Philosophical considerations related to saving/paying for college

[pellep]

I'm debating with myself about how best to save and pay for college for my 2 children (ages 4 and 8).

Philosophically, I'm disappointed in the way college costs have spiraled out of control, and the decisions that have allowed it to occur.  I understand the importance of education and will encourage my kids to go, but I struggle with how my payment decisions should influence their choices.

It seems colleges, in lock step with government backed student loans, have completely drifted away from providing efficient and cost effective product.  Tuition increases go to administration and campus amenities without really providing any proportional increase in educational value.

My in-state options (Massachusetts) are not as strong as many other state's Flagship schools.  I think there's good value at the very top (ives), and strong state flagship schools, but the huge number of very expensive, slightly above average private schools seem to have a poor overall ROI (IMHO).

My wife and I have saved in 529s (70K for older daughter, 20k for younger son), but it obviously delays FIRE for us.

Does anyone here set limits for saving to encourage rational efficient choices for/by their children (can a 17 year old do this?).  Is it selfish to limit contributions so the kids have more skin in the game?   Am I creating false dichotomies so we can FIRE sooner?

Thanks for reading...

[FrugalFan]

I think these are all important things to consider. I fully agree with you on the cost of college in the US and it is important to consider the ROI. I think you just have to do what you are comfortable with. Some here will say that they make plenty and don't mind their work and want to fully pay for education. Some are saving nothing. Personally, I think it is important for kids to have some skin in the game. If my kids want to go to college, I will expect them to apply for scholarships and work in the summers to help them pay. I won't expect them to work in the school year unless it is a work-study program on campus. Currently, our jobs provide free tuition but I would like my kids to have more options than that. So, we are saving some money through the Canadian version of 529's, and when our kids start thinking about college, we will tell them how much we have saved for them and go through all the options with them. Some options, like attending our current school, will be very low/no cost, especially if they live at home. Some will be more costly. I will definitely steer them away from incurring huge debt though.

[pbkmaine]

Could you move to a state with schools you like when it's time to establish residency for college?

[MrsDinero]

Could you move to a state with schools you like when it's time to establish residency for college?

This is a good idea.  I have a friend whose daughter is doing exactly this.  The daughter went to community college and lived at home the first two years to keep costs down.  She then found a program she likes in California.  The daughter's plan is to move to CA, get a job, live with a relative, establish residency, then apply for school.  It means the degree will be pushed out by 1 year (at least) but it is the cheapest route for the school she wants.

[little_brown_dog]

We save by setting a limited amount we feel comfortable with every year. Once we hit that, we stop and consider spending our funds elsewhere for the family.

I also struggle with the idea of saving for college given the insane costs and the inability to predict exactly how much a public university degree will cost in 18 years (baby is <1). If it continues like this, even in-state public tuition in some states could cost upwards of 150-200k for a 4 year bachelors. Then again, if the govt steps in and sets tuition caps, we may end up with far more reasonable numbers. We had to balance saving enough to take most of the burden off the kids, against the risk that govt programs may limit tuition and we could be stuck paying way more than necessary because we have “too much” saved.

I personally don’t buy the skin in the game theory due to personal experience. My parents paid for almost all of my undergrad and I got straight As, worked part time, and managed to graduate a semester early. I was accepted to a great graduate program, and paid for it with loans while working 2-3 part time jobs to support myself at any given time. If my parents had tried to “teach me a lesson” by withholding college funds, I would still be in student loan hell despite working my butt off. Instead, we paid off my student loans in full this year (100k), less than 5 years after graduating from my masters program.

I have seen this same story repeat itself in my family, my husband’s family, and my friends’ families. If you raise kids with a strong work ethic and a respect for money and education, you shouldn’t have to saddle them with student loans to “encourage” them to perform admirably. I think the skin in the game theory is a bit unfair, it automatically assumes kids are lazy and need a kick in the pants to work hard. If parents want to withhold college funds so they can save more for their own retirement or to do other things, that is perfectly fine, but I think a lot of parents hide behind the skin in the game theory to make themselves feel better about actively choosing to not prioritize their kids' college savings.

[pellep]

We save by setting a limited amount we feel comfortable with every year. Once we hit that, we stop and consider spending our funds elsewhere for the family.

I also struggle with the idea of saving for college given the insane costs and the inability to predict exactly how much a public university degree will cost in 18 years (baby is <1). If it continues like this, even in-state public tuition in some states could cost upwards of 150-200k for a 4 year bachelors. Then again, if the govt steps in and sets tuition caps, we may end up with far more reasonable numbers. We had to balance saving enough to take most of the burden off the kids, against the risk that govt programs may limit tuition and we could be stuck paying way more than necessary because we have “too much” saved.

I personally don’t buy the skin in the game theory due to personal experience. My parents paid for almost all of my undergrad and I got straight As, worked part time, and managed to graduate a semester early. I was accepted to a great graduate program, and paid for it with loans while working 2-3 part time jobs to support myself at any given time. If my parents had tried to “teach me a lesson” by withholding college funds, I would still be in student loan hell despite working my butt off. Instead, we paid off my student loans in full this year (100k), less than 5 years after graduating from my masters program.

