The Money Mustache Community
Learning, Sharing, and Teaching => Mini Money Mustaches => Topic started by: Bikeguy on May 02, 2016, 09:51:56 AM
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Was talking to a friend last week. Their daughter had 3 days to decide whether to go to U of Illinois. The problem was the family was out of state and tuition was $55K a year.
Their kid had applied to several in state schools in Michigan, but didn't get into the one they wanted to and wanted to go to Illinois. I was wondering how the family got themselves into the position of having 3 days to make a major decision and not having some ground rules beforehand that said they weren't paying $55K a year.
So, I came up with a written document spelling out my wife and my expectation of our kids college experience. Our kids are 16, 14 and 10.
Both of our parents said they'd pay for college, and both of us did a lot of experimenting with alcohol and weren't good students. We really wanted to protect from paying for that. Hence, some of the language in the document.
I'm curious if other parents have written expectations and if so, whether they'd be willing to post them here.
ORIGINAL CONTRACT
1) We will use your money first.
2) You will need to get a job in the summers, starting the year you are 16, unless there is a reason this is a non optimized idea.
3) Mom and I will pay for your college if the amount is the same or less than the University of Michigan.
(Picture showing Michigan tuition, room and board at roughly $28K a year.)
4) To get 100% of your college costs, you will need to get an A average.
5) To get 85% of the costs, you will need to get a B average.
6) To get 50% of the cost, you will need to get a C average.
7) At the end of 4 years of college, you are paying 100%, no matter what your grades are.
If you are considering a college that costs more than University of Michigan, you will need to cover any amount of money over the above amount with scholarships, loans or grants. You will need a plan before a deposit will be paid to any college.
If you want to go to graduate school, you will need to pay for it. You kids are smart and can figure out if the cost of the graduate degree is worth the expense.
After college, you will need to find a place to live. You will not be living at home.
The last line is actually not in the document yet, as I think I will let them know right before they leave for college. They will still have 4 years to come up with a plan.
And I already ran this by the wife and she is fine with it.
CONTRACT AFTER EXCELLENT MMM FORUM FEEDBACK.
1) There needs to be a reasonable plan. What are you going to do with your major in _____? What kinds of jobs are available for _____ majors and what do they pay? What is the job outlook?
2) We will use the money gifted to you first. Money you earn and save will be matched dollar for dollar for your contribution and spending money.
3) You will need to get a job in the summers, starting the year you are 16.
4) Mom and I will pay for up to 85% of your college if the amount is the same or less than the University of Michigan.
Chart showing roughly $27K a year room and board.
5) To get 85% of the costs, you will need to get a 3.0 or above.
6) To get 50% of the cost, you will need to get a 2.0 or above.
7) The percentage paid will be averaged for GPA between 2.0 and 3.0.
8) If you go to a particularly challenging school, or take a particularly challenging course, GPA tuition % can be negotiated.
9) Anything under 2.0, and you pay for the next semester you attend.
10) The percentage you get will be determined at the end of the semester for the next semester. The first semester you will get 85%.
11) At the end of 4 years of college, you are paying 100%, no matter what your grades are. The only exception is if you are in a 4 ½ or 5 year program.
12) Mom and I will give you 25% of any scholarships you get at the beginning of each semester, up to 25% of the above amounts.
13) Any money saved by taking college courses while in high school will be deducted from the amount you are required to put in.
If you are considering a college that costs more than University of Michigan, you will need to cover any amount of money over the above amount with scholarships, loans or grants. You will need a plan before a deposit will be paid to any college.
If you want to go to graduate school, you will need to pay for it. You kids are smart and can figure out if the cost of the graduate degree is worth the expense.
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I like this idea! This would have helped me and my family a lot when I was that age.
You might want to clarify whether the average is the total average or the annual average or the semester average. E.g., if the kid bombs the first year but gets As the second year, where does that get them?
You might want to clarify board. Does that mean you'll cover their meal plan but nothing else (books, computer, movies, etc.) and they have to get part time work for that? What if they choose to live off campus and cook for themselves for cheaper, do they get the equivalent of what you would have paid for dorm and meal plan?
The living at home is a personal thing, of course, but you might want to lay out options there too. Like, if they forgo any part time work in order to ace a really challenging degree, it might help them enormously to know they can live at home while doing job interviews rather than thinking about saving up for apartment deposit / car / etc. during the last year. Or you may not want them at home if they got Cs. Or you may not want them at home no matter what.
You might also want to address the contingency that they drop out (do they pay you back in that case). Or that they don't go to college immediately after high school. Or what if they graduate in three years, will you contribute the ~$28k to graduate school or a house purchase or something.
Just some stuff to think about. I really like this.
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Many similarities, but ours are a bit more liberal I think. Kids are 11, 9 and 6.
1. Parental Grants are available for up to the tuition/room & board for <local state university>. Grant money may only be used for tuition & fees, direct housing expense (rent/Dorm charges) and university meal plans.
2. Parental vehicles shall not be available while in college except for short-term pre-arranged purposes
3. If costs are less than the amount in 1, your siblings thank you, as it means parent grants are more likely to be funded in the future.
4. If costs are greater than Parental Grants, Parental zero interest loans may be available. These will require payment and a contract and have the same spending restrictions laid out in 1.
5. Any years of schooling beyond 4 years need to be discussed and approve by parents if any funding, including parental loans are desired.
6. If at any time, overall GPA drops below 3.5, Performance improvement plans are necessary to maintain funding.
7. If at any time, overall GPA drops below 3.0, 1 semester(or school period) will be afforded to bring it back above 3.0. Failure to do so terminates future parental funding, both Grants and Loans.
8. Parents may revoke the program at any point should college funding interfere with or endanger retirement stash.
9. After schooling, living with parents must be a temporary solution with an approved plan for independent living reviewed and approved prior to move-in.
Any exceptions to these rules must be approved by parents.
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One thing I noticed about your plan:
You're going to use the kid's money first (fine) but how does that incentivize the kids to make/save money? While you're requiring them to get a job (also fine) you're not giving them a lot of motivation to work the best job. I think giving them a certain amount of money with the other strings attached is great. Perhaps a bit less than full room and board so they will know they'll have to pay for the rest, and have them figure out how to pay for the rest - you can stipulate no loans. I think you'll get more buy in if you're letting them figure this stuff out for themselves rather than telling them what they have to do.
Also, depending on the kid, living at home for a bit after college doesn't have to be some big issue. But that's up to the parents. I'm assuming you have reasons for including this. I, a perfectly responsible young adult, lived at home after college for a few months to save money to travel for a bit, and then again for a few months after I got my first career job and was waiting for some other things to settle out. It doesn't have to be some moocher kid drinking his/her life away while living in the parents basement.
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My daughter is a college freshman. When she was in 10th grade, her high school counselor wisely told the parents to let their children know what the college budget was. By the time she was a senior it became apparent that she would be admitted at just about any school, but would not get scholarships to some. (It is very easy to estimate this with GPA and test scores). So she applied to schools where she was in scholarship range, and wound up attending a tough liberal arts college with a full tuition scholarship. I urged her to take a computer science course her first semester (she also took Chemistry, Chinese and required humanities/English). She did, and really liked it, but despite working really, really hard, did not get the all A's she had in high school. (The average GPA for first semester at her college was a 2.8. ) Not getting all A's upset her and she talked about taking an easier path to get all A's. But I told her if she liked it, go for it, work hard and don't worry about the grades. She even visited a local college during her fall break as she thought about transferring. She came home and told me that in the CS class, week 8, they were just covering what she had learned in week 2...using the same text.
I teach grad school and I know many students who took easy courses and majors to keep scholarships(some state provided). There are many factors to consider in evaluating success at college, but I would rather have my child go to a challenging school and take tough courses.
So I really recommend just stating the budget and requiring work at 16....and see where things are when the time comes.
As for the working, I told my daughter that in our family people get jobs when they turn 16 and I expected her to do the same. I told her it wasn't just about the money, but that she would learn a lot working for a boss in an organization. (I wouldn't count babysitting). She worked in food service and learned a lot about people, and grew much more comfortable talking to strangers, which she needed. I did also tell her she needed to save up for any spending money she would want in college.
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My oldest is 5, so this isn't exactly a pressing concern for me just yet.
I think that clearly stating expectations before the college search starts is awesome. I'm not so sure I agree with the grade-based performance evaluation, at least not as laid out by a couple of the posters above.
I was one of those kids who breezed through high school with A's, often without doing a lick of homework. Then I majored in engineering at a Top-20 university (significantly funded by a relative's association with the school), and that abruptly change. I had to work my butt off and did well, but hardly made straight A's. On top of that the University requirements included quite a few humanities classes. I commend the school for that, because today I write better than most engineers I know, but at the time I hated those classes and struggled at times. It's a dozen years later now, and I feel I received a truly outstanding education that far surpasses the one I would have gotten at a local state school where I might have graduated with honors (maybe I'm just being snobby, but that's my honest opinion).
I'm looking in an old file right now, and it turns out my overall GPA was 3.43, and 3.53 in-major. I can only imagine the rage I would have felt if my parents had dinged me to the tune of thousands of dollars for missing an A average or the expletives that would have run through my head if they had asked me for a "performance improvement plan", and all because my school wanted me take philosophy classes that so I could learn to write and argue in addition to calculating pipe flows. Like the previous poster's daughter, I can easily see that pushing me to find an easier path, which would have been an enormous mistake.
Either way though, good on you guys for having a plan.
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2) You will need to get a job in the summers, starting the year you are 16, unless there is a reason this is a non optimized idea.
Examples? My teenage brother would say getting out of bed before noon in the summer is a non optimized idea.
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Also tying financial gain to GPA might encourage cheating.
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Agree with the points PPs have made.
- Requiring the kid's $ to be used first doesn't incentivize saving. Consider paying first, or matching dollars, etc.
- Be aware your plan encourages attending less challenging schools or courses.
I got straight As in high school. I also took some college courses in high school, so I challenged myself as much as possible. Yet, I still found it tough to attend a top-10 school, and my first semester "only" earned just above a 3.00. I worked that up to 3.54 by graduation (earning ~3.67-4.00 my last two years), but like Dee18 & Dr. A, I would have been distressed that by challenging myself more than my siblings, I would have been penalized financially.
- "non-optimized" is unclear
My parents told us:
- We're paying $X to school costs. Anything else is on you.
- We will make sure college is paid for, however, you will need to pay us back (with an interest free loan) whatever we pay beyond the $X.
- We expect you to finish in 4 years.
- We expect you do study and do a good job.
And while less "contractual", it worked out just fine. The expectations were still clear, and there were no incentives to game the system.
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To echo some of the concerns others have brought up with using their money first and grades I think the specific agreement is not within the spirit of why you are paying for their college in the first place. Unless you mean for it to be more along the lines of maintaining control by rewards.
Have you also thought of the fact that they might just use it to party for the 4 years? Even though they maintain A average, but are taking under water basket weaving will you still honor the agreement? What if you found out that they were cheating but didn't get caught, an A is still an A right?
Also what happens if you can't actually afford it?
Someone else brought up a good point about grades. A lot of students need an adjustment period making the transition to college from high school. Depending on the high school a solid A student might be a B student staring off in college. I barely showed up to class in high school, slept, copied, paid other to do my work, you name it I did it just to get a decent grade. As a high school student I figured out that learning was not the objective it was the grades and how good your college application looks. After all that I still qualified for a full scholarship.
Once I got to college I thought it was going to be the same thing, so I loaded up on classes so I could graduate early and get the degree. Well my first year was a rude awakening. I really had to bust my ass to keep my scholarship. But by my senior year I was a 4.0 student as a dual major, taking additional classes to fulfill both requirements and was also in an accelerated graduate program where I was taking masters levels courses that would count towards my undergrad and graduate classes.
