not qualify for financial aid. I researched this on these forums some time back, but maybe I missed something. Are you aware of a way to shield assets such as rentals/other non-retirement accounts from being considered in the FAFSA application?

Yes, and I just started a thread about it last week.

@sol - Can you link the relevant thread?

[sol]

@sol - Can you link the relevant thread?

https://forum.mrmoneymustache.com/taxes/does-the-new-tax-law-make-the-fafsa-really-easy/

[secondcor521]

The fafsa simplified needs test excludes your assets.  You can qualify by having anyone in your family in the FRPL program within the past two years.  For my family, that means we have to show less than $54,427 of income on at least one tax return.  Easy!

It sounds like the $54,427 number is the relevant number for you for FRPL.  Note that this number varies with family size, so people with fewer children will have a lower threshhold number.

In addition, one must have a federal AGI < $50K in the year prior to filing FAFSA in order to qualify for SNT.

[LiveLean]

Here in Florida we have the wonderful Bright Futures program which covers much of in-state college depending on how high your grades are. There's also a service hours component to it. So if our guys max that out I count that as skin in the game. One of them might also have a shot at sports scholarships, which could make for some out-of-state-school options. We've also done Florida prepaid.

But there will be no loans. No way never.

[LiveLean]

I don't worry to much about college costs.  Most mustachian style families will qualify for huge amounts of financial aid because they look poor. 

Student loans are typically 0% interest until you graduate, so even if i could pay cash for college I would encourage my kids to take the loans and then I would help repay them later.

Not true. Most MMM families are highly penalized when it comes to financial aid because we have lived far below our means and have built assets. All of those rental properties and mutual funds can and will be held against you.

By contrast, if you have a huge salary but blow it on clown cars and homes, every gadget and toy imaginable and build no wealth, you qualify for more aid.