I have seen this same story repeat itself in my family, my husband’s family, and my friends’ families. If you raise kids with a strong work ethic and a respect for money and education, you shouldn’t have to saddle them with student loans to “encourage” them to perform admirably. I think the skin in the game theory is a bit unfair, it automatically assumes kids are lazy and need a kick in the pants to work hard. If parents want to withhold college funds so they can save more for their own retirement or to do other things, that is perfectly fine, but I think a lot of parents hide behind the skin in the game theory to make themselves feel better about actively choosing to not prioritize their kids' college savings.

My thought wasn't to burden them with debt as much as influence their choice knowing they did not not have unlimited tuition resources.  My wife and I both have about $80k combined professional school (veterinarians) debt at very low interest rates (2%).  Its made me think more about the cost/benefits of education more, considering the relative lower pay of veterinarians.

[bb11]

I'll start off with saying I am a big fan of the "skin in the game" theory. If one expects their kids will have a strong work ethic and good personal finance values anyway, why the need to foot their entire tuition bill?

That said, there are several options to limit the cost of college:

1. Go to community college for two years.

2. Establish residency in another state with better flagship schools, possibly while in community college. This would allow the student four years of living away from home as well.

3. Use that strong work ethic to get an academic scholarship. Do research on which schools offer the most scholarships and apply to them.

4. The student can work part-time in school to pay for many of their living expenses.

5. Go to a lesser public school. There's nothing wrong with UMass. The huge amounts being paid for slight increases in school prestige is nuts.

I graduated from a UC (born and raised in California) in 2012. Went to community college first, which was essentially free. Then got grants due to parents' low income to pay for 2 years UC and worked part-time for expenses. Parents did not contribute a dime to tuition, but I only graduated with $11k in debt (could have been debt free if I had been Mustachian then). Now I'm going to get my MBA at UNC-Chapel Hill this fall for free on a full scholarship. I have two sisters, both of whom went to an even better UC than I did (one of the top 2). One followed my path and will graduate with $14k in debt while the other got a full scholarship and stipend for her undergraduate studies. None of us received parental help. We did pretty well.

I have to wonder how strong these kids' work ethic is if they really need mommy and daddy to pay for everything. I can see helping out, but someone really doesn't want their kids to pay anything? Nah. Be a little flexible and work hard, there's no reason to save $100k or more in a 529.

[forummm]

I think the whole college thing is a huge unknown. By the time my baby gets there, it could be free or nearly free due to online coursework. Even if it's not, I also have conflicting feelings about what's in his best interests. I think it's probably better for him to go through the process believing he's paying for it and to learn how to navigate all the hoops to get financial aid and work while in school and focus on (and value) his studies, etc. And then I could pay off any loans he had if I felt he was really giving it his best. But by not knowing this in advance he would get all the lessons out of the situation. And he would still get to benefit from not being burdened by debt forever.

This could depend a lot on the individual personality of the kid though. Some people turn out just fine with their parents paying for things. Others don't. I have a long time before I find out what kind of personality he will have at that age.

For various reasons I won't be funding a 529. If I pay for stuff it will be from other funds.

[nobody123]

I am in the "who knows what it will be in 10+ years" camp.  I'm saving a tiny amount in 529s to appease my wife, but I figure the best strategy is to have the house paid off and retirement as funded as possible so we can cash-flow some or most of college.  If we are able to help out the kids, great, but I'm not going to work until I'm 70 to do so.

I generally think the "skin in the game" makes some sense, but looking back I don't think the reality of what it meant to have a mortgage or car payment until I had one.  Will my 17 year old really be able to appreciate the obligation of student loans years before he would be required to pay on them?  Hopefully my kids will learn from me and my wife and be financially responsible, but who knows, everyone is different.

I think the idea of at least getting a "contract" in writing and crystal clear for your kids is a good idea.  I plan on doing something similar when they are freshman in high school that covers expectations about their behavior that will relate to their driving privileges and potential college assistance from me and my wife.

[FrugalFan]

We save by setting a limited amount we feel comfortable with every year. Once we hit that, we stop and consider spending our funds elsewhere for the family.

I also struggle with the idea of saving for college given the insane costs and the inability to predict exactly how much a public university degree will cost in 18 years (baby is <1). If it continues like this, even in-state public tuition in some states could cost upwards of 150-200k for a 4 year bachelors. Then again, if the govt steps in and sets tuition caps, we may end up with far more reasonable numbers. We had to balance saving enough to take most of the burden off the kids, against the risk that govt programs may limit tuition and we could be stuck paying way more than necessary because we have “too much” saved.