But since I didn't do so well my first year my GPA was around 3.5. During an interview when asked about my GPA I explained how it was a rough transition as first but highlighted that the trend was up and 4.0 for my senior year while I worked getting actual real world experience as a software developer. I did not get that particular job, dam you GoldmanSachs, but I did not have any issues finding work after graduating during the Dotcom bust. I was able to demonstrate actual skill vs some arbitrary GPA on a transcript my peers had to rely on.
So depending on what you want for your kids you might want to be more conscious of the incentives you are giving your children based on the agreement you come up with.
For us the main thing I want to instill in my children is to take ownership of their education and if college becomes part of that then they need to figure out how to pay for it. I will support them financially as best as I can, offer guidance and suggestions. However, I will communicate to them that I will not be financially responsible to pay for it. They can stay with us while they attend college and maybe even after they graduate as long as they demonstrate that they can be independent and take care of themselves without our support.
To me it doesn't matter if they even go to college or not, however I also recognize that it is the most likely path, what I want most for them is to have the skills and knowledge to be independent and have options that I had because I was financially responsible. The more options I can help them open up the better but it will not come at the expense of the family's financial security.
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I can see why you wrote what you did, but I disagree on some points. Requiring extra contribution as grades go down isn't the best way to improve grades, since it would require working more and having less time to study. Sometimes a harder school or program is better for future careers than one that is a breeze, and you're giving the wrong incentive. It's a little different here in Canada since school doesn't cost as much, but I'm glad my parents let me go where I wanted even though it ended up costing a little more. I got into schools that were less renowned but gave me bigger scholarships, but I chose the best school I could and decided that was worth the extra cost. In the end, I had my savings, my parents savings, loans, grants and a part time job to fund my education, but I didn't know beforehand exactly how much it would all cost, and how much I would be able to work, and all kinds of other variables that make a contract more difficult to abide by. The most important thing is for students to get a good education that will allow them to work in a job they like, and having a contract that is too strict or inflexible may not result in the best outcome.
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Interesting. Commenting to follow
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Most employers are not hiring kids their senior year. Even when the economy was better, it took kids an average of 6 months post graduation to find a job. It would be ridiculous to have your kids spend their stash to live on their own during those 6 months. You should encourage them to move home during that time so long as they are actively job hunting and working whatever other part time job they can to contribute. My very first job post college ended up being near my parents house even though it was the last place I wanted to end up. My parents encouraged me to live at home for at least 6 months to put my paycheck 100% to savings so I would have an emergency fund before I left the nest. It really helped me get a good start in life without credit card debt.
The wording of your proposed plan sounds more like "We only care about our own financial future and we want you burdens off our hands asap." Rather than what I think is your intended message "here is how to be financially responsible."
I went to a really good school with big scholarships but my parents still had to contribute and I still needed some loans. I got excellent grades. If I had to work more than a work study job during that time I would not have got the grades I did. I did party on Friday and Saturday nights but during the week I was all business. I looked, and no employers near my school would hire someone for weekend only work. You had to be available during the week too. For bartending/waitressing for example, weekends are the best paying shifts so you need some seniority. Also, a kid can get by in college without a car. If they are going to work, they will likely need a car. There are some schools with public transportation or in the middle of the city but many are out in the boonies.
I like saying you have X amount to put towards their schooling. They can decide to go to a school in that budget, to get scholarships and go bigger, save up to go bigger, or take out loans to go bigger. Some people also let their kids keep the difference as an incentive to go cheaper/get scholarships. A kid might not care if their sibling gets to go to a better school. They might care if they graduate with a nice slush fund.
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I agree that setting it out clearly is a great idea, but that the decreasing contribution with grades could provide perverse incentives. Why not say what you mean, that you reserve the right to de-fund college if more partying than learning is happening?
I remember reading, I'm guessing it was in Freakonomics or Malcolm Gladwell but not completely sure, that sometimes spelled-out incentives can backfire. The example I'm thinking of involved windmills or some other good-but-not-pleasant technology that was being put up near a couple neighborhoods; some neighborhoods were approached with just the benefits of the technology, would they be willing to deal with the minor inconvenience of having it in order to secure these benefits for everyone? And people generally agreed. But when the company (I don't recall if it was real or fictitious) offered to make small compensation payments...people refused to do it at all! And at least part of the explanation was that you're tapping into different forms of reasoning: in the latter case, people contemplate the value of the discomfort vs the payment offered...vs in the former case, you tap into a social conscience, "would I do this for the greater good?". I would hope that your college-bound children have some degree of conscience and drive to succeed; do you want to risk them disregarding that by setting up a monetary value system to be gamed?
Also, your plan completely disregards the fact that in a few majors, a standard program is 5 years. Architecture definitely was at my college, and I know many engineering programs are toying with the idea (though the ones I know of that do it already include a co-op year, which is an earning year, not a spending year, so not quite the same).
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I applaud your intentions, just don't think I'd ever do it myself. They either have money sense by the time they leave the house or they will learn on their own through mistakes. Family and contracts generally don't mix well.
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Agree that grades could be an issue with cheating or choosing easier courses. There are other signs of investment besides grades. In fact, I graduated with a 4.0 and was virtually unemployable, so you might think about how to encourage realistic career planning besides just announcing they're on their own.
I understand why you say you're not paying for graduate school--my grandfather, who funded our educations, always said that same thing. But then there he was, still sitting on millions of dollars, when my sister, a nurse and the sole breadwinner for a family of five, wanted to get a doctoral degree to become a nurse practitioner. Of course he's shelling out. So you might want to keep an open mind on the issue!
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Our children are 16, 15, and 13 (in grades 12, 11, and 8 respectively). We have some definate guidelines set up. We wanted to help them out, but still make sure they put money into the game.
1) We will match any money made via a job or scholarships equal to the amount for a state school
We wanted to make them understand that school was a top priority and wanted them to work hard in school. Our oldest did not work last summer and instead spent time each week studying for the ACT and SAT. As a result, she ended up with a 32 ACT and was awarded a $5700 scholarship at OSU. She will be working this summer and will make around $2300. That $8000 will be matched, but that will still leave her with a shortfall. OSU is around 10,000 a year for tuition and another 10,000 for room and board. She would have had that all covered if she lived at home (which we would allow) but she wants the campus experience so she will be taking out a loan to cover the difference.
2) If living on campus we will not be paying for car, parking, or insurance.
3) If living at home we will match money for car, parking, and insurance
4) We will do this for a 4 year education. Anything beyond that is their responsibility.
5) You may live at home but you will be paying rent equal to a reasonable apartment in the area.
We figure this is a great deal for them. If they lived in their own apartment they would likely have to pay utilities, and would have to shop and make their own food.
Our oldest also took advantage of a program our state has called College Credit Plus. She spent her entire senior year taking classes at OSU. She was able to take 30 credit hours this year and saved herself the $10,000 in tuition (they paid for all books and lab fees as well. We picked up the tab for a commuter eating plan since she was on campus from 8-5 each day. She didn't have to pay any commuting costs because my husband works downtown and was able to drop her off and pick her up each day. Even though she is considered a first year student for the 2016-2017 year she will already have over 42 credit hours to her name (CCP + AP credit). This enables her to graduate in 3 years and she can even double major if she chooses.
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1. We will pay for four years of a college or university in our state system, including room and board or the equivalent should they want to go to a private school. Taking longer or going someplace more expensive is not our problem.
2. If you want to live at home and attend the local public university, we will buy you a used car and there will be some help with grad school if that's in the cards.
3 This is contingent on maintaining good grades. If the grades are not good, you are welcome to come home, get a part time job and attend the local community college and figure things out.
4. There needs to be a reasonable plan. What are you going to do with your major in ____? What kinds of jobs are available for ___ majors and what do they pay? What's the job outlook? We honestly expect deviation from the plan, but the point is, think about where this degree is going to lead before you spend the money on it, not after.
5. You need to have a summer job and save the vast majority of what you earn. Some of that will be spending money during the year, but some will go towards making sure you have a little saved to get you started on the next phase of your life.
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We agreed to pay full costs for 4 years at a NJ state school (using Rutgers as the benchmark) or the equivalent anywhere for DH's 3 daughters. We also had $10,000 set aside for the wedding for each, but allowed the girls to use that money for schooling instead. Two of them used the wedding money toward their master's and one took 5 years to graduate from college. Not a peep out of them about any extra money for school or the weddings because we were crystal clear upfront.
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Most employers are not hiring kids their senior year. Even when the economy was better, it took kids an average of 6 months post graduation to find a job. It would be ridiculous to have your kids spend their stash to live on their own during those 6 months. You should encourage them to move home during that time so long as they are actively job hunting and working whatever other part time job they can to contribute. My very first job post college ended up being near my parents house even though it was the last place I wanted to end up. My parents encouraged me to live at home for at least 6 months to put my paycheck 100% to savings so I would have an emergency fund before I left the nest. It really helped me get a good start in life without credit card debt.
The wording of your proposed plan sounds more like "We only care about our own financial future and we want you burdens off our hands asap." Rather than what I think is your intended message "here is how to be financially responsible."
I went to a really good school with big scholarships but my parents still had to contribute and I still needed some loans. I got excellent grades. If I had to work more than a work study job during that time I would not have got the grades I did. I did party on Friday and Saturday nights but during the week I was all business. I looked, and no employers near my school would hire someone for weekend only work. You had to be available during the week too. For bartending/waitressing for example, weekends are the best paying shifts so you need some seniority. Also, a kid can get by in college without a car. If they are going to work, they will likely need a car. There are some schools with public transportation or in the middle of the city but many are out in the boonies.
I like saying you have X amount to put towards their schooling. They can decide to go to a school in that budget, to get scholarships and go bigger, save up to go bigger, or take out loans to go bigger. Some people also let their kids keep the difference as an incentive to go cheaper/get scholarships. A kid might not care if their sibling gets to go to a better school. They might care if they graduate with a nice slush fund.
This...
I applaud your intentions, just don't think I'd ever do it myself. They either have money sense by the time they leave the house or they will learn on their own through mistakes. Family and contracts generally don't mix well.
and this.
I'm in the camp of giving money without strings or not giving it at all. Your approach sounds like a formula for resentment on both sides.
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Most employers are not hiring kids their senior year. Even when the economy was better, it took kids an average of 6 months post graduation to find a job. It would be ridiculous to have your kids spend their stash to live on their own during those 6 months. You should encourage them to move home during that time so long as they are actively job hunting and working whatever other part time job they can to contribute. My very first job post college ended up being near my parents house even though it was the last place I wanted to end up. My parents encouraged me to live at home for at least 6 months to put my paycheck 100% to savings so I would have an emergency fund before I left the nest. It really helped me get a good start in life without credit card debt.
The wording of your proposed plan sounds more like "We only care about our own financial future and we want you burdens off our hands asap." Rather than what I think is your intended message "here is how to be financially responsible."
I went to a really good school with big scholarships but my parents still had to contribute and I still needed some loans. I got excellent grades. If I had to work more than a work study job during that time I would not have got the grades I did. I did party on Friday and Saturday nights but during the week I was all business. I looked, and no employers near my school would hire someone for weekend only work. You had to be available during the week too. For bartending/waitressing for example, weekends are the best paying shifts so you need some seniority. Also, a kid can get by in college without a car. If they are going to work, they will likely need a car. There are some schools with public transportation or in the middle of the city but many are out in the boonies.
I like saying you have X amount to put towards their schooling. They can decide to go to a school in that budget, to get scholarships and go bigger, save up to go bigger, or take out loans to go bigger. Some people also let their kids keep the difference as an incentive to go cheaper/get scholarships. A kid might not care if their sibling gets to go to a better school. They might care if they graduate with a nice slush fund.
This...
I applaud your intentions, just don't think I'd ever do it myself. They either have money sense by the time they leave the house or they will learn on their own through mistakes. Family and contracts generally don't mix well.
and this.
