<p>Our oldest child (of four) is presently finishing up his sophomore year of HS. I am starting to draft my thoughts as to college funding responsibilities that I can begin to share with the oldest as he is now 16 and eligible for summer jobs. </p>
<p>We are fortunate in that we should be able to fund the kids education in full, assuming a mix of state u and private schools. But I don't want to provide a 100% full ride with no skin in the game at all for the child. For background, I have two reasonably motivated "B+" type students and two "B-" students who need regular reminders as to classroom motivation.</p>
<p>I am currently thinking of paying 100% of tuition / room / board (TRB) up to $40K per year (inflation adjusted for the younger kids) and sharing costs in excess of that (say 50/50). Merit scholarships / grants would be applied to reduce the net cost of TRB. The student in all cases would pay for books and spending money.</p>
<p>I am not presently planning to provide the children any post-graduation cash if he / she "saves me money" by attending state u. In effect, I'm saying 'go where you want and I'll pay for it, up to $x". And I'm counting on their being responsible for books / spending money (and some possibility of excess tuition) to keep them diligent in the classroom.</p>
<p>I've also thought about other possible 'incentive' schemes, such as reimbursing all / part of the cost of books based on some level of academic performance (e.g. scholarship money earned, dean's list achieved, what have you).</p>
<p>Would love your reactions / ideas / improvements. </p>
<p>We have asked our kids to 1) fund their own books/entertainment/cell phone etc. during college either through working or (for our S who is a singer) cash prizes from competitions, 2) take out Stafford loans each year that they will be responsible for after graduation and 3) keep their grades up in order to meet their scholarship requirements.</p>
<p>Every family will have different expectations depending on their resources, but I do believe that kids should have responsibility for some portion of their college expenses, ie. skin in the game. I also think that kids need to have work experience before they graduate from college.</p>
<p>You may want to reconsider your stance on merit scholarships, since they are “skin in the game”, especially if the student needs to maintain a decent college GPA to keep them (and you may want to given them incentive to earn the merit scholarships in the first place).</p>
<p>Wow, ucb, I was just thinking that exact same thing^. We told D we would like her to keep the COA to something less than about $35K, so she needed to get merit if she wanted to go someplace more expensive than that. I think it helped her to strive for a better ACT/SAT score, and keep her grades up.</p>
<p>I agree with UCB - We have 3 kids and our oldest is a senior. He has worked really hard and is now seeing the benefits of that work IE Merit Aid. That merit aid has given him OOS college choices that he would not have had if he had not put in the work. Merit Aid does come with a catch. He will have to maintain a certain GPA to keep the Merit Aid. While I am not saying he can’t have a part time job. His main job is going to be keeping the grades up. He knows that if the grades aren’t there, well then it’s back to our local state u. That’s his skin in the game.</p>
<p>How about showing your kids the kind of automatic merit aid they could get? Think about it. They would have to work a ton of hours at minimum wage to come anywhere close to what some of the colleges offer for a good gpa & test scores.</p>
<p>I absolutely agree with the above . . . why should YOU get the benefit of the hard work your kids do earning merit scholarships??? Any merit money should go 100% to the kid’s share of the cost.</p>
<p>I agree with setting a fixed dollar amount that you’re willing to pay - just make sure you take a good, long look at actual tuition costs when each of your kids hits their junior or senior year in high school. The amount that was reasonable for kid #1 may no longer be reasonable when kid #3 is ready to start college. (Ahhh - just saw that you’e planning to allow for “inflation”! Just keep in mind that inflation and college tuition increases tend NOT to run hand in hand!)</p>
<p>I also agree with your willingness to share any costs above that fixed dollar amount - although, frankly, I think it would be easier to just set your initial limit higher . . . and (1) let the kid pick up the full cost above and beyond that amount and (2) if the kid’s actual cost of attendance is below that amount, agree to set aside the difference for graduate school. If the kid is willing to plan ahead, and can earn some merit scholarships, he or she might be able to set aside a sizable nest egg for grad school.</p>
<p>This earns the kid a reward for saving, instead of a penalty (debt) for not saving. Learning to save is probably the most important financial lesson you can teach your kids . . . and a reward system is likely to be more effective than a penalty system.</p>