I personally don’t buy the skin in the game theory due to personal experience. My parents paid for almost all of my undergrad and I got straight As, worked part time, and managed to graduate a semester early. I was accepted to a great graduate program, and paid for it with loans while working 2-3 part time jobs to support myself at any given time. If my parents had tried to “teach me a lesson” by withholding college funds, I would still be in student loan hell despite working my butt off. Instead, we paid off my student loans in full this year (100k), less than 5 years after graduating from my masters program.

I have seen this same story repeat itself in my family, my husband’s family, and my friends’ families. If you raise kids with a strong work ethic and a respect for money and education, you shouldn’t have to saddle them with student loans to “encourage” them to perform admirably. I think the skin in the game theory is a bit unfair, it automatically assumes kids are lazy and need a kick in the pants to work hard. If parents want to withhold college funds so they can save more for their own retirement or to do other things, that is perfectly fine, but I think a lot of parents hide behind the skin in the game theory to make themselves feel better about actively choosing to not prioritize their kids' college savings.

For me, skin in the game means taking some responsibility towards the things you want. If you want to go to college, you should get good grades, apply for scholarships, save some of your money to help pay for college, and consider the costs of various options. It sounds like you did have skin in the game. I would never want to saddle my kids with huge debt, but not every option involves huge debt. That is why I don't want to save the equivalent of 50k per year x 4 years x 2 kids to pay for a full ride at college. That's 400k! For many people, that would involve putting their own retirement (even at a regular age) in jeopardy to save for college. That's why we are saving some and expect our kids to play some role in paying as well. I'm also a college prof and I see first hand that the kids that have everything paid for often take it for granted more than the kids helping out.

But, I also think the US system is not sustainable and expect to see some big changes in the next decade. If things got to the point that even state schools were not affordable (which I don't think will happen), then there are many other countries offering less expensive college education. 

[boarder42]

We save by setting a limited amount we feel comfortable with every year. Once we hit that, we stop and consider spending our funds elsewhere for the family.

I also struggle with the idea of saving for college given the insane costs and the inability to predict exactly how much a public university degree will cost in 18 years (baby is <1). If it continues like this, even in-state public tuition in some states could cost upwards of 150-200k for a 4 year bachelors. Then again, if the govt steps in and sets tuition caps, we may end up with far more reasonable numbers. We had to balance saving enough to take most of the burden off the kids, against the risk that govt programs may limit tuition and we could be stuck paying way more than necessary because we have “too much” saved.

I personally don’t buy the skin in the game theory due to personal experience. My parents paid for almost all of my undergrad and I got straight As, worked part time, and managed to graduate a semester early. I was accepted to a great graduate program, and paid for it with loans while working 2-3 part time jobs to support myself at any given time. If my parents had tried to “teach me a lesson” by withholding college funds, I would still be in student loan hell despite working my butt off. Instead, we paid off my student loans in full this year (100k), less than 5 years after graduating from my masters program.

I have seen this same story repeat itself in my family, my husband’s family, and my friends’ families. If you raise kids with a strong work ethic and a respect for money and education, you shouldn’t have to saddle them with student loans to “encourage” them to perform admirably. I think the skin in the game theory is a bit unfair, it automatically assumes kids are lazy and need a kick in the pants to work hard. If parents want to withhold college funds so they can save more for their own retirement or to do other things, that is perfectly fine, but I think a lot of parents hide behind the skin in the game theory to make themselves feel better about actively choosing to not prioritize their kids' college savings.

For me, skin in the game means taking some responsibility towards the things you want. If you want to go to college, you should get good grades, apply for scholarships, save some of your money to help pay for college, and consider the costs of various options. It sounds like you did have skin in the game. I would never want to saddle my kids with huge debt, but not every option involves huge debt. That is why I don't want to save the equivalent of 50k per year x 4 years x 2 kids to pay for a full ride at college. That's 400k! For many people, that would involve putting their own retirement (even at a regular age) in jeopardy to save for college. That's why we are saving some and expect our kids to play some role in paying as well. I'm also a college prof and I see first hand that the kids that have everything paid for often take it for granted more than the kids helping out.

But, I also think the US system is not sustainable and expect to see some big changes in the next decade. If things got to the point that even state schools were not affordable (which I don't think will happen), then there are many other countries offering less expensive college education.

where are you paying 50k for college holy cow.  i went to school college was around 20k a year and i lived in a fraternity with food for 450 a month. 

[bb11]

We save by setting a limited amount we feel comfortable with every year. Once we hit that, we stop and consider spending our funds elsewhere for the family.

I also struggle with the idea of saving for college given the insane costs and the inability to predict exactly how much a public university degree will cost in 18 years (baby is <1). If it continues like this, even in-state public tuition in some states could cost upwards of 150-200k for a 4 year bachelors. Then again, if the govt steps in and sets tuition caps, we may end up with far more reasonable numbers. We had to balance saving enough to take most of the burden off the kids, against the risk that govt programs may limit tuition and we could be stuck paying way more than necessary because we have “too much” saved.