I'm in the camp of giving money without strings or not giving it at all. Your approach sounds like a formula for resentment on both sides.
We're going to do what my parents did for me. They saved what they could and then laid out what that could get me at different schools, different living scenarios, what loan payments would look like after school etc. The only 'threat' they made was that if I moved back home after school, I'd pay rent that'd go into a fund to help me find my own place when I moved out.
I was the kind of kid that put more pressure on myself than anyone else, and was the first person to kick myself if I failed. I think if you go with these contracts, you need to know what kind of kid you have and how they respond to different stimulus. I was very successful in school and a contract like that would have added a layer of anxiety in addition to the self-pressure; it would have just been too much.
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We make our expectations clear but do not actually present them as a contract. We do expect our daughters to attend/graduate college and do everything within their power to minimize the costs. First one took 30 hours of dual enrollment while in high school. This wasn't free but was heavily subsidized by a state grant. She then took advantage of the new state-funded last-dollar scholarship at community college, making tuition free. She just finished the first year and needs one more semester to complete the transfer agreement to a state university.
The second one will start dual enrollment in the fall.
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Many excellent schools, public and private, will give full tuition for a 32 ACT. That high a score would also make a student eligible for consideration for scholarships for full tuition, room and board, and a semester abroad, especially if a student is willing to go away from home since every school wants students from every state. So time spent prepping can be a good investment.
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I say that it's your money and you can do whatever you want! I plan to start conversation with my child (currently in utero) re: college costs and my contribution when they are around 12-years-old. I don't plan to write out a formal agreement, but will communicate clearly re: my intentions and parameters. I really like it that you and your wife set clear limits on your maximum contribution. I plan to NOT pay 100% of my child's college partly because it seems excessive to me, and partly because my personal experience in college was that those of us who had to work and pay our own tuition were much more serious and dedicated students than the students whose parents paid 100% of their tuition. In addition to setting out a clear maximum contribution, I also plan to be clear about my willingness to co-sign loans. I will allow my child to go to whatever school they wish, but I won't co-sign loans if the tuition is ridiculously high.
I did have a friend in college whose parents paid his tuition up front, but then made him pay back 100% of the cost if he got a grade below a B. I thought that was a fine idea, except since his parents were paying his tuition he didn't have a job, so I'm not sure where they thought the money for lower grades would come from!
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We are planning to match any scholarships received dollar for dollar. No blank checks here. If a third party doesn't consider our child a good investment for college by awarding a scholarship, why should we?
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I haven't read all the responses in this thread but I'm not sure I've seen a matching system proposed.
For example for every $1000 the kid saves by working, the parents will contribute $2k.
Or
If the kid earns $4k in scholarship money then the parents will match $4k or something like that?
What are your thoughts on a system like this?
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I think with an only child that might be fine, but I really believe parents should reward kids more for effort then for test scores or grades, which are what determines most scholarships. School and standardized tests came more easily for me than for my sister, despite her working hard at school, but I'm glad my parents supported her college as much as mine. She went on to have a great career, in part because she is very self disciplined.
I think you have to evaluate each child individually and help them in the ways that's best for them. I was absolutely opposed to private schools, until I realized that my daughter would thrive in one (we were living overseas briefly and the private school was covered). I spent a lot paying for that when we returned home, but it was worth it. And then she got free college tuition so it worked out financially too. There are so many factors, including parent resources and parents' own experiences. I especially have noticed our tendency to think our kids might behave the way we did in college...if we partied too much, we worry our kids might; if we gained a lot from working our way through school we assume our kids will; if our parents financed our college in full, we think we should. Yet many of us are being far more analytical about growing our finances and intentionally not doing what we were taught by example when it comes to money issues.
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One other thought is it seems exceptionally cruel to leave a kid with no financial support in college when you have the financial means to do so. This is because even if you disown your child, the school will still treat him/her as a dependent of you and his/her financial aid and need based scholarships/grants will entirely depend on your financial circumstances. Most schools won't even give out merit based scholarships without a FAFSA and/or PROFILE from the parent.
A kid I went to high school with had his life ruined this way. He has some responsibility for his own downfall here too but his parents, in my mind, were way out of line. Kid worked hard and did really well in school but didn't get any scholarships despite trying hard. He got into a lot of top schools for the field he was interested in. There are some industries where the name on your diploma actually matters. Law is one. I worked for a firm that only hired graduates of Tier I school, even if it was the lawyer's 15th year in practice with a stellar history. Kid's parents said he was 100% on his own after high school. He couldn't live at home and they wouldn't give any money towards tuition. These were upper middle class folks and the kid had been a saint in high school. This wasn't some kind of punishment. He worked at a golf course throughout high school but never really made enough money to cover more than books and food for school. He went to a good school in state but tuition was still 20k+. He put the whole thing for the first year on loans because the school wouldn't give him a penny because of his parents wealth. He looked at the state school but they had a sliding fee tuition and the tuition for him, due to his wealthy parents was equivalent to the private school he ultimately chose.
He freaked out about the size of the debt he was incurring and dropped out. He then job hopped through blue collar entry level jobs. Car salesman, golf course maintenance worker, etc. He never fully recovered. His relationship with his parents was shot. I had a good relationship with his parents too and I just couldn't respect them after what they did. But they are living it up at their beach house and ski chalet so we know where all that college tuition ended up.
He did so much better than me in high school and I truly believe he was smarter than me. I ended up where I am because my parents helped make college possible for me. It was a much harder sacrifice for my parents than his. I'm eternally grateful. (In case you were wondering, I was on my own for law school and did the whole loans thing. Working hard to pay them off though and after this pay day, the number will finally start with a $2x,xxx! Starting at 6 figures.
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We're still trying to figure out how to deal with this (kids are 10, 8 and 4) because we live and work outside of the US and probably will not be in the US while the kids are in High School (so no post-secondary option/dual enrollment) or while the kids are in college (so no borrowing the family car, living at home during school, coming home for vacations, etc.)
There are also three of them, so I expect them to be sensible and frugal in their decisions, especially about where to attend college. I'm thinking along these lines:
1. Mom and Dad will not pay to send you to the best school you get accepted to. Sorry, not sorry. We will make a decision together about what the best value and fit are among the colleges you are accepted to. We expect you to seriously consider midwest-compact schools (places where we get in-state tuition), schools that are likely to offer you scholarship money, and schools abroad where tuition will be cheaper. (Community college/vocational ed might be an option, but commuter schools are hard for kids with no parents or roots in the area...)
2. We expect you to make full use of summer school, J-term, CLEP examinations and other ways to finish your degree in the shortest practical period of time.
3. We will cover tuition and basic room and board. In exchange, we expect you to study hard, pass your courses, and take at least 16 credit hours a semester. We will not pay extra for you to make up classes you have failed, or re-take classes. (Also, no study abroad programs, for the love of God. Your whole life has been one long study abroad program! We expect you to try something new and have a cross cultural experience in the US!)
4. Your spending money is your own responsibility. That said, it is also your responsibility to find work that means that you will have useful experiences when you graduate into the job market. We may be willing to subsidize some costs so you can get experience in your field. (I'm not paying for any unpaid internships, but if it's the difference between a $7/hr job that leads to something in their field v. a $10/hr job as a barista, mom may be willing to kick in a bit...)
5. You ABSOLUTELY MUST be self-supporting after college, because under the terms of Mom's work agreement you aren't allowed to live with us abroad anymore after you graduate, so consider plans and finances very, very carefully.
I actually feel badly about the last one, because I know that transition between college and work/grad school can be really hard. But we've already started talking about the issue of when the kids can no longer be legal dependents with them (at least with the 10 year old), so it shouldn't be a surprise. It stinks that they can't have the long adolescence that most kids their age get, but I console myself that sometimes you've got to be cruel to be kind.
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I don't think it's reasonable to match future tuition contributions to grades. Getting As and Bs in college is generally a lot tougher than in high school, even for smart, hard-working students. You run the risk of adding a lot of unnecessary pressure, and also of driving them towards "easy" classes (instead of challenging ones that would really enhance their degree) because they are afraid of losing financial support from you.
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We're still trying to figure out how to deal with this (kids are 10, 8 and 4) because we live and work outside of the US and probably will not be in the US while the kids are in High School (so no post-secondary option/dual enrollment) or while the kids are in college (so no borrowing the family car, living at home during school, coming home for vacations, etc.)
There are also three of them, so I expect them to be sensible and frugal in their decisions, especially about where to attend college. I'm thinking along these lines:
1. Mom and Dad will not pay to send you to the best school you get accepted to. Sorry, not sorry. We will make a decision together about what the best value and fit are among the colleges you are accepted to. We expect you to seriously consider midwest-compact schools (places where we get in-state tuition), schools that are likely to offer you scholarship money, and schools abroad where tuition will be cheaper. (Community college/vocational ed might be an option, but commuter schools are hard for kids with no parents or roots in the area...)
2. We expect you to make full use of summer school, J-term, CLEP examinations and other ways to finish your degree in the shortest practical period of time.
3. We will cover tuition and basic room and board. In exchange, we expect you to study hard, pass your courses, and take at least 16 credit hours a semester. We will not pay extra for you to make up classes you have failed, or re-take classes. (Also, no study abroad programs, for the love of God. Your whole life has been one long study abroad program! We expect you to try something new and have a cross cultural experience in the US!)
4. Your spending money is your own responsibility. That said, it is also your responsibility to find work that means that you will have useful experiences when you graduate into the job market. We may be willing to subsidize some costs so you can get experience in your field. (I'm not paying for any unpaid internships, but if it's the difference between a $7/hr job that leads to something in their field v. a $10/hr job as a barista, mom may be willing to kick in a bit...)
5. You ABSOLUTELY MUST be self-supporting after college, because under the terms of Mom's work agreement you aren't allowed to live with us abroad anymore after you graduate, so consider plans and finances very, very carefully.
I actually feel badly about the last one, because I know that transition between college and work/grad school can be really hard. But we've already started talking about the issue of when the kids can no longer be legal dependents with them (at least with the 10 year old), so it shouldn't be a surprise. It stinks that they can't have the long adolescence that most kids their age get, but I console myself that sometimes you've got to be cruel to be kind.
On the "consider schools abroad" bit, make sure that doing so works with your kid's long term goals. Going to school abroad might preclude them from law school or medical school in the US or require them to take a much longer program to get the prerequisites necessary to qualify. I'm not saying it is always a bad idea. Just research it first.
On the no study abroad thing, I'd make exceptions for programs that provide unique experiences for the major without crazy cost to you. It was cheaper for me to do a summer abroad program for my Spanish minor than it was to take the same classes at my regular undergrad over the summer. My brother studied international politics and did a semester in Jordan taking intensive Arabic. You aren't going to get the same experience in a mid-west school. If you are studying nursing, great. If you are studying foreign relations, the program may require some foreign travel.
For number 5, even if you the kids can't come back "home" after graduation, are you precluded from helping subsidize their housing until they land their first job? Do you have any family friends or relatives in the states that would be willing to provide a transitional place to stay? I'm thinking less than 6 months. I just can't imagine having to find a job and a place to live before actually graduating. I was focused on taking finals and finishing my thesis.
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Currently we just finalized what we were willing to do for our (currently) three boys.
I wanted to keep options open, but help out some. I still maintain, the best gift I can give them is to not be a financial burden to them in the future...
We have opted to save $10,000 in TODAY's money for college for each one of them. So each one will get a slightly different payout based on the value of the dollar. Our rules are:
1. You do not have to go to college--it is strong encouraged but not required. (we have entrepreneur and military people in our family, I have great respect for both, I believe collage would of aided them anyways). The money is yours and will be given to you at another appropriate time.
2. If you go to a community collage while in high school we will pay your tuition (depending on the class.)
3. If you go to collage you are welcome to live at home during that time period, you will maintain the rules we have here out of respect for your rent-free living situation.