<p>I would also include books as part of each kid’s cost of attendance. Spending money is entirely discretionary - books are not.</p>
<p>As for the rest of your “incentive” scheme - I’m not thrilled. It strikes me as overly meddlesome . . . and appropriate for high school, but not for college. At some point, you have to let go, and let the kids sink or swim on their own, without you looking over their shoulders.</p>
<p>By the way, kudos for thinking about all of this ahead of time . . . you are doing yourself and your kids a HUGE favor!!!</p>
<p>Our kids have a fixed amount per year that we have saved and is more than enough to attend our state flagship (tuition, room, board, books, fees). It increases with rising costs of tuition. If they want to attend a school that costs more, they must earn the merit scholarship to go there, as they will not qualify for FA. We do not want them taking loans for undergrad. Then they must maintain the GPA to keep the merit scholarship. That is more than enough of an incentive plan.</p>
<p>Any discretionary expenses are theirs–entertainment, meals out, spring break trip.</p>
<p>Any money left at the end of undergrad is theirs for grad school.</p>
<p>We have given our children an incentive to go after scholarships. We tell them that we will match any amount under $X that they earn in scholarships. (We don’t want to be on the hook for the amount of a full scholarship at a private school, so we set $X as our limit.) The scholarship money goes to the school; the matching amount goes into the student’s bank account. Yes, we’re still paying out $X, but it’s money that goes directly to our children, and they get experience submitting applications and interviewing. They are also quite frugal and like watching their accounts grow, so we don’t worry about them blowing the money!</p>
<p>Like dentmom, we also designate an amount per year, and any difference must be made up with scholarship money. So far, they have very wisely chosen in-state public universities, plus pulled down some scholarships. We are very happy. :)</p>
<p>For my son, I told him he has to pay for all of his own personal expenses and fraternity costs throughout the year from the money he makes over the summer. The goal is for him to learn some fiscal discipline, because he is spending his own money. That has worked well. Once he moved into an apartment, I told him he could put his supermarket purchases on my credit card, but he has to pay for his restaurant meals from his own debit card.</p>
<p>My son has taken out the maximum amount of federally subsidized loans. I’m not taking out any debt in my name, because my priority needs to be retirement savings. </p>
<p>When some students push their parents to take on too much debt, the parent responds - “Sure… and then I can move into your house when my retirement savings run out, right?” That usually ends the discussion.</p>
<p>When he was trying to decide between a more expensive college and a college with a more affordable net price, I told him that if he picked the more expensive college, he would need to work throughout the school year. If he selected the affordable college, he only needed to work during the summer. That helped him finalize his decision.</p>
<p>Hmm…Ours pay for their books and incidentals and we don’t give them spending money (but my MIL sends them something every month, it’s her idea). We managed to save enough in their 529s for pay for most of the anticipated costs; keeping that cost down meant not the best dorm, not the nicest apartment, etc…S1 works p/t now and has been paying his own p/t tuition which has really helped. We have one PLUS loan but that will be paid off in a few months. My parents paid for all my school (I paid for grad school) but my inlaws preferred boats and summer houses to college education, so as newlyweds we had my DH’s huge student loans to shoulder. (Literally, we had to work, and couldn’t cruise to FLA with them. They were angry we wouldn’t. Go figure) DH was adamant we would not do that to our kids. But every family has to do what makes sense to them.</p>
This sounds reasonable, OP. We did something similar, telling our kids what we could afford, and leaving them accountable for spending money and books. Our kids chose either an OOS public school or a generous merit scholarship at a private school, which meant that our contribution covered the full remaining cost of tuition, fees, room and board. Our contribution was for 4 years only, and they knew it. This seemed enough incentive to make good academic progress, though I don’t think they really needed a carrot or a stick. </p>
<p>For the d with a nice merit scholarship, we used what we hadn’t spent of our contribution to cover two summer programs and to help her buy a car.</p>