I personally don’t buy the skin in the game theory due to personal experience. My parents paid for almost all of my undergrad and I got straight As, worked part time, and managed to graduate a semester early. I was accepted to a great graduate program, and paid for it with loans while working 2-3 part time jobs to support myself at any given time. If my parents had tried to “teach me a lesson” by withholding college funds, I would still be in student loan hell despite working my butt off. Instead, we paid off my student loans in full this year (100k), less than 5 years after graduating from my masters program.

I have seen this same story repeat itself in my family, my husband’s family, and my friends’ families. If you raise kids with a strong work ethic and a respect for money and education, you shouldn’t have to saddle them with student loans to “encourage” them to perform admirably. I think the skin in the game theory is a bit unfair, it automatically assumes kids are lazy and need a kick in the pants to work hard. If parents want to withhold college funds so they can save more for their own retirement or to do other things, that is perfectly fine, but I think a lot of parents hide behind the skin in the game theory to make themselves feel better about actively choosing to not prioritize their kids' college savings.

For me, skin in the game means taking some responsibility towards the things you want. If you want to go to college, you should get good grades, apply for scholarships, save some of your money to help pay for college, and consider the costs of various options. It sounds like you did have skin in the game. I would never want to saddle my kids with huge debt, but not every option involves huge debt. That is why I don't want to save the equivalent of 50k per year x 4 years x 2 kids to pay for a full ride at college. That's 400k! For many people, that would involve putting their own retirement (even at a regular age) in jeopardy to save for college. That's why we are saving some and expect our kids to play some role in paying as well. I'm also a college prof and I see first hand that the kids that have everything paid for often take it for granted more than the kids helping out.

But, I also think the US system is not sustainable and expect to see some big changes in the next decade. If things got to the point that even state schools were not affordable (which I don't think will happen), then there are many other countries offering less expensive college education.

where are you paying 50k for college holy cow.  i went to school college was around 20k a year and i lived in a fraternity with food for 450 a month.

https://www.nyu.edu/content/dam/nyu/financialAid/documents/tuitiongeneral.pdf

At NYU annual tuition is $49,062 and total cost of attendance is $71,754. Not uncommon for American parents to shell out $200-300k over the course of undergraduate studies for one child at a private college if they don't get scholarships or financial aid. Compare to my community college then transfer to a UC: the combined tuition from all years was about $20k.

College is like most things, it can be as expensive as you want it to be, but the marginal utility drops off very steeply in most cases. If you can do Harvard or a few of the other very top schools then yeah, maybe it's worth it. Otherwise go to a public school and pick a good major.

[boarder42]

We save by setting a limited amount we feel comfortable with every year. Once we hit that, we stop and consider spending our funds elsewhere for the family.

I also struggle with the idea of saving for college given the insane costs and the inability to predict exactly how much a public university degree will cost in 18 years (baby is <1). If it continues like this, even in-state public tuition in some states could cost upwards of 150-200k for a 4 year bachelors. Then again, if the govt steps in and sets tuition caps, we may end up with far more reasonable numbers. We had to balance saving enough to take most of the burden off the kids, against the risk that govt programs may limit tuition and we could be stuck paying way more than necessary because we have “too much” saved.

I personally don’t buy the skin in the game theory due to personal experience. My parents paid for almost all of my undergrad and I got straight As, worked part time, and managed to graduate a semester early. I was accepted to a great graduate program, and paid for it with loans while working 2-3 part time jobs to support myself at any given time. If my parents had tried to “teach me a lesson” by withholding college funds, I would still be in student loan hell despite working my butt off. Instead, we paid off my student loans in full this year (100k), less than 5 years after graduating from my masters program.

I have seen this same story repeat itself in my family, my husband’s family, and my friends’ families. If you raise kids with a strong work ethic and a respect for money and education, you shouldn’t have to saddle them with student loans to “encourage” them to perform admirably. I think the skin in the game theory is a bit unfair, it automatically assumes kids are lazy and need a kick in the pants to work hard. If parents want to withhold college funds so they can save more for their own retirement or to do other things, that is perfectly fine, but I think a lot of parents hide behind the skin in the game theory to make themselves feel better about actively choosing to not prioritize their kids' college savings.

For me, skin in the game means taking some responsibility towards the things you want. If you want to go to college, you should get good grades, apply for scholarships, save some of your money to help pay for college, and consider the costs of various options. It sounds like you did have skin in the game. I would never want to saddle my kids with huge debt, but not every option involves huge debt. That is why I don't want to save the equivalent of 50k per year x 4 years x 2 kids to pay for a full ride at college. That's 400k! For many people, that would involve putting their own retirement (even at a regular age) in jeopardy to save for college. That's why we are saving some and expect our kids to play some role in paying as well. I'm also a college prof and I see first hand that the kids that have everything paid for often take it for granted more than the kids helping out.

