Hmm. Maybe the currency should be start-up costs for a business? You can’t drive a business in to a river but you can run it in to the ground.
@jym626: I agree. Cars are ultimately worthless hunks of metal.
Hence I’d “bribe” with Master’s degrees and trips abroad (they can be justified as educational)*.
Not really bribing, but I’d have a set pot for educational expenses and hope they have enough of a long-term view to realize that a fully-paid for Master’s from a program that opens doors may be very nice to have.*
**All that depends on what they get in to for undergrad or trade school, of course.
What if the prospective college kid doesn’t care about cars, cash gifts, and other material things? In short, what if s/he’s not a “Material girl/boy”?
What if s/he values the perceived superior campus experience/academic rigor a particular college offers above the in-state local/state public college?
Human beings in general just aren’t very good at spending other people’s money wisely. That’s why governments (made of people) do such a great job spending tax money and borrowing more. I think most of the bribe comments are meant as a method to try to help the student think of their parents’ money as they would their own. Very few of even the best-intentioned kids can do this well, just like very few public servants do. But even thinking of the money as their own, most 18 year-olds really don’t have the money management experience to make the best decisions (I won’t comment on politicians). They may be attracted to the “superior campus experience/academic rigor”/prestige of a certain school (or the cool factor of a certain car), but they are highly unlikely to have any good frame of reference with which to put a $$ value to that attraction.
I think that a compilation of many of the posts results in a excellent approach, as long as you start early enough int he college search process to make it work. Decide as parents what you legitimately can afford and what you are willing to borrow/co-sign. Be up front with your child, use the EFC calculators before you visit every school, and help your child to know up front that a school may be a reach financially and not a possibility if merit or other scholarships aren’t offered. And if there is money earmarked for college that will flow back to them (whether for graduate school, travel, a vegas binge or whatever), that can always be in the mix as well.
My hope (I say hope, because I didn’t quite do this right last time, but I still have at least one more chance!) is that this will not only set expectations in the right place, but will also help the child to participate in good financial decisions even among those that are “affordable” options. I’ll let you know in a few years if it works!
I seriously doubt many people actually implement the buy-a-car plan. But many (including me) have used it as a way to focus the discussion on this topic.
Most often I come down on the side of stretching to full pay to provide a great opportunity for my kid. Having said that, I just steered my kid to a deal college that saved our family $200k. Here’s why.
First, we thought the deal school was pretty close to the full pay school. For academics and prestige, it was top 20 vs. top 20. The full pay school was more dreamy for the kid and higher on student experience and fit. But the deal school was pretty strong there too. Had the gap on those things been bigger, I would have paid up.
Second, while we joked about buying cars (two Porsches or one Ferrari?), what we realistically discussed was where that $200k could otherwise go – law/biz/med school, seeding 529s for the grandkids, house down payments, letting one of the parents dial back their job a bit. I think those are really the kinds of things that families consider. But quantifying the dollars (is it really worth 4 BMWs?) helped my kid focus on what the more expensive choice really did/did not provide.
Third, there’s many shades of gray difference in the concept of what you “could pay” or “could afford.” There’s tightening the belt; there’s taking on parent debt; there’s taking on student debt; and there’s selling a kidney (since you only need one of those).
Many times there is a reason to pay up; many times there’s really not. But a very personal choice. And, no one ever knows for sure if it really was worth it. Because you get zero data on the road not taken.
@cobrat The provenance and pedigree are guaranteed. Ferrari only made 39 of them in 1962 and their histories are documented. Difficult to pull off a forgery of a vintage Ferrari or almost any vintage car.
The point being, cars are not all worthless hunks of metal. Especially the collectible and desirable ones. To some people, like me, their every bit of a work of art just like a famous painting.
To someone with little/no interest in cars or any other particular collectible, it’s going to be viewed nearly the same as worthless hunks of metal beyond them selling it off for as much money as they get get from it so they could purchase something else they desire much more…including an experience like attending a college/university with greater academic rigor/rep than another.
@cobrat My earlier post was tongue-in-cheek (joke) and then you said “that’s assuming the buyer of that $38,000,000 Ferrari wasn’t ripped off by someone passing off a convincing knockoff.” Which of course doesn’t make much sense to me.
Seriously, I have no idea what you’re talking about. As a car enthusiast, cars aren’t worthless. Certainly the cars I own aren’t worthless. If you can sell them, then logic would say they’re worth something, not worthless. I’ll move along now.
And this is the kind of talk we make sure our kids never ever hear. No parental martyrdom for which they are obligated to feel forever grateful. We chose to fund college for them because we thought it was the best choice we could make. We will never let them hear one word of poor-mouthing or pity-partying about how much we spent or where it could have gone instead. That’s just unhealthy emotional manipulation.
Where I am, the offer to buy a car if the student selects the instate option (and especially if they get the scholarship) is done, and implemented, more often than I wish to think about. I really find it distasteful.
I had never heard of the “car purchase for instate option” offer before this thread. That type of offer doesn’t seem to be popular in CA, to make a HUGE generalization about our state. I’m not really sure what to think about it. I get it, but I think I’d rather take a more “holistic” approach to choosing a college with my kid. ;
My kid had an option to go to school 6 hours away by car, no airport or train service. He was awarded a scholarship that was worth over 30k per year. He also had a choice to attend a local school at full pay, close to 70k. I told him I had the. $$ for either school, his choice. I told him I’d buy him a new car and set aside the additional funds for him to use after 4 years at the cheaper school if he wanted. That way he could drive himself back and forth to school. I did not buy him a car in HS, he’s always borrowed mine. He liked this idea, but in the end chose to attend the more costly school closer to home.
We are fine with his decision. He is excited t start at the new school soon.
What about if the parents say (preferably before the student makes the application list*), “our contribution is up to $X total over four (or whatever) years to your bachelor’s degree; if you spend less than $X by the time you finish your bachelor’s degree, the rest is available for post-graduate professional school if you do that”?
*It does seem that the frequency of these discussions is pretty high in April, indicating that many parents and students defer the money talk until April, instead of having it before the student makes the application list.
Good suggestion, @ucbalumnus ,but that’s not what they say.
We had money for our younger s in accounts with his name on it with DH (Yes, I KNOW!! BAD idea! But did didn’t know how DH had it set up the savings until it was too late to change it… but that’s water under the bridge). Anyway, DS#2 chose a college where he had a full tuition scholarship, as he had planned to go to med school and the deal we had with our kids was we’d pay undergrad only. When DS#2 changed to engineering and decided not to pursue medicine, there was a nice sum of $ earmarked for education that was still in savings. When we asked him what he wanted for his 21st birthday, he replied “I want your name off my savings accounts” .
“our contribution is up to $X total over four (or whatever) years to your bachelor’s degree; if you spend less than $X by the time you finish your bachelor’s degree, the rest is available for post-graduate professional school if you do that”
We did this early in the process. One daughter picked her dream university that fit the budget perfectly (nothing will be left at the end). The other picked several more affordable options to apply to, and then picked from between the affordable options. She will have some $$ left at the end of four years. Academically their choices are pretty much at the same very good level, and I think a good fit in both cases.
