Thursday, March 4, 2010

Let's Get Controversial - Paying for College for Kids

I’ve decided to use this week to get through some of the controversial issues I see on other blogs. I’m simply going to post my opinions and see what you think.

Today's topic:  Fronting College Costs

My hubby and I don’t have kids, but we remember college.  I had some help from my parents and my husband was covered 100%.

I can’t think of anything concrete to base an opinion on.  I had a higher GPA than my husband, but I don’t know if money had anything to do with that.  My parents are retired and my husband’s are not, but I’m not sure if his college expenses are what held them back.  In short, I’m not sure what is best for your situation, but here’s my opinion.

I’d save for retirement before I’d save for my kid’s college expenses.  My kid can get scholarships, grants, a job, or loans.  There is none of that for retired people.  I rather not have to depend on others to provide for me in my old age, so I believe in retirement first.

What if you are good for retirement?  Well, that’s trickier.  I remember how mature and how selfish I was as a teenager.  Yes, I could handle money, but I was sooo manipulative.  I don’t believe my grades would have been worse if my parents had covered me, but I might have gotten into more trouble.  What are your kids like?  Do you think they will see your help as the miracle it is and earn their keep?  Or do you think they will party the nights away since it’s not their money?

If I was a parent and knew I could help, I’d make them this deal.  I have X amount to contribute.  If I see them working their butts off to get all the scholarships and grants as possible, I’ll help them cover the rest if I can.  If they continue to work their butts off, I’ll continue trying to help.  If at any point they decide to take advantage (like fail a class or two or become alcoholics), I’ll pull the plug.

The best idea I’ve heard of was from a lady that left a comment on a blog I read last year.  Her parents agreed to pay for the housing expenses of all 3 of their kids, but the kids had to cover everything else.  This motivated her and her siblings to get as much “free” money as possible and work summers to cover the rest.  That seemed really helpful and fair.

What do you think?  To pay or not to pay, that is the question.  Sorry, I couldn’t help myself.  :-)


  1. My wife and I have discussed this with regards to our daughter who is 2. We're going to use the we have $X to contribute, everything else is up to you. Our plan is that when my wife goes back to work (SAHM currently) we're going to use 50% (25% taxes and 25% retirement) of her earnings to save for college. We figure the amount saved would roughly pay for an in-state university. IF they want to go somewhere more expensive, they need to foot the bill.

    I didn't have to pay for school, I got a couple of scholarships that paid for everything. My wife had to take out loans to cover the short falll from what her parents covered. If I can help my children out more, I will, but not to the detriment of my own financial health.

  2. That sounds like a great plan!

    Plus, if your daughter gets a full scholarship, you'll be able to make a huge nest egg contribution! Or you can be miracle workers like my in-laws and help her out with the downpayment on her first home (business, emergency fund, etc). Or copy my parents and help her with the unexpected (like a foreclosure with no appliances or light bulbs).

  3. Thanks.

    Exactly, if the funds aren't needed for college, then we can use them however we want. Our plan is to have one more child, so we'll be planning on paying for 2. If things work out financially, we'll have our next house paid in time for the second child to start college. The mortgage payments should be about the same as tuition. Ah, the joys of parenthood.

  4. Oh, you know you love it!

    You and your wife probably smile your butts off when you're talking about the futures (and expenses) of your little, parents are a whole different kind of addict. That's the only way to explain my husband and I surviving to adulthood. :-)

  5. I'm with MikeS. We plan to have a set amount for each of our children and to cover things like food and car insurance while they are in school, but if they choose to go to a expensive private university with no scholarship, they will have to make up the difference. We plan to have 3 kids.

    We currently have a set amount taken out of our account and put into a 529 monthly for our daughter. We will do the same for the baby we are expecting in April.

    My husband thinks that we can probably cash-flow their living expenses so we just really need to save for the equivalent of in-state tuition.

  6. Julie, that sounds like a solid plan. How do you plan to keep their living expenses stable? I know a bunch of my friends that went money crazy on their parents during their first years on campus...

  7. I had zero help from my mom (single mom), so I know first-hand how hard it is to pay for school all by yourself. I had a unique situation, I'm not a US citizen so I was not eligible for many scholarships although a graduated 2nd in my class.

    I had to go to a private university (2x as expensive) since my immigration status did not matter to them, and I took full advantage of a monthly no-interest tuition payment program. I busted my butt to make those payments every time, on-time. I finished school debt-free and learned the value of hard-work.

    I have been saving for my daughter's college ever since I knew I was pregnant! Our money will come with many, many stipulations. The amount will be a set amount per year, grades must meet our approval, she must maintain a part-time job at all times. No extras (utility bills, gas, food, etc.) will be provided, and in the event she earns scholarships, the difference will be set aside as a gift for her upon graduation, to be used however she wants.

    I take a lot of pride in knowing I can help her with this without hurting our finances and retirement.

  8. Shantall, you are a self-made woman! Your daughter is lucky (but you knew that).