But, I also think the US system is not sustainable and expect to see some big changes in the next decade. If things got to the point that even state schools were not affordable (which I don't think will happen), then there are many other countries offering less expensive college education.

where are you paying 50k for college holy cow.  i went to school college was around 20k a year and i lived in a fraternity with food for 450 a month.

https://www.nyu.edu/content/dam/nyu/financialAid/documents/tuitiongeneral.pdf

At NYU annual tuition is $49,062 and total cost of attendance is $71,754. Not uncommon for American parents to shell out $200-300k over the course of undergraduate studies for one child at a private college if they don't get scholarships or financial aid. Compare to my community college then transfer to a UC: the combined tuition from all years was about $20k.

College is like most things, it can be as expensive as you want it to be, but the marginal utility drops off very steeply in most cases. If you can do Harvard or a few of the other very top schools then yeah, maybe it's worth it. Otherwise go to a public school and pick a good major.

this isnt a site for common americans.  i would say that saying College costs 50k/year is equivalent to saying you can't afford to live on a 100k salary b/c you have to buy a new 80k car every year.  yeah to each his own but this is a site about maximum return for minimal cost/effort. 

i understand you can pay 50k for college annually.  but you can also but a 100k ice cream sunday in paris.  so should we start equating all value to what the most one unreasonable person chooses to spend on it.

[bb11]

We save by setting a limited amount we feel comfortable with every year. Once we hit that, we stop and consider spending our funds elsewhere for the family.

I also struggle with the idea of saving for college given the insane costs and the inability to predict exactly how much a public university degree will cost in 18 years (baby is <1). If it continues like this, even in-state public tuition in some states could cost upwards of 150-200k for a 4 year bachelors. Then again, if the govt steps in and sets tuition caps, we may end up with far more reasonable numbers. We had to balance saving enough to take most of the burden off the kids, against the risk that govt programs may limit tuition and we could be stuck paying way more than necessary because we have “too much” saved.

I personally don’t buy the skin in the game theory due to personal experience. My parents paid for almost all of my undergrad and I got straight As, worked part time, and managed to graduate a semester early. I was accepted to a great graduate program, and paid for it with loans while working 2-3 part time jobs to support myself at any given time. If my parents had tried to “teach me a lesson” by withholding college funds, I would still be in student loan hell despite working my butt off. Instead, we paid off my student loans in full this year (100k), less than 5 years after graduating from my masters program.

I have seen this same story repeat itself in my family, my husband’s family, and my friends’ families. If you raise kids with a strong work ethic and a respect for money and education, you shouldn’t have to saddle them with student loans to “encourage” them to perform admirably. I think the skin in the game theory is a bit unfair, it automatically assumes kids are lazy and need a kick in the pants to work hard. If parents want to withhold college funds so they can save more for their own retirement or to do other things, that is perfectly fine, but I think a lot of parents hide behind the skin in the game theory to make themselves feel better about actively choosing to not prioritize their kids' college savings.

For me, skin in the game means taking some responsibility towards the things you want. If you want to go to college, you should get good grades, apply for scholarships, save some of your money to help pay for college, and consider the costs of various options. It sounds like you did have skin in the game. I would never want to saddle my kids with huge debt, but not every option involves huge debt. That is why I don't want to save the equivalent of 50k per year x 4 years x 2 kids to pay for a full ride at college. That's 400k! For many people, that would involve putting their own retirement (even at a regular age) in jeopardy to save for college. That's why we are saving some and expect our kids to play some role in paying as well. I'm also a college prof and I see first hand that the kids that have everything paid for often take it for granted more than the kids helping out.

But, I also think the US system is not sustainable and expect to see some big changes in the next decade. If things got to the point that even state schools were not affordable (which I don't think will happen), then there are many other countries offering less expensive college education.

where are you paying 50k for college holy cow.  i went to school college was around 20k a year and i lived in a fraternity with food for 450 a month.

https://www.nyu.edu/content/dam/nyu/financialAid/documents/tuitiongeneral.pdf

At NYU annual tuition is $49,062 and total cost of attendance is $71,754. Not uncommon for American parents to shell out $200-300k over the course of undergraduate studies for one child at a private college if they don't get scholarships or financial aid. Compare to my community college then transfer to a UC: the combined tuition from all years was about $20k.

College is like most things, it can be as expensive as you want it to be, but the marginal utility drops off very steeply in most cases. If you can do Harvard or a few of the other very top schools then yeah, maybe it's worth it. Otherwise go to a public school and pick a good major.

this isnt a site for common americans.  i would say that saying College costs 50k/year is equivalent to saying you can't afford to live on a 100k salary b/c you have to buy a new 80k car every year.  yeah to each his own but this is a site about maximum return for minimal cost/effort. 

i understand you can pay 50k for college annually.  but you can also but a 100k ice cream sunday in paris.  so should we start equating all value to what the most one unreasonable person chooses to spend on it.

Are you implying that I endorse the $50k per year on college plan? I'm doing the opposite. Showing that it exists (and is not uncommon in the US) but is a bad idea because there are much cheaper/smarter alternatives.

[boarder42]

my opinion of paying for kids college aligns much with that of Forummm.  i plan to have them pay for it themselves and if successful i will lump some pay it off for them at the end.  But thinking they have to pay for it all should encourage them to seek out scholarships and have much more skin in the game to keep their grades up and keep the scholarships.