4. If you are not going to collage we expect a written plan in place of how you will support yourself outside of our home. Alternately, rent will be set given current market values.
5. We will provide you the amount that is your balance, we will help you determine a plan to utilize it wisely, you will probably need to find employment or take student loans to cover the remaining expense.
*Collage is equal but not limited to; trading school, community collage, apprenticeships, etc.
We actually plan on adopting two more kids, so I knew we won't have much to bankroll for all kids equally (at least...currently). While we want to help out, we want to be fair to each kid and ourselves. The high school part was added because we felt that a high school student really wouldn't have the time to work and go to collage as well (or get practically no hours). It wouldn't cost us much since it would probably be a class or two at the local collage.
I never got a penny from my folks and neither did she, so while we want to do more, we felt this was a good starting place. My oldest is 6.
I purposely left out grade requirements since, I don't think they accurately measuring learning. My hope is, with them knowing how much we've saved for them, they will utilize the grants/scholarships/community collage+4 year to get the best 'bang for their buck'.
If they decide not to go to collage, right now our thought is it would their wedding gift or house downpayment, either way it would go to them somehow. We didn't want to penalize someone who would be successful without the traditional educational steps I took.
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I want to chime in to mention that at my college, the dorm and meal plan prices were RIDICULOUS compared to rent on an apartment and groceries. I finally convinced my parents that it'd be better to live off campus in my senior year, and they said they were only paying for the equivalent dorm and meal plan.
Well, that money got me a full 12 months rent plus $50/week for groceries (2006 dollars). Where the dorm and caf only open Sept-Dec and late Jan-May. So, it was awesome for me, but maybe not what you want to do to encourage wise spending.
Have you thought about possibly saying that you'll pay for U of M tuition or give them the cash at graduation if they get scholarships or go to a cheaper school? I mean, if they get a full ride but want to go to grad school, you're not going to let them use the money you would have spent on undergrad on their grad school?
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Some follow up, based on the comments.
1) The "your money first" is based on generous grandparents giving rather large sums to the first child and then the other kids came along. It wasn't meant to be for earned money, but I can see how it appears that way. Will be changing the wording so it's "Will be using given money first, and matching earned money."
2) My wife and I were both told all costs would be covered for our college and both of us did not do well in school or were serious students. The grade requirements were meant to incentivize the kids to not party like we did. I agree that it may be easier to say "don't party too much", but really think spelling out a limit is important. Excellent point on the tougher schools and tougher classes though. I'll have to rethink that some.
You might want to clarify whether the average is the total average or the annual average or the semester average. E.g., if the kid bombs the first year but gets As the second year, where does that get them?
The plan was to evaluate every semester. I figured straight A's was unrealistic and that their portion would be the 10 or 15%. Probably makes sense to just offer 85-90% for a B average or up. I agree the initial write up would potentially cause undue pressure or resentment.
I appreciate all the feedback and will be changing with some of the suggestions. A also agree that if they get a scholarship for undergrad, that some (all?) grad school paid for?
You've all given me a lot to think about. Thanks.
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Interesting discussion. I liked a lot of points that u brought up in your contract - but won't be as strict in my "rules" as you are choosing to be.
I prefer more fluidity. I have emphasized to my kids that things will not always be fair or equal between the two of them. But they will each get what we feel they need/is appropriate to their situation.
Insisting on specific grades wouldn't work for us. I have an overachieving daughter to whom studying comes easily and a son who has to work harder at it. Plus, he just doesn't love it the way his sister does (who complains when a teacher doesn't teach enough).
I want both to be prepared in advance so they have the right expectations. At 13/14, I started telling them in more detail the type of assistance they can expect from us. I think its mean when parents wait until the last second to tell their kids "oh no I can't afford to pay for college". This way they can plan for jobs, savings, college expectations (no Ivy League budgets here).
We have been saving since they born. It should be (but may not be) enough to pay for 4 years at our local university. I told them they would be responsible for anything beyond what we have saved. They will also pay a small amount of rent to live at home. They also need to be prepared to find (and pay) for their own housing in case we downsize and travel when they go to college.
We will reassess as the years and situations change to see if we need to make any modifications to this basic plan. If they turn into kids that goof off - there's no way that's happening on my dime. If they are ungrateful and disrespectful brats, the tap will also be turned off.
In my own situation, My parents paid for my tuition and books and I was very proud to work and pay all my own living expenses. They paid for everything for my brother who didn't work through college. I'd like my kids to work and they would like to as well.
Sent from my iPhone using Tapatalk
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1) The "your money first" is based on generous grandparents giving rather large sums to the first child and then the other kids came along. It wasn't meant to be for earned money, but I can see how it appears that way. Will be changing the wording so it's "Will be using given money first, and matching earned money."
Using money that was given to the children and retroactively tying conditions of performance (i.e. grades) to that money seems a bit odd to me. Is the money theirs or not? And when it was given to them was it given with conditions?
If it was given to you then it is obviously yours to do with as you wish. But I would worry about possible resentment if you were to take money that the kids already felt was theirs and then change the rules on what they must do to receive it.
I obviously have no idea what amounts of money you're talking about - but just seems like a potential problem area to me. For example, if one of your children does not get an A average the first year will you keep part of their own 'gifted' money from them for the next years tuition? Or if your child drops out of school, what will happen to the remainder of the money that was given to them? Or if they never go to college?
Unlike others here I have no issue with tying money to goals that must be met - but I do see a potential problem with tying access to their own money with goals that must be met.
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On the GPA thing-- I could see myself switching my major/ courseload to something fluffier (where I went, that meant taking a religion or a psych class vs a hard science). Upon graduation, I'd end up with an A average in Religious Studies or a B+ average in Chemistry.... I didn't have any of these financial constraints but STILL took fluff classes to boost my science-heavy GPA.
You may want to consider some flexibility in there, but I'm not sure how to word it. Perhaps an expectation of a B or better average (ie overall GPA of 3.0 at any given time) and then like, bonus triggers for Deans List or whatever?
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On the "consider schools abroad" bit, make sure that doing so works with your kid's long term goals. Going to school abroad might preclude them from law school or medical school in the US or require them to take a much longer program to get the prerequisites necessary to qualify. I'm not saying it is always a bad idea. Just research it first.
On the no study abroad thing, I'd make exceptions for programs that provide unique experiences for the major without crazy cost to you. It was cheaper for me to do a summer abroad program for my Spanish minor than it was to take the same classes at my regular undergrad over the summer. My brother studied international politics and did a semester in Jordan taking intensive Arabic. You aren't going to get the same experience in a mid-west school. If you are studying nursing, great. If you are studying foreign relations, the program may require some foreign travel.
For number 5, even if you the kids can't come back "home" after graduation, are you precluded from helping subsidize their housing until they land their first job? Do you have any family friends or relatives in the states that would be willing to provide a transitional place to stay? I'm thinking less than 6 months. I just can't imagine having to find a job and a place to live before actually graduating. I was focused on taking finals and finishing my thesis.
It depends. Even for professional schools, there are some bonuses to getting your first credential abroad -- the difference in cost can be SO substantial that it's worth doing even if you do need to take additional courses to practice in the US, not to mention that then you have an EU recognized (or Asian, or whatever) credential. I think it's probably more likely that they'll want to do sciences or humanities, though.
Unless I radically change careers (which isn't out of the question) our kids will have grown up and spent functionally all of their childhood living outside of the US in many different countries. They will have very little experience of normal American culture, but that is the culture they will most likely have to live and work in for their adult lives. That's why I'd impose a very 'hard no' on study abroad for them; they really need their time in college to transition into US based culture and get their feet under them. If they're crazy enough to study foreign relations after living it for their entire childhood we'll work something out! ;)
And yes, we would assist with housing and the transition -- I don't mean to be literally cruel. But I went home to my mom's and bummed around for a year working lousy jobs that paid nothing trying to 'find myself' after college, and my kids won't have that option. It sucks, because I think it was a good experience for me, but the reality is that they're going to have to be more career-oriented at an earlier point in college life than I was.
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My folks had the very basic plan - sorry, we have no money for you for college. Have at it.
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My parents took an approach that I think I will use on my kids (if I choose to have them). My parents incentived grades early - $5 for every A, nothing for any grades lower starting in 8th grade. Grades were quarterly so I could make up to $40 a quarter. This seemed like a lot to a kid wearing hand-me-downs. This encouraged high grades and probably helped with our ability to get scholarships later down the road. With regards to college, they told me and my brother that they would pay for the first 2 years of college, we would be responsible for getting the cash for the 3rd year and we would take out a loan for the 4th year to learn financial responsibility. My mom dropped me off at the mall a few weeks before I got my driver licensed and told me she wasn't going to pick me up until I applied for 10 jobs. So I had my first job at 16 and worked continuously until I started college. My brother did farm labor.
I also had a drop in GPA transitioning from high school to college but my parents didn't ask about grades in college, instead they pressured us to find a major that had a secure job outlook. We didn't need to be reminded to do well academically because we saw the advantages of doing well in high school during the transition to college.
I ended up getting a partial scholarship for an expensive liberal arts school. True to their word, my parents paid the first two years, I paid the 3rd year but then during my 4th year, my parents insisted on paying. They knew I wasn't going to be a boomerang kid and I had already been offered a grad school fellowship at an Ivy school. My brother followed my footsteps at a different school.
With regards to studying abroad, I studied abroad in Scotland, my partial scholarship covered most of the trip and tuition in Scotland was cheaper by 2k. It was unfortunately my weakest academic performance but I don't regret it.
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My parents took an approach that I think I will use on my kids (if I choose to have them). My parents incentived grades early - $5 for every A, nothing for any grades lower starting in 8th grade. Grades were quarterly so I could make up to $40 a quarter. This seemed like a lot to a kid wearing hand-me-downs. This encouraged high grades and probably helped with our ability to get scholarships later down the road.
Studies show that pay for performance (external rewards) actually reduces performance in the long-term, because kids don't build the intrinsic motivation for doing well in school.
http://www.alfiekohn.org/punished-rewards/
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First, I want to thank everyone for the thoughtful, detailed feedback! Many of you came up with excellent points that I hadn't considered.
Perhaps a written contract is not for everyone, but I feel it will make for less drama in my family.
The following is the second attempt at the contract. Please provide feedback so I can give it a third tweek. Also, I hope people don't mind the blatant copying a did for some of their ideas.
1) There needs to be a reasonable plan. What are you going to do with your major in _____? What kinds of jobs are available for _____ majors and what do they pay? What is the job outlook?
2) We will use the money gifted to you first. Money you earn and save will be matched dollar for dollar for your contribution and spending money.
3) You will need to get a job in the summers, starting the year you are 16.
4) Mom and I will pay for up to 85% of your college if the amount is the same or less than the University of Michigan.
Chart showing roughly $27K a year room and board.
5) To get 85% of the costs, you will need to get a 3.0 or above.
6) To get 50% of the cost, you will need to get a 2.0 or above.
7) The percentage paid will be averaged for GPA between 2.0 and 3.0.
8) If you go to a particularly challenging school, or take a particularly challenging course, GPA tuition % can be negotiated.
9) Anything under 2.0, and you pay for the next semester you attend.
10) The percentage you get will be determined at the end of the semester for the next semester. The first semester you will get 85%.
11) At the end of 4 years of college, you are paying 100%, no matter what your grades are. The only exception is if you are in a 4 ½ or 5 year program.
12) Mom and I will give you 25% of any scholarships you get at the beginning of each semester, up to 25% of the above amounts.
13) Any money saved by taking college courses while in high school will be deducted from the amount you are required to put in.
If you are considering a college that costs more than University of Michigan, you will need to cover any amount of money over the above amount with scholarships, loans or grants. You will need a plan before a deposit will be paid to any college.
If you want to go to graduate school, you will need to pay for it. You kids are smart and can figure out if the cost of the graduate degree is worth the expense.