<p>You may need to apply somewhat different standards to the kids who are performing strongly on their own vs. the kids who have lower GPAs and need motivation. I assume they’re still so young that this could change before college is in the immediate future. I personally would need to know that my kids were motivated to work hard in school before spending up to $40K per year for their college educations. Another thing to consider, if you get into a situation where the kids are borrowing significantly to cover the difference between cost and what you’re willing to pay - how much debt will they be able to handle after graduating? Major, school, and career will be factors.</p>
<p>Yes. If you don’t do this, your student has no incentive to apply for merit scholarships.</p>
<p>You may also want to set the amount you can pay and let the student decide whether to choose a more expensive school (where the student would have to incur some of the costs) or a less expensive one (where parents would pay all expenses).</p>
<p>Another thing to consider: If the student does not use up the money you have allocated for college expenses, would you be willing to contribute that money toward graduate or professional school? For students who expect that there will be some type of graduate school in their future, agreeing to do this can be a powerful incentive to apply for merit scholarships or choose less-expensive undergraduate colleges.</p>
<p>We will spend up to x" on tuition, fees, r/b. kid will buy books and cover own personal expenses. If we spend less than x because of scholarships, I don’t refund the money to the kid or offer to cover books/expenses. I do not owe them a certain dollar amount.</p>
<p>We did something similar but not a fixed amount for each DD. One get a full tuition scholarship so we paid everything else. DD2 opted to attend a school where she only got 1/2 tuition (she could have received the full tuition at DD1’s university for NMF) so she is taking on Stafford loans. We pay the rest. And this May we’ll be done!! :D</p>
<p>My kids have covered books & spending money, and the cost of living if they take any unpaid internships in the summer. So D1 wanted to intern in DC for a summer, and she knew well ahead of time that she would have to cover her expenses to do that (and still be able to cover her books and spending money during the school year). D1 also pays for her texting (I pay for basic cell phone service).</p>
<p>I did not give my kids any hard dollar limits. But they know that I am a single working parent with no help from my ex on college expenses, so they also know that every dollar counts. They have applied for merit scholarships where possible, and D1 attended the school that gave her the best merit because she honestly liked it as well as any other school she was accepted to AND it was the best financial deal. D1 came out with no loans, which has given her a big boost financially as a young professional. </p>
<p>D1 worked at paying internships most summers, and held a campus job as well. D2 is currently hunting for a job for next summer (before freshman year of college), and plans to work on campus as well.</p>
<p>This is a really good time to set your expectations with your kids on this, so they know if they need to start saving for books/expenses/etc. However… I know parents who made this kind of deal, then realized that they would be asking their kid to take on too much debt OR she would be attending a level/type of school they really didn’t want for her. So they upped their planned contribution amount at the beginning of her senior year of high school. Sending her college search into scramble mode because of changing expectations.</p>
<p>You may want to consider the possibility of extra semesters and give appropriate incentives up front, rather than trying to figure this out after 7 semesters. E.g. if the student goes to a school that requires parental contribution at the limit, then there is no money left for any extra semesters. But if the student goes to a school requiring a lower parental contribution, the excess money could be used for any extra semesters, and if not used, could be used for post-graduate professional school.</p>
<p>To adjust for the different college costs over the course of the many years your kids will be in college, you may want to index your contribution to the instate public college, even if you are just doing this privately. </p>
<p>I also have several kids spread out. They did not all graduate in 4 years. Your kids are so young that it may be hard to know what will happen, but you may want to consider that one or two of them may need to start at the cc or go more than 4 years and make contingencies. (For example, if the student attends cc and lives at home, does it still cut into your 4-year contribution?) You could structure this in a way that encourages AP courses and dual enrollment so your children are more likely to graduate in 4 years. Note that it is harder to win transfer merit scholarships than freshman scholarships.</p>
<p>Even if it did, starting at CC and transferring to a four year school as a junior to finish the bachelor’s degree could still be a lot less expensive for a student who does not earn big merit at a four year school as a freshman (and even if the student takes extra semesters at CC and perhaps an extra semester at the four year school after transfer).</p>