[teen persuasion]

We save by setting a limited amount we feel comfortable with every year. Once we hit that, we stop and consider spending our funds elsewhere for the family.

I also struggle with the idea of saving for college given the insane costs and the inability to predict exactly how much a public university degree will cost in 18 years (baby is <1). If it continues like this, even in-state public tuition in some states could cost upwards of 150-200k for a 4 year bachelors. Then again, if the govt steps in and sets tuition caps, we may end up with far more reasonable numbers. We had to balance saving enough to take most of the burden off the kids, against the risk that govt programs may limit tuition and we could be stuck paying way more than necessary because we have “too much” saved.

I personally don’t buy the skin in the game theory due to personal experience. My parents paid for almost all of my undergrad and I got straight As, worked part time, and managed to graduate a semester early. I was accepted to a great graduate program, and paid for it with loans while working 2-3 part time jobs to support myself at any given time. If my parents had tried to “teach me a lesson” by withholding college funds, I would still be in student loan hell despite working my butt off. Instead, we paid off my student loans in full this year (100k), less than 5 years after graduating from my masters program.

I have seen this same story repeat itself in my family, my husband’s family, and my friends’ families. If you raise kids with a strong work ethic and a respect for money and education, you shouldn’t have to saddle them with student loans to “encourage” them to perform admirably. I think the skin in the game theory is a bit unfair, it automatically assumes kids are lazy and need a kick in the pants to work hard. If parents want to withhold college funds so they can save more for their own retirement or to do other things, that is perfectly fine, but I think a lot of parents hide behind the skin in the game theory to make themselves feel better about actively choosing to not prioritize their kids' college savings.

For me, skin in the game means taking some responsibility towards the things you want. If you want to go to college, you should get good grades, apply for scholarships, save some of your money to help pay for college, and consider the costs of various options. It sounds like you did have skin in the game. I would never want to saddle my kids with huge debt, but not every option involves huge debt. That is why I don't want to save the equivalent of 50k per year x 4 years x 2 kids to pay for a full ride at college. That's 400k! For many people, that would involve putting their own retirement (even at a regular age) in jeopardy to save for college. That's why we are saving some and expect our kids to play some role in paying as well. I'm also a college prof and I see first hand that the kids that have everything paid for often take it for granted more than the kids helping out.

But, I also think the US system is not sustainable and expect to see some big changes in the next decade. If things got to the point that even state schools were not affordable (which I don't think will happen), then there are many other countries offering less expensive college education.

where are you paying 50k for college holy cow.  i went to school college was around 20k a year and i lived in a fraternity with food for 450 a month.

DD1's university was ~$54k/yr when she graduated 4 years ago.  DS2's college was nearly $50k/yr when he graduated last year.  DD3's state school is $22k/yr , and DS4's state university will be the same.  Most of the schools DS4 applied to were $45k to $50k/ year, though.  Actual OOP costs ended up similar, though, for the older kids regardless of sticker price.  The higher prices schools offered much more in scholarship and grant aid.

[boarder42]

We save by setting a limited amount we feel comfortable with every year. Once we hit that, we stop and consider spending our funds elsewhere for the family.

I also struggle with the idea of saving for college given the insane costs and the inability to predict exactly how much a public university degree will cost in 18 years (baby is <1). If it continues like this, even in-state public tuition in some states could cost upwards of 150-200k for a 4 year bachelors. Then again, if the govt steps in and sets tuition caps, we may end up with far more reasonable numbers. We had to balance saving enough to take most of the burden off the kids, against the risk that govt programs may limit tuition and we could be stuck paying way more than necessary because we have “too much” saved.

I personally don’t buy the skin in the game theory due to personal experience. My parents paid for almost all of my undergrad and I got straight As, worked part time, and managed to graduate a semester early. I was accepted to a great graduate program, and paid for it with loans while working 2-3 part time jobs to support myself at any given time. If my parents had tried to “teach me a lesson” by withholding college funds, I would still be in student loan hell despite working my butt off. Instead, we paid off my student loans in full this year (100k), less than 5 years after graduating from my masters program.

I have seen this same story repeat itself in my family, my husband’s family, and my friends’ families. If you raise kids with a strong work ethic and a respect for money and education, you shouldn’t have to saddle them with student loans to “encourage” them to perform admirably. I think the skin in the game theory is a bit unfair, it automatically assumes kids are lazy and need a kick in the pants to work hard. If parents want to withhold college funds so they can save more for their own retirement or to do other things, that is perfectly fine, but I think a lot of parents hide behind the skin in the game theory to make themselves feel better about actively choosing to not prioritize their kids' college savings.