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4) Mom and I will pay for up to 85% of your college if the amount is the same or less than the University of Michigan.
Chart showing roughly $27K a year room and board.
Two questions on this: first, does the U of M have different tuition levels for different branches of the system? If so, might be worth specifying Ann Arbor versus Flint or whatever.
Second, the incentive seems to be to go to a school that is as expensive as the U of M and no less. If they have a choice between U of M and some other school at half the cost. (Let's say that it's a less prestigious school overall but with a very specific program they want, so it's not a matter of quality.) Choosing the cheaper school saves you $46k (assuming a 3.0) and saves them $8k. So they're going to be looking at it as an $8k difference, not a $54k difference. You could align the incentives by saying that you will pay the given fractions of U of M tuition and if they find something less for a comparable education, they can spend the difference on other education expenses subject to negotiation. Like, maybe the cheap school is not in a transit-friendly area and they buy a car. Or if the program is has an overseas component (they're going to study Chinese and political science with a required year in Beijing, to get a job working for the State Department), it could pay for the study abroad expenses.
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I would point out the same potential issues with the use of gifted money that I pointed out earlier in the thread.
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I think having a written document listing out what you will do is better than not having a discussion about it. However, once you put it in writing expectations will be set and I hope that they can be followed through.
I would also add at least explaining the spirit of the agreement and if necessary the specific line item and motivation for it. To a kid just coming out of high school it might be taken as just a bunch of arbitrary rules to show that you are still in charge and not something to help guide them through college.
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Man, this is a lot of pressure to put on a kid.. Assuming that they will go to college, then select an appropriate degree, then pressure for specific marks, .... maybe leading to pressure to decide what you want to do NOW! What will you be?
Teenagers these days have a lot of pressure already.
I found that by the time my kids are in highschool, my expectations of them have changed. It is more about being a quality person, interested in learning and life, and collecting a ton of life skills (thanks to MMM's articles for that!) Truthfully, I set the bar down and expect homework completion, and a positive attitude about chores, and trying / working different jobs to make money.
After all, if my son decides to be a paramedic, and my daughter to become a red seal industrial painter (while studying philosophy and fine art on mostly her own dime), and they are both happy, healthy adults, that are part of my life....I think I will have won.
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Thanks for the thread Bikeguy. Our kids are 14 and 12. I have been thinking and conversing with them already along the lines that you have outlined and others refined in comments. I appreciate all the good insights. I will add my own 2 cents
"Contract" seems like the wrong language for what we seek to negotiate with our kids. I think of a contract as something that is complete when it is signed, or when you take possession of the house or the car or the whatever. Instead of a contract, I want something organic, fluid and not-so-binding. I want to have a dialogue that can be amended and adjusted and renegotiated. I can picture that terms may have to be redefined later after we thought everything was settled, but with new experience to better inform both sides. We may have to start over again to assure we look at it all in terms of a new understanding, but continue in the spirit of the original conversation.
I want what is best for my kids, but that is likely to be revealed sometimes only in steps and at times only after the last step has been taken.
Of course there are some pretty obvious ground rules. I think we told our 7 year old (at the time) that "Out of state and private schools are for graduate degrees". That is a no brainer. Anyway, thanks for all the thoughts on this topic. I am so grateful to have kids with working arms, legs, senses and brains...to be able to consider the possibility of college and independent living is a blessing.
Happy Tuesday all - AP.
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I found that by the time my kids are in highschool, my expectations of them have changed. It is more about being a quality person, interested in learning and life, and collecting a ton of life skills (thanks to MMM's articles for that!) Truthfully, I set the bar down and expect homework completion, and a positive attitude about chores, and trying / working different jobs to make money.
After all, if my son decides to be a paramedic, and my daughter to become a red seal industrial painter (while studying philosophy and fine art on mostly her own dime), and they are both happy, healthy adults, that are part of my life....I think I will have won.
Excellent point. All the kids have expressed interest in going to college. Getting them interested in the MMM take the computer apart stuff or learning coding hasn't happened. Hopefully removing the term "contract" and changing it to "living document" or something like that will help. I really think this is necessary, at least for my kids, so expectations are clear and there is no surprise if financial aid is pulled. All my kids have ability, but 2 out of 3 have run the experiment of seeing how long they could get away without doing any homework. Then there was the minimal effort experiment, which ran for a few years. Everyone is working to ability now. They really don't like me talking to them about homework ("Dad, we have this.") I let them know if their current grades are at B or above, you'll never hear from me. At B-, we are talking. At C+, cell phones and screen time are going away.
So, there is no way I would be comfortable approaching college with anything but clear expectations.
"Contract" seems like the wrong language for what we seek to negotiate with our kids. I think of a contract as something that is complete when it is signed, or when you take possession of the house or the car or the whatever. Instead of a contract, I want something organic, fluid and not-so-binding. I want to have a dialogue that can be amended and adjusted and renegotiated. I can picture that terms may have to be redefined later after we thought everything was settled, but with new experience to better inform both sides. We may have to start over again to assure we look at it all in terms of a new understanding, but continue in the spirit of the original conversation.
I want what is best for my kids, but that is likely to be revealed sometimes only in steps and at times only after the last step has been taken.
Of course there are some pretty obvious ground rules. I think we told our 7 year old (at the time) that "Out of state and private schools are for graduate degrees". That is a no brainer. Anyway, thanks for all the thoughts on this topic. I am so grateful to have kids with working arms, legs, senses and brains...to be able to consider the possibility of college and independent living is a blessing.
Excellent point. Living document is the first term that came to mind.
I think having a written document listing out what you will do is better than not having a discussion about it. However, once you put it in writing expectations will be set and I hope that they can be followed through.
I would also add at least explaining the spirit of the agreement and if necessary the specific line item and motivation for it. To a kid just coming out of high school it might be taken as just a bunch of arbitrary rules to show that you are still in charge and not something to help guide them through college.
A discussion of why we think all these things are important and the thoughts behind them will be conveyed when the final draft is given to them. There will also be a talk about how things can be modified if everyone agrees it makes sense.
4) Mom and I will pay for up to 85% of your college if the amount is the same or less than the University of Michigan.
Chart showing roughly $27K a year room and board.
Two questions on this: first, does the U of M have different tuition levels for different branches of the system? If so, might be worth specifying Ann Arbor versus Flint or whatever.
Second, the incentive seems to be to go to a school that is as expensive as the U of M and no less. If they have a choice between U of M and some other school at half the cost. (Let's say that it's a less prestigious school overall but with a very specific program they want, so it's not a matter of quality.) Choosing the cheaper school saves you $46k (assuming a 3.0) and saves them $8k. So they're going to be looking at it as an $8k difference, not a $54k difference. You could align the incentives by saying that you will pay the given fractions of U of M tuition and if they find something less for a comparable education, they can spend the difference on other education expenses subject to negotiation. Like, maybe the cheap school is not in a transit-friendly area and they buy a car. Or if the program is has an overseas component (they're going to study Chinese and political science with a required year in Beijing, to get a job working for the State Department), it could pay for the study abroad expenses.
Excellent point. I need to think about that. Totally makes sense. I'm thinking that can be discussed when we talk about the write up and then an agreed upon solution added. I like getting the kids involved and thinking about what makes sense. Even some ownership in the document.
It's interesting looking at the siblings in my family and my wife's family. A lot of this is what I think would have helped this group.
I would point out the same potential issues with the use of gifted money that I pointed out earlier in the thread.
The gifted money for the 16 year old is basically the first years college cost. It was given by grandparents to me to be used for his college when he was born. If it was more than a year, I'd give it more thought. If it was in his name, I'd just give it to him. I feel like it was given to me to be used for the originally stated purpose. I'm comfortable with having the document read the way it does.
The 14 year old has about $2k.
Oh, BTW, my friends kid is going to Illinois next year for $55K a year. When I told her she inspired me to get something typed up, she said at least something good came of their situation.
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The gifted money for the 16 year old is basically the first years college cost. It was given by grandparents to me to be used for his college when he was born. If it was more than a year, I'd give it more thought. If it was in his name, I'd just give it to him. I feel like it was given to me to be used for the originally stated purpose. I'm comfortable with having the document read the way it does.
That makes total sense.
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Just like me, my kids react badly to detail control and gifts with strings attached. Allowances based on grades would border on child abuse for us, since the oldest is a perfectionist and already pushes herself much more than is healthy. Getting her to accept that 95 % is good enough, is still a work in process. We try to treat the girls as intelligent beings, and try to take the time to explain the WHY of stuff. In fact, we actually do the old fashioned family meetings when we have important issues to discuss. It sounds weird, but it is actually very nice. In the years leading up to university, we are planning to teach the girls more and more about money managements and setting goals. I like Dave Ramsey's idea of letting the teenagers handle the costs of their own clothes and activities, to teach them budgeting and planning in real life. When we are closing in on uni, we will probably be helping them setting up budgets and finding solutions for housing and food that they can afford, and then letting them try and fail for a bit. My kids really need to learn how to fail well, and college/university is a perfect place to learn that in a safe environment.
There are no tuition fees in Norway, and they will get a small grant from the government to cover some of the living expences. But to get all the way through university they will need some more money; from a very cheap state loan, their own earnings, and/or money from us. I hope they will want to study at least one year abroad, and then there could be some tuition fees. "Luckily", they both have disabilities, and should be able to access some extra international grants. But we are also saving some money for them in a mutual fund, that could be used to cover that type of stuff. Most of it is gifts from grandparents, but we are adding a bit to it. We also expect them to work weekends and holidays, but hopefully not as much as I did. If they turn out to be lazy moochers, we will of course have to address that. But so far it looks good.
BTW: four year degrees are basically worthless here, unless it is a nurse degree or in engineering. To get the good jobs, you need a masters degree, and those are five to six years.
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Oh, BTW, my friends kid is going to Illinois next year for $55K a year. When I told her she inspired me to get something typed up, she said at least something good came of their situation.
May I ask what university in Illinois costs $55k a year? Never mind I just looked up Northwestern and tuition alone is $50K, no room, board, or other fees. Total for one year at Northwestern is $70K, jaw fell to the floor. However, if you are a only child with a single parent making $25K a year with no assets, then they would get $66K a year in aid. Not bad at all.
http://undergradaid.northwestern.edu/types-of-aid/aid-package-examples.html (http://undergradaid.northwestern.edu/types-of-aid/aid-package-examples.html)
Moral of the story, some how raise your kids to get into competitive private schools while making poverty level wages and tuition is covered, easy peasy.
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Oh, BTW, my friends kid is going to Illinois next year for $55K a year. When I told her she inspired me to get something typed up, she said at least something good came of their situation.
May I ask what university in Illinois costs $55k a year? Never mind I just looked up Northwestern and tuition alone is $50K, no room, board, or other fees. Total for one year at Northwestern is $70K, jaw fell to the floor. However, if you are a only child with a single parent making $25K a year with no assets, then they would get $66K a year in aid. Not bad at all.
http://undergradaid.northwestern.edu/types-of-aid/aid-package-examples.html (http://undergradaid.northwestern.edu/types-of-aid/aid-package-examples.html)
Moral of the story, some how raise your kids to get into competitive private schools while making poverty level wages and tuition is covered, easy peasy.
U of I. And they earn more than 24K.
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But you bring up an exceptional point. If you are close to FI when you have a sophomore in HS, you are just about required to bail.
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4) Mom and I will pay for up to 85% of your college if the amount is the same or less than the University of Michigan.
Chart showing roughly $27K a year room and board.
Two questions on this: first, does the U of M have different tuition levels for different branches of the system? If so, might be worth specifying Ann Arbor versus Flint or whatever.