For me, skin in the game means taking some responsibility towards the things you want. If you want to go to college, you should get good grades, apply for scholarships, save some of your money to help pay for college, and consider the costs of various options. It sounds like you did have skin in the game. I would never want to saddle my kids with huge debt, but not every option involves huge debt. That is why I don't want to save the equivalent of 50k per year x 4 years x 2 kids to pay for a full ride at college. That's 400k! For many people, that would involve putting their own retirement (even at a regular age) in jeopardy to save for college. That's why we are saving some and expect our kids to play some role in paying as well. I'm also a college prof and I see first hand that the kids that have everything paid for often take it for granted more than the kids helping out.

But, I also think the US system is not sustainable and expect to see some big changes in the next decade. If things got to the point that even state schools were not affordable (which I don't think will happen), then there are many other countries offering less expensive college education.

where are you paying 50k for college holy cow.  i went to school college was around 20k a year and i lived in a fraternity with food for 450 a month.

DD1's university was ~$54k/yr when she graduated 4 years ago.  DS2's college was nearly $50k/yr when he graduated last year.  DD3's state school is $22k/yr , and DS4's state university will be the same.  Most of the schools DS4 applied to were $45k to $50k/ year, though.  Actual OOP costs ended up similar, though, for the older kids regardless of sticker price.  The higher prices schools offered much more in scholarship and grant aid.

so you werent paying 50k per year for school then - thanks for that.

but if they got scholarships at the big ones to bring it down they likely could have gone even cheaper to other state schools.  but then they wouldnt have a ferrari degree worth about the same as a ford degree from a state school. 

[SimplyMarvie]

We are not saving for college, but plan to help fairly aggressively, especially because our kids are in a bad situation due to our lifestyle -- we don't have a residence where they can live for free and go to college, nor can they live at home with mom and dad after school at all. (We live and work abroad and so there are visa issues.)

Right now, looking at what is seen as 'assets' which will increase our expected family contribution and what isn't, it makes more sense to me to turbo-charge my retirement savings so that when the kids are in college I can throttle back contributions and put that cash toward their tuition. I don't like the idea of 529 accounts, because they count against aid for many of the small, well-endowed middle-of-the-road private schools that would be the best bets for our kids.

I also feel like telling Junior that he has XX thousand dollars in his college fund leads teens to think "Okay, great! That's what I have to spend!" which isn't how I want to go into the college choice conversation.  I'd like to push my kids to make the same kind of value-based judgement I did, and I worry that saying "Okay, spend XXXXX!" clouds that. We're fighting tooth and nail to maintain our Minnesota residency to stay in the midwest compact (I think about that every time I write my state tax checks...), expect them to think globally about their college choices, and are already talking about value, grades, and choosing 'marketable' extracurriculars. (Eldest is taking up fencing, because yay, little-known olympic sport!), all of which focus on making decisions based on value, not cost. We'll see how it all shakes out in 8 years or so!

[Drifterrider]

I have no children so I can only present what my parents did.

SAVE.  Before the eldest child graduated from high school, my parents had saved enough to send all three to college.  They did this on modest incomes by placing a priority on our educations.  We didn't have much "new" stuff growing up.  For years I thought we were poor then I realized my dad was just cheap.  Later I realized he was thrifty.

Their approach was:  If you go to college and make good grades, we will pay for it.
If you don't make good grades, we stop paying.  If you get a scholarship, you get the money we saved, upon graduation.

Older brother stopped at an associates.  Parents stopped paying.

I took a summer off for 16 years, parents stopped paying (but I did eventually return on the GI Bill, grants and VISA).

Younger brother stopped at an associates.  Parents stopped paying.

Save your money but spend it all NOW on their education if need be.  Better early grades lead to better high school grades lead to scholarships.

[doggyfizzle]

College is like most things, it can be as expensive as you want it to be, but the marginal utility drops off very steeply in most cases. If you can do Harvard or a few of the other very top schools then yeah, maybe it's worth it. Otherwise go to a public school and pick a good major.

I couldn't have said it any better.  Especially for an undergraduate degree, a private college doesn't offer anything more than a public institution that justifies the 2-3x increase in cost of attendance.  My son (now 2 months old) can attend any CSU or UC school he wants, and my wife and I will pay for it.  If he gets into Stanford or an Ivy, we'd pay for that as well, but that's the extent of the private schools that we'd pay for. 

We don't plan on using a 529 account, just dividends from our taxable investments coupled with cash flow which should be more than sufficient to cover the cost of tuition when he starts school in 18 years (or 20 years if he goes to CC first).  I like the taxable route best because I don't like the idea of depleting an account (529) to pay for the cost of tuition, I'd rather keep the principal invested and use the dividends to fund the tuition, and then once our kid is done with school, the dividends can return to funding our frugal lifestyle.

[Axecleaver]

When Little Axe was applying to schools, we had a long discussion about this topic. She was very motivated to graduate with no debt. She was admitted to every program she applied to, including an expensive out of state design school. She then went to each school and negotiated the best deal she could. At the end of the day, she took the best financial deal she got, at a state school, over the fanciest school she was admitted to. We would have supported either decision, but the fancy school would have meant loans for her.

I agree with the folks who are saying that the personality of the kid matters a lot. I'm not sure I'd be 100% on board if my kid wasn't completely motivated to succeed and getting the most out of college. She graduated HS a year early and is planning to finish college in three years. I don't mind paying the freight.

The approach I'd recommend, especially if you have multiple kids, is to offer a "defined benefit" plan for college equal to the amount to attend a state school (or whatever amount you can afford). If they want to use that for welding school and the balance toward a house, or take loans to go to Harvard, either way they know what to expect and you're helping them achieve it.

[Miskatonic]

There's nothing wrong with regional state schools. Teaching quality can be on par with elite privates and flagships. There may not be as many research hotshots, but does that really bother you? Rankings are BS and can be engineered, so don't pay attention to them. As your kid gets closer to college age and figures out what to major in, look specifically at the department he/she would take classes in. A school that may not appear exciting at first glance, but could have a superb Department of Basketweaving (or whatever the kiddo is interested in) if you dig deeper.

College employees often get huge tuition breaks for their children. Remember, a campus is essentially a city-state: there is a huge variety of jobs besides teachers and administrators. I know it's not always an option, but it's something to think about.

[teen persuasion]

We save by setting a limited amount we feel comfortable with every year. Once we hit that, we stop and consider spending our funds elsewhere for the family.

I also struggle with the idea of saving for college given the insane costs and the inability to predict exactly how much a public university degree will cost in 18 years (baby is <1). If it continues like this, even in-state public tuition in some states could cost upwards of 150-200k for a 4 year bachelors. Then again, if the govt steps in and sets tuition caps, we may end up with far more reasonable numbers. We had to balance saving enough to take most of the burden off the kids, against the risk that govt programs may limit tuition and we could be stuck paying way more than necessary because we have “too much” saved.

I personally don’t buy the skin in the game theory due to personal experience. My parents paid for almost all of my undergrad and I got straight As, worked part time, and managed to graduate a semester early. I was accepted to a great graduate program, and paid for it with loans while working 2-3 part time jobs to support myself at any given time. If my parents had tried to “teach me a lesson” by withholding college funds, I would still be in student loan hell despite working my butt off. Instead, we paid off my student loans in full this year (100k), less than 5 years after graduating from my masters program.

I have seen this same story repeat itself in my family, my husband’s family, and my friends’ families. If you raise kids with a strong work ethic and a respect for money and education, you shouldn’t have to saddle them with student loans to “encourage” them to perform admirably. I think the skin in the game theory is a bit unfair, it automatically assumes kids are lazy and need a kick in the pants to work hard. If parents want to withhold college funds so they can save more for their own retirement or to do other things, that is perfectly fine, but I think a lot of parents hide behind the skin in the game theory to make themselves feel better about actively choosing to not prioritize their kids' college savings.

For me, skin in the game means taking some responsibility towards the things you want. If you want to go to college, you should get good grades, apply for scholarships, save some of your money to help pay for college, and consider the costs of various options. It sounds like you did have skin in the game. I would never want to saddle my kids with huge debt, but not every option involves huge debt. That is why I don't want to save the equivalent of 50k per year x 4 years x 2 kids to pay for a full ride at college. That's 400k! For many people, that would involve putting their own retirement (even at a regular age) in jeopardy to save for college. That's why we are saving some and expect our kids to play some role in paying as well. I'm also a college prof and I see first hand that the kids that have everything paid for often take it for granted more than the kids helping out.

But, I also think the US system is not sustainable and expect to see some big changes in the next decade. If things got to the point that even state schools were not affordable (which I don't think will happen), then there are many other countries offering less expensive college education.

where are you paying 50k for college holy cow.  i went to school college was around 20k a year and i lived in a fraternity with food for 450 a month.

DD1's university was ~$54k/yr when she graduated 4 years ago.  DS2's college was nearly $50k/yr when he graduated last year.  DD3's state school is $22k/yr , and DS4's state university will be the same.  Most of the schools DS4 applied to were $45k to $50k/ year, though.  Actual OOP costs ended up similar, though, for the older kids regardless of sticker price.  The higher prices schools offered much more in scholarship and grant aid.

so you werent paying 50k per year for school then - thanks for that.

but if they got scholarships at the big ones to bring it down they likely could have gone even cheaper to other state schools.  but then they wouldnt have a ferrari degree worth about the same as a ford degree from a state school.

No, we weren't paying $50k, but the schools do charge that.  I've made it my job to understand the FAFSA formulas inside and out to best take advantage of our family situation (5 kids, relatively low income, saving heavily in retirement accounts).  With EFCs ~0, big$ and small$ colleges generally cost the same for our kids (federal loans and work study), assuming a school doesn't gap you.  DD1's first choice gapped her 50% of our annual income - sorry, that's a deal breaker, not going there! 

The differences in where my kids chose to go reflects each kid's individual personality and choice of major, not costs.  Though DS4 has a less stellar academic record than his older siblings, so had fewer choices.  Merit scholarships are the best option, by far, but they are rarely a true "full ride".  Room and board is at least $12k/year now, well more than tuition at the state U system.