Second, the incentive seems to be to go to a school that is as expensive as the U of M and no less. If they have a choice between U of M and some other school at half the cost. (Let's say that it's a less prestigious school overall but with a very specific program they want, so it's not a matter of quality.) Choosing the cheaper school saves you $46k (assuming a 3.0) and saves them $8k. So they're going to be looking at it as an $8k difference, not a $54k difference. You could align the incentives by saying that you will pay the given fractions of U of M tuition and if they find something less for a comparable education, they can spend the difference on other education expenses subject to negotiation. Like, maybe the cheap school is not in a transit-friendly area and they buy a car. Or if the program is has an overseas component (they're going to study Chinese and political science with a required year in Beijing, to get a job working for the State Department), it could pay for the study abroad expenses.
K. I've been thinking about this. I feel like there is an advantage to going to a more competitive school. Not sure I want to incentivize the cheapest school. Would be interested in others feelings on this.
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K. I've been thinking about this. I feel like there is an advantage to going to a more competitive school. Not sure I want to incentivize the cheapest school. Would be interested in others feelings on this.
I went to a small private tech school, not widely known, and I chose it largely because they offered me a full-tuition scholarship. My other alternative was the state flagship, where I just so happened to end up going for grad school. In retrospect, knowing what I know today, I would have chosen the small school even if they were the same price; if money was not (as big) an issue, I would have gone to the smaller school even if it was slightly more expensive. I liked the small classes from day 1. I liked the number of project and lab classes in the curriculum. I liked the kind of people it seemed to attract (I got to live on campus for a weekend when I interviewed for my scholarship and meet many of the students). It was easier, for me, to find a niche on that campus; I expect I would have gotten lost at the state school, but as it was I got to tutor and research and even TA as an undergrad and lead some student groups. I liked that the school was in the city and not a cornfield, so there was much more to do on the weekend than get drunk and hook up (though those who were after this did find opportunities). And while, nominally, it was less competitive, the classes had plenty of academic rigor; having TA'd a senior year lab course at the state school, I can say with certainty the students were no better educated than my classmates and I from the small school. The state school is in the top-10 for engineering...there's just not that much difference in academics, at least until you get to the very elite level schools (I know a few people who went through MIT, and they have a lot more depth to all their coursework).
I partly agree with you; depending on the degree of "more competitive" and "more expensive" it might be worth it. But one important thing to note is that college has a significant "you get out what you put in" component. A student that's not particularly driven to seize upon additional opportunities won't get a significant benefit from a marginally more competitive school in terms of education. Only, perhaps, better job fairs and entry-level employment prospects due to name and alumni recognition. But a motivated student will create those opportunities for themselves even at a less recognizable school. All the graduates of my cohort and the years on either side are gainfully employed using their degree, or pursuing/nearing completion of graduate work (some have finished masters and are now working).
I think what ends up being more important, as far as education rather than reputation, is not how competitive or selective a school is but some of the details people forget to consider. What classes are in the curriculum? How many are hands on, project based, laboratory courses, or otherwise emulate the real world (whatever that looks like for non-science/engineering/CS)? What resources are available for students to pursue extracurricular projects? Is there a "fab-lab" or shop, site licenses for key software, IP/entrepreneurship office? What kind of student groups are active (robotics, student consulting group, school newspaper, volunteering, etc)? How good is the career center (at educating and catering to [desired major])? I didn't know to ask some of these going in, and I'm sure there are many more. But these sorts of considerations give you insight into what people *do* on campus, and at the end of the day, doing is the best way to learn and being surrounded by people doing things (besides going to lectures) is a great way to be motivated to do them oneself!
I think it might be hard for you to put the right incentive into the contract because Kid 1 might be super-motivated and academically inclined whereas Kid 2 might be smart but disinclined toward academic structure so they'd get all they need/want academically from a lower-tier state school (e.g. CSU vs UC system for CA). But it probably wouldn't look fair to them if you said "Kid 1, have $5k extra to go to Prestige School because you'll benefit from it, but Kid2, you should go to a cheaper school." So maybe you just leave it open to reasonable negotation. So Kid 1 comes to you and says "look, I got into Prestige University and I got these scholarships but I'm still $5k short but PU has all these benefits:" you can say, "ok, you've convinced me, that sounds reasonable" (or "ok but this is a loan" or whatever you want) and when Kid 2 comes to you and says "parent, I can clearly see I am saving you $10k by going to Community College and then Cheap College, and I know you gave Kid 1 $5k to go to PU, why don't we split the savings" you can be like "that sounds fair, yes" I just don't see a way to "lock it down" in your contract and still motivate your kids to make good decisions...
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Honestly, I would stick to making this about the money, and leave the rest out. This seems very controlling to me, and like you're projecting your own experience as a student onto your kids. If your kids are well-prepared for college, I don't see why it needs to be more complicated than "We can pay $x per year for 4 years, and the rest is on you." Other than that, let them make some mistakes and learn to be adults.
As a kid, I was very independent, responsible, and a good student, plus I also had a huge "You're not the boss of me" streak. If my parents had presented me with something like this, my reaction would have been resentment and distrust, followed by either a) telling them don't worry about it, I'll pay for it myself instead of agreeing to their stupid contract, or b) shrewdly figuring out how game their little system to accrue the maximum financial benefit to myself. Both of these reactions would have been counterproductive to the intended goal.
That said, it would have benefited me as a kid to have the financial picture spelled out more clearly, because it was a black box to me. I was also a first-generation college student, so my parents didn't necessarily understand or think through all the options.
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I just don't see a way to "lock it down" in your contract and still motivate your kids to make good decisions...
Excellent points about the difference in kids and what each would get out of different learning experiences.
As a kid, I was very independent, responsible, and a good student, plus I also had a huge "You're not the boss of me" streak. If my parents had presented me with something like this, my reaction would have been resentment and distrust, followed by either a) telling them don't worry about it, I'll pay for it myself instead of agreeing to their stupid contract, or b) shrewdly figuring out how game their little system to accrue the maximum financial benefit to myself. Both of these reactions would have been counterproductive to the intended goal.
That said, it would have benefited me as a kid to have the financial picture spelled out more clearly, because it was a black box to me. I was also a first-generation college student, so my parents didn't necessarily understand or think through all the options.
If my kids had an established track record of being independent, responsible, and good students, the write up wouldn't need to be so detailed. Both have had relatively recent excursions. Both are great kids, but they got the bad DNA with the good from both my wife and me.
I appreciate the "just give them the money crowd", but it's not a responsible thing to do.
And if they think we're too controlling with this, they are welcome to self fund.
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Scholarships have GPA, often major, and sometimes even coursework or extracurricular requirements. No reason parental scholarships can't have similar strings attached.
I do think parents should think about higher ed and plan to help their kids achieve their potential (whatever that might be). But that doesn't mean kids are entitled to that support unconditionally...
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Man, this is a lot of pressure to put on a kid.. Assuming that they will go to college, then select an appropriate degree, then pressure for specific marks, .... maybe leading to pressure to decide what you want to do NOW! What will you be?
Teenagers these days have a lot of pressure already.
I 2nd that. My son who is now 18 went through a period of very acute depression at age 16. At the heart of it was overload of academic and social pressure from high school, and Mom and Dad were always harping on him to find a PT job. He felt like a failure and hadn't even finished HS yet. The truth is, in our little town, none of the jobs were available to those under 18. The business owners figured they had plenty of 18 and up kids to choose from so wouldn't even consider hiring a 16 year old. So finding a job was very hard for him. He lucked upon one last fall and it's been great experience for him. Now our other son who is 16 but will be 17 in a few weeks, is having the same difficulty. It's not for lack of applying. A manager at one store literally told him that hiring a 16 year old was out of the question because they are too young and immature and can't be trusted. What a crushing thing to say to a young man!
As our oldest goes to college this fall, he has been able to save money. He's spent hardly anything of what he made working over the last year. He's not a spender really. But if he graduates and has to live at home for a little bit to look for a job, we will support him. Perhaps consider a small amount of rent. But we want him to 'launch' one time and be successfull. It will be close to our FIRE date by then and we have our own plans, which involve selling our current residence and doing some travelling before settling to a LCOLA. What I mean is that his bedroom will only be available for a limited period of time and he is aware of this. It's tough for some graduates to find jobs these days and the pay in some professions starts out so low. I'm not compelled to add to his stress levels at this point. Our contract is more general in nature as in, "we expect you to work hard for your own future happiness and success" not to make your parents happy. We learned important lessons about crossing over the line between support and encouragement vs. being a source of extra stress. It's his life after all.
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If my kids had an established track record of being independent, responsible, and good students, the write up wouldn't need to be so detailed. Both have had relatively recent excursions. Both are great kids, but they got the bad DNA with the good from both my wife and me.
I appreciate the "just give them the money crowd", but it's not a responsible thing to do.
And if they think we're too controlling with this, they are welcome to self fund.
One consideration is that kids often learn by making mistakes. If your attitude is, "I will prevent my kids from making mistakes" they cannot learn.
You should make any plan so it incentivizes your kids themselves making reasonable decisions. Not mandating and dictating decisions to them.
Of course, the ideal outcome here is that you lovingly teach them how to make large life decisions throughout their childhood, guiding them and mentoring them in that process. Then when college comes around you can say, "we'll pay $X per year for school" and not have to make a long detailed list of legalese about how you are going to prevent them making mistakes in life.
My parents did something like that. But you know what I would have preferred? That my parents actually help me think through the process of deciding what school to go to. Thinking about the financial aspects (my parents never talked to me about money so I made a $100k decision without any clue what I was doing). Talking about how to think through career options vs "do what you want!" and how that works after school. Talking about how to value cost of school vs location vs educational outcome.
The money vs contractual plan for college is not even remotely as important as the parenting aspect. Parenting isn't just "we're going to write up a plan for your life and give it to you." It is lovingly and patiently helping enable your kids to make their own decisions in a responsible manner. I would have loved for my parents to talk through things with me instead of just throw their perspective over the wall to me, such as your approach.
But you know what that lack of parental involvement did do for me? I spent more money than my siblings, who happened to go to in-state schools where their cost was less than $X and so they paid nothing out of pocket. But I learned a lot about how important it is for ME to learn what I need to know and not expect it to be given to me. Maybe it cost me $40k to learn - but that $40k mistake in total will pay a huge return in my life overall.
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I 2nd that. My son who is now 18 went through a period of very acute depression at age 16. At the heart of it was overload of academic and social pressure from high school, and Mom and Dad were always harping on him to find a PT job. He felt like a failure and hadn't even finished HS yet. The truth is, in our little town, none of the jobs were available to those under 18. The business owners figured they had plenty of 18 and up kids to choose from so wouldn't even consider hiring a 16 year old. So finding a job was very hard for him. He lucked upon one last fall and it's been great experience for him. Now our other son who is 16 but will be 17 in a few weeks, is having the same difficulty. It's not for lack of applying. A manager at one store literally told him that hiring a 16 year old was out of the question because they are too young and immature and can't be trusted. What a crushing thing to say to a young man!
Oof. Well the kid was probably better off not working for him. I had trouble finding work at 16 too, though with a mall nearby I eventually did. One of the managers mentioned to me that he preferred not to hire 16 year olds, no matter their character, because legally there were more limitations on the hours they could work than 18 year olds.
I agree with those saying that talking out the college decision in a rational way is the really important thing, but what I like about the contract is that it opens the door to this conversation and the OP and his wife can always modify it based on the response they get. Even if the kids hate it, it gets them thinking about the decision in a nuts and bolts kind of way, rather than the vague aspirational way schools and other families tend to approach it. Giving money conditionally can infantilize kids who should be moving into an adult role, but so can unconditionally giving money if there are unspoken assumptions (e.g., you have to go to college; you have to go to the best college you can get into, etc.), it all depends on the intent. Best to have things laid out clearly.
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This thread has got me thinking about what I will do in the future for my kid but I have a question about the purpose of this or any college contract?
Is it to help prevent your kid from failing? Or is it to protect your monetary investment in your kid?
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This thread has got me thinking about what I will do in the future for my kid but I have a question about the purpose of this or any college contract?
Is it to help prevent your kid from failing? Or is it to protect your monetary investment in your kid?
I agree with those saying that talking out the college decision in a rational way is the really important thing, but what I like about the contract is that it opens the door to this conversation and the OP and his wife can always modify it based on the response they get. Even if the kids hate it, it gets them thinking about the decision in a nuts and bolts kind of way, rather than the vague aspirational way schools and other families tend to approach it.
Sheepstache nailed it. The write up has opened the discussion of college with my 9th and 10th grader. We will still be working out what they want to study and where it makes the most sense to go. But they now know what their Mom and I are thinking is reasonable.
The most interesting thing is they both loved the idea of 25% cash for any scholarship they earn. My son says he will now study for the ACT, because scholarships open up academically at a score of 32, and his PSAT score shows he should be close. I can guarantee the idea of studying for it didn't occur to him before this discussion. My daughter is also exploring scholarships she may be eligible for.
This exercise started out with me wanting to be crystal clear there was a cap, and not getting ourselves in the position of my friend who is shelling out $55K a year for her daughter.
Stuff got added that makes it so money won't be wasted if the kids lose motivation or aren't interested in coming up with their 7.5% (the amount they need to cover if they work and we match dollar for dollar.)
If my kid fails, I don't want to be having a discussion about how I'm being unfair by not offering another chance. It's all spelled out.
I find it interesting to guess who has kids and who doesn't based on what they post to this thread.
Again, I really appreciate all the feedback and feel this will benefit my kids and our family to have this document in place.
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We started an irrevocable education trust for DS when he was a year old, funded with our annual gift exclusion & invested to take advantage of the compounding time. At the time, 529 plans didn't exist. We would still do the trust again, because in our case it allowed us to pay tax on the earnings at the trust rate rather than the higher kiddie tax rate, gave us control as trustee even when DS became of legal age, & has an exit strategy if all the money is not used for college. DS was responsible for covering anything over the trust for his college expenses. Upon receiving a full degree (Bachelors, not Associate), he is allowed but not required to claim 50% of any residual, with any remainder due to him on his 30th birthday. We wanted the funds to be there for most if not all of his university expenses, with an incentive for DS to preserve it by graduating on time or early.
DS received 2 merit scholarships from his undergrad university, so that meant substantial savings for his trust. He has no student loans. He graduated last week & plans to return next fall in a 4+1 program that will allow him to get his Masters degree in just 2 semesters rather than 2 years. His trust still has more than enough to pay for it, but he is likely to get a scholarship and/or TA position to pay for most if not all of grad school.
He lived in an apartment for all but his first year of college, when he was required by his university to live in a dorm on campus. We transferred a monthly amount to his checking account to cover his apartment, utilities, & basic food -- anything beyond this amount was his responsibility. He still managed to save money out of this, & it was his to keep. We didn't require him to work during the school year but he found paid part time research & TA jobs within his college that were interesting to him. Every summer since sophomore in HS was spent working full time in an internship, which was invaluable in shaping his degree choice, & he started funding a Roth account to the max that his earnings & the limit allowed.
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This whole contract thing seems crazy to me but I guess everyone is different and is able to succeed in different ways. I always tried hard in school but if I were given a contract like this, it would just freak me out.
I didnt start thinking about college at all until after my junior year of high school. I think it worked out well though (:
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But you bring up an exceptional point. If you are close to FI when you have a sophomore in HS, you are just about required to bail.
"Son, my college funding gift to you is having a low-income family. Get into Stanford - it will be free!"
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But you bring up an exceptional point. If you are close to FI when you have a sophomore in HS, you are just about required to bail.
"Son, my college funding gift to you is having a low-income family. Get into Stanford - it will be free!"
Love it!
That is actually a plan I am considering. If I quit working, a lot of this goes away. Wife and 3 kids that currently don't qualify as mustachian are causing me pause before I take the plunge and quit. And I really do enjoy my job most days.
So, I'm currently talking out the changes necessary with the wife, who is supportive of my goal to retire early.
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FWIW, there are many means to the same end, college-wise, for certain careers. I am an RN - BSN (Bachelors of Science - Nursing) as are my coworkers, but we all got there different ways.
Nurse 1 - 4 years of Univerity of Nebraska, $80,000 in debt at graduation. Passed NCLEX, is an RN, and has a BSN.
Nurse 2 - 2 years of community college, passed NCLEX, is an RN. Did the last 2 years at University of Nebraska, $50,000 in debt at graduation, has a BSN.
Nurse 3 - 2 years of community college, passed NCLEX, is an RN. Used employer tuition reimbursement and worked full time during last two years old school. $30,000 in debt at graduation, has a BSN.
Nurse 4 (me!) - one year of community college, got my LPN. Worked as an LPN, finished second year of community college on employers dime, is an RN. BSN also on employers dime. Roughly $6000 in debt at graduation.
4 nurses, 4 levels of college costs. I'm sure this isn't limited to just nurses. Sometimes you don't have to work harder, you have to work smarter. I'd encourage my kids to find out if the field they want to work in has any incentives to pay for tuition costs. If I had taken college classes my senior year in high school, I bet I would be debt free.
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FWIW, there are many means to the same end, college-wise, for certain careers. I am an RN - BSN (Bachelors of Science - Nursing) as are my coworkers, but we all got there different ways.
Nurse 1 - 4 years of Univerity of Nebraska, $80,000 in debt at graduation. Passed NCLEX, is an RN, and has a BSN.
Nurse 2 - 2 years of community college, passed NCLEX, is an RN. Did the last 2 years at University of Nebraska, $50,000 in debt at graduation, has a BSN.
Nurse 3 - 2 years of community college, passed NCLEX, is an RN. Used employer tuition reimbursement and worked full time during last two years old school. $30,000 in debt at graduation, has a BSN.
Nurse 4 (me!) - one year of community college, got my LPN. Worked as an LPN, finished second year of community college on employers dime, is an RN. BSN also on employers dime. Roughly $6000 in debt at graduation.
4 nurses, 4 levels of college costs. I'm sure this isn't limited to just nurses. Sometimes you don't have to work harder, you have to work smarter. I'd encourage my kids to find out if the field they want to work in has any incentives to pay for tuition costs. If I had taken college classes my senior year in high school, I bet I would be debt free.
Yep - my DH got his community college diploma completely subsidized (low income family). So 2 years for a full RN degree. He started working full time at a hospital and they paid for his BSN - which he did part time. It took him 10 years to get his BSN but he was in a good job so no big deal. His hospital also paid for half of his Masters degree in nursing (we did have to pay it back when he found a really good job less than a year later). Not a big deal as his Masters was only like $20k through an online program which he did full time while also working full time.
I've found out that our local community college has a lot of agreements with our local university. I recently met a student who got a 3 year business diploma and transferred to the university - one more year and he gets his bachelor's degree. I've already brought it up with my kids that this might be the better (cheaper) way to go.
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Wow, Typhoid Mary, good on you for your path! This is a really smart way to do it. My sister was an LPN for years before getting her RN and now has a good job managing out patient pediatric home visits. She had very little debt as well.
Such a different $$$ world now. I went to a top tier liberal arts college in the 70's, still under $4000 my senior year, all on scholarship, grants and my own earnings. At the time a summer research position paid about $1000-1200. I rode a bike, made all my own vegetarian food( could not afford meat) and saved virtually all of it which was a meaningful contribution to my tuition. Now, the stipends for summer work seem virtually the same, but no one is going to get very far paying for tuition with $1000.
We did pay for our 2 kids college but not for any spending money, no cars. They had worked summers in high school and had some good savings for their college future selves. Now in their 20's, they express gratitude all the time for this, watching their friends struggle with debt. So we have no regrets, even though my own parents were not able to help me through those years financially.
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I've found out that our local community college has a lot of agreements with our local university.
There was a program before where if you were accepted, you would do your first two years at Washtenaw County Community College and were guaranteed admission to finish your second two years at university of Michigan. That is a great way to get a name degree, if that will help you.
That particular program was cancelled, due to lack of interest. I think it was cancelled before MMM started his blog. I should ask to get it brought back.
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Great topic.
My concern with the contract is the number of points involved. Can the contract be simplified at all so that it is more easily absorbed and understood?
Another question -- are you sure you will have the funds to back up your promises?
I appreciate the discussion on encouraging kids to have jobs in high school if possible. I did not, but had a lot of activities. My husband thinks our kids should work many hours as soon as they are old enough. I would like them to have friends and grades too, but basic work experience is good. I am wary of having them work in a low-paid, poorly managed environment where there might be people who are bad influences at a young age. A low paid environment with a strict, positive culture is fine. I think getting a job with some good people and good managers is more important than the money earned.
Right now I cannot say with certainty that I will have funds to cover 50% or 25% or 80% of school costs. Perhaps I need to sit with a calculator, but market returns are not guaranteed, and I'm worried about that. I do not want to tell my children that we can pay X if we don't have X immediately available.
Dave Ramsey often talks about conditions on his family's behavior both for college funding and for inheritance. I agree with this. I was just thinking about the swimmer who got let off for rape and how I might want my sons to stay the hell away from fraternities in college. I cannot think of any good coming out of any fraternity, save for job connections, but that's really not much of anything.
Can I tell them that they can't join a frat? I can tell them that I think they are stupid, immature distractions.
I have listened to another podcaster who says that colleges will be reinvented in the future and that it will be more about skills building than the 4 year degrees. More online, more part-time, cheaper, etc. etc. My oldest currently wants to be a veterinarian and I am sure there are no shortcuts for that. The other kids are too young to know.
Also just a note that first semester in college can be a wake up in terms of what it takes to be focused and get the grades. For me it was a time of meeting a lot of new people and I was not as focused on study as I should have been. I struggled in a few classes, not all, but a few.
I want to stay in touch with my kids when they are in college, visit them frequently, talk to them frequently, etc. etc. etc. but also give them some space. I will be watching and monitoring.
I also want my kids to have their adult skills in place for college. They should know how to cook to sustain themselves. They should manage laundry and basic life. They will maintain their checkbook (ha! does that sound old fashioned.) No credit cards.
Note: Kids will change their minds about majors and careers. In middle school I wanted to be a lawyer. (My mom discouraged me.) At the end of high school I considered teaching and broadcast journalism. I went into school thinking I was going to triple major and become an industrial psychologist. I ended up with a communications degree and graduating in a recession. Slow start to the career.
My parents did not attend college and did not have a lot of experience with choosing careers. I hope to help our kids a little more.
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But you bring up an exceptional point. If you are close to FI when you have a sophomore in HS, you are just about required to bail.
"Son, my college funding gift to you is having a low-income family. Get into Stanford - it will be free!"
Love it!
That is actually a plan I am considering. If I quit working, a lot of this goes away. Wife and 3 kids that currently don't qualify as mustachian are causing me pause before I take the plunge and quit. And I really do enjoy my job most days.
So, I'm currently talking out the changes necessary with the wife, who is supportive of my goal to retire early.
You know you cannot count on that working out, right?
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2) You will need to get a job in the summers, starting the year you are 16, unless there is a reason this is a non optimized idea.
Examples? My teenage brother would say getting out of bed before noon in the summer is a non optimized idea.
This was my thought, too. During high school and college, working can be detrimental to academic success.
When I was a teen, my parents pushed me hard to get a "real job" (aka retail) as soon as I was legally old enough. (I'd been babysitting and etc for years, but that didn't 'count'.) I did, and worked retail/ coffee/ restaurant type jobs through the rest of high school and college. It was basically all I did. No real extra-curriculars, mediocre grades. I got a scholarship to college anyway, because my SAT score was excellent (1530 back when it was a 1600 scale), but my GPA was only somewhere around 3.1. This trend continued into college-- working was so ingrained in me by then that it wouldn't have occurred to me to "just
go to school.
In retrospect, I don't think this did me any favors. Yes, I have a good work ethic and always had spending money in high school and college, but I would have been better served by working on my grades and extras.
My brother is 10 years younger than me. Our parents did not encourage him to get a job in high school, and he never did. Here's what he did do: He was an Eagle Scout by the time he graduated HS. GPA was 4.0, SAT scores excellent (runs in the family :)), he was on his school's robotics club that went to nationals that year, as well as a few other clubs, Spanish etc. Needless to say, he also had a full scholarship. He didn't work menial jobs in college, but focused on his degree (computer science), and did some internships towards the end of his college career. By the time he graduated, he had a job in his field.
He also has a great work ethic, and I don't think he lost anything by not waiting tables or brewing coffee for hours and hours every week when he was learning code.
It's definitely given me food for thought with regard to my own kids, and I think that in many cases, working on their "careers" in high school by doing the things my brother was doing is more valuable than the kind of work I was doing. And he was certainly not lazy or unmotivated-- becoming an Eagle Scout takes tremendous effort, and looks better on a college app than 4 years working retail-- and so do things like that robotics club. They spent hours and hours on those machines, and ended up with one of the best teams in the country. Definitely a plus for a kid that was always destined to end up in computer science!
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IMO, being productive in the summer is important. Ideally, this should be something the teen wants to explore, such as a job or course in a field s/he is interested in as a career, to hone choices or even eliminate it. Any money earned helps but is not as important as figuring out a plan for post-HS & learning life skills. High school itself should be considered job #1. No "feeding a car".
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This is an interesting thread. I struggle with the right amount of subsidy, right amount of work, etc. What I have circled around to is roughly paying the cost of a 4 year degree at an instate school regardless of the actual cost of education. So if early college credits, scholarships, etc. reduce the cost the extra would just be a cash gift with no strings. If there was an expensive out of state school with no scholarships, or graduate school involved then there would need to be some student loans. I think this puts much of the decision making and power with my kids as to what they choose to do. It is something that I struggle with though. I think what I teach my kids about money and life in general is probably worth more than any tuition I could pay for them, but maybe that is delusional thinking on my part :)
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Great topic.
My concern with the contract is the number of points involved. Can the contract be simplified at all so that it is more easily absorbed and understood?
Another question -- are you sure you will have the funds to back up your promises?
You know you cannot count on that working out, right?
Agreed about the number of points. You haven't met my son. He has never met a loophole he doesn't try to exploit. I still remember at 4 he kept touching the windows. I asked him to not touch them. He instantly put his finger on the window frame, about a quarter inch from the window and just stared at me. He also once said no to going out for ice cream when he was like 8 or 9 just to see the look on my face.
They now each have a copy. The quick summary I gave them was we'll pay for 90% roughly, as long as they get a B average or up. If they get a job, we match dollar for dollar. The detail is absolutely necessary for my son.
We have the funds to back up the promise. I was mustachian well before this blog started.
I realize I can't count on the scholarship. Especially with assets being higher and income potentially being really low. I'll need to find an old article I read. Something about 5% of assets being used per year for college, not including retirement accounts or home equity. I've funded 401k and Roth IRA to max for a while, to get more money into these asset classes that aren't considered.
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This thread has got me thinking about what I will do in the future for my kid but I have a question about the purpose of this or any college contract?
Is it to help prevent your kid from failing? Or is it to protect your monetary investment in your kid?
In our case it is both. Knowing that funding will stop if they don't work hard is motivational. My oldest did not do as well as she needs to do her first semester for what her stated career goals are. A come to Jesus meeting about us discontinuing funding if she didn't improve and reminding her of admission requirements for the professional programs she wants after her undergrad resulted in Deans list grades the second semester. I'm not pouring money down a black hole.
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Just wanted to follow up with the choices kid one made. I think the contract influenced his decision, but can never be certain with him.
He applied and was accepted to Michigan State, Eastern Michigan and Washtenaw Community College. He applied for and received a full ride scholarship to WCC, which is tuition and books for both years. WCC also has a list of courses that is accepted at University of Michigan, so you don't end up taking courses they won't accept.
He ended up going to WCC and just completed his first semester. When I asked why he didn't go to MSU or EMU, he replied why would he spend way more money and get the same education. His goal is to transfer to U of Michigan and get a degree in computer science. Several younger friends have also gone this route, graduating from U of Michigan. They feel strongly that it is better to have professors that want you to learn the material (WCC) versus the 200 person lectures U of M has.
Kid two will be graduating in June. Will be interesting to see what she decides. Pretty sure WCC is already out of the running, which is fine.
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Interesting points of view. Before kids, I used to think that my kids would have to pay for most of University themselves in order to appreciate it. I knew some kids who’s parents paid for everything and then partied it all away. However, seeing my nieces and newphews who turned out great, and reflecting my situation, I have reconsidered.
We have decided the following, it may may as our kids are still 10 and 13
We will help for tuition and books for the equivalent up to a graduate degree, providing they choose area where they can show there is employability and they can support the lifestyle they want to live. We will not pay for ‘wasted’ courses. So if they have to retake a coarse or change their minds, they have to pay for that.
We expect their ‘job’ is school and that includes earning scholarships.
For summers, I expect them to find jobs that will help them on the future, or they must do something useful in terms of building skills, like volunteers, or learning. Paid work is a bonus.
For costs payments
- we will pay for the books and tuitions
- living costs will be shared, we will do a base so they can live a student life cooking foe themselves on a budget, they can earn money or use their scholarship money or earned money.
- wasted classes or additional credits paid for by them
- we haven decided on an average yet, but my oldest has already indicated she wants to get into med school, so I think an A is all they will accept otherwise, it’s wasted credits. Both of them have already indicated they will probably go into touch programs, so I won’t put added pressure.
Who else knows what the terms will be, but this post has given me a good start.
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We live in Florida, where between the terrific Bright Futures scholarship program and the Florida prepaid college program, your kids are highly incentivized to stay in state. It's also why the University of Florida has become one of the toughest schools in the US to get into.
Thus, here are our rules for our guys, ages 16 and 13.
1. Go to a Florida school. Max out Bright Futures scholarship, thus costing your mother and I basically nothing beyond the Florida prepaid plan we've done already.
2. Graduate in four or fewer years.
3. Major in something with value in the marketplace: STEM, computer science, business.
Want to go somewhere out of state? Here's the rule:
1. Your Proposed School (Insert Cost) must beat Florida/Florida State $0.00
For instance, Stanford or Harvard at $75,000 per year does not beat UF/FSU at $0.00
Stanford/Harvard, or similar (and there aren't many schools that are going to fit this equation), written down with scholarships and grants (not loans) to $30,000 or less....we'll talk.
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Many excellent schools, public and private, will give full tuition for a 32 ACT. That high a score would also make a student eligible for consideration for scholarships for full tuition, room and board, and a semester abroad, especially if a student is willing to go away from home since every school wants students from every state. So time spent prepping can be a good investment.
I got a 32 on the ACT and did not get a full scholarship anywhere. Granted that was years ago, but the point is I don't think there's any one credential that guarantees you anything.
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I got a 32 on the ACT and did not get a full scholarship anywhere. Granted that was years ago, but the point is I don't think there's any one credential that guarantees you anything.
With a 31 and 4.0, full ride here.
https://umdearborn.edu/students/financial-aid/types-aid/scholarships/freshman-scholarships/freshman-scholarships-2018-19
Here is another example:
Oakland University Freshman Merit Scholarships - Class of 2019
PLATINUM PRESIDENTIAL SCHOLAR AWARD
Amount: Full tuition for four years
Requirements
High school GPA: 3.90 or higher
SAT score: 1450 or higher
ACT composite score: 33 or higher
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Many excellent schools, public and private, will give full tuition for a 32 ACT. That high a score would also make a student eligible for consideration for scholarships for full tuition, room and board, and a semester abroad, especially if a student is willing to go away from home since every school wants students from every state. So time spent prepping can be a good investment.
I got a 32 on the ACT and did not get a full scholarship anywhere. Granted that was years ago, but the point is I don't think there's any one credential that guarantees you anything.
Same happened to me, it is state specific. Years ago, only the student (top one for the high school) with the Principal's personal recommendation had a chance at a full ride scholarship... they were quite rare in my region. I think the school I went to only gave out 16 of them, for high achieving academics, out of a entry class of over 6000 students. They had quite a few 50% scholarships (maybe 50?). I did get several scholarships independent of the school, however, with my scores plus volunteer work.
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Another piece of anecdata that excellent grades =/ full ride scholarships in all situations. 4.0, 1560, accolade that starts with V and no scholarships at all. I applied to a lot of standalone scholarships but in hindsight my parents, school counselor and I were rather naive in shopping the schools themselves.
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Another piece of anecdata that excellent grades =/ full ride scholarships in all situations. 4.0, 1560, accolade that starts with V and no scholarships at all. I applied to a lot of standalone scholarships but in hindsight my parents, school counselor and I were rather naive in shopping the schools themselves.
I was totally naive shopping schools and scholarships, my parents and counselor gave zero guidance.
Still turned out OK (50% scholarship, good school) - but it could have been a LOT better.
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I read parts of the thread not all of it but since I have 2 in college I thought I would add what we did.
We have a DD in College thats on a 100% out of State Athletic Scholarship BUT she graduated a semester Early from HS so we borrowed her money for that despite have plenty in her 529 and wrote her a contract on the loan. It was about 19k.
We have a DS that just transfered this winter break who over the course of his 4 years will have slightly above a 50% athletic scholarship.
Both schools are around 50k a year DD's a little more. And we did contracts despite as i said having 4 years of State college saved in there 529s because over the years we more than paid for college with all the traveling we did plus we still have 2 more to go.
For us /me it was a combination of both a morals clause and financial. And i found that for the moral part of it , the best thing was to just put it in there once and dont bring the things up and it wont be a big deal.
Were not helicopter parents BUT if I am going to borrow somebody money there has to be conditions and while we want them to experience and enjoy college it to us was just not taking things to far.
So couple example in the moral part was there allowed a tatoo but it must be no bigger than 4x6, they can have 1 and only in places that are covered by clothing. Earings one in each ear for my DS and 2 in each ear for my DD. There going to Drink theres no denying that but they cant fail any substance abuse test or I will call in there loan.
On the loan part I put incentives for my DD whereas if she takes full advantage of her Scholarship and gets her masters she doesnt have to pay back the 19k. I also set it up where over the 4 years with certain GPA's and accomplishments she can graduated as well not owing us a dime and or if she does make payments they count as double under certain circumstances. I did this with her because besides her full ride she gets about 3k a year in a stipend for spending money plus jobs for her at school are easy to get and like I said she pays for NOTHING.
For my son since I borrowed my DD the 19k to be fair I helped him get a car. So his contract is pretty much the same as hers but he will probably graduate between 30-40k in debt. My son got a small piercing in each ear and a small italian written tattoo on his rib cage and my DD has just the earnings. I never bring the contract up other than when there home for break and the day they leave let them know where there doing but in more of a positive way.
So imo its fine to have a moral/Financial clause , my kids appreciate and understand it as well as the opportunity to pay less or have to weight out the what if's and I never have to harp on them. But being in college there are always still the worrys and plenty of other things to harp on! haha.
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soccerlovof4 - A question about the athletic (soccer) scholarship.
My friends with kids with athletic scholarships (other than just a few specific sports*) found that the kids are training all summer and could not reasonably get work to help offset the tuition. For them, the 50% scholarship essentailly made up the lost working income, plus a bit.
Have your kids been able to work during summer? I am curious because my sample set of info is very low.
* One person I know on athletic scholarship -- he was offered a football as well as a track scholarship, and took the track one because the core season allowed him to still work co-op terms during the summer, whereas the football would have even struggled to take 5 classes a term and only play sport all summer. The soccer golf and swimming kids had similar challenges.