How have other families structured financial arrangement w/ kids?

Parents Forum
101

We paid for our kids’ tuition, books, room and board at private colleges with the exception of the Stafford loans we required they take out as their contribution to their educations – yes, their “skin in the game.” It was reasonable and both kids paid their modest Staffords off pretty soon post graduation. We wanted them to know that skipping a class or not making the most of it was their own money, in part, being wasted. H had calculated that each class was the equivalent of a ticket to a night at the Metropolitan Opera.

Grad school was on them – one went after working and saving a couple of years, and with tuition waiver and an assistantship that kept the costs pretty low (basically, she covered her grad school living costs minus what the assistantship paid). Second kid had no interest in grad school but is doing fine in his engineering career.

They were always responsible for their own entertainment and personal expenses – wanted D (our first) to decide for herself the economic value of which shampoo to purchase, and whether to order pizza despite having a full campus meal plan. No cars provided for either.

Worked well for us (full pay family throughout even though H was “between jobs” one year). Saved one semester’s expenses with D by her doing an abroad experience her junior year on her own (worked in China) independent of college – she was able to graduate on time due to her AP credits; I think there was a $50 fee for her leave of absence.

Both kids had great experiences at schools that worked very well for them. None of us have any regrets.

102

@Trisherella - you’ve made some great points - we are definitely not wanting to “penalize” our daughter for having worked or saved, so we will definitely be giving more thought to how much or in what form her involvement in financial stuff will come in the next number of years. As I mentioned upthread, $5000 isn’t a number to which we are wedded - we want to be smart and flexible in our thinking about how best to support our daughter through this next phase, which includes helping her to continue her generally good habits regarding work and money. Thanks for your comments!

103

Because our son is at a service academy and is paid a small salary while he attends, there were no serious financial arrangements to make. We pay for his flights to/from school and, each year at Christmas, we top off the shortfall in his Roth to meet the max. At graduation, we will also give him some of the unused 529 funds to add to his investments.

104

Our system for both kids is that we pay tuition,room and board. We also subsidize books. They take out unsubsidized student loans (it is likely we we subsidize their repayment). Neither one was eligible for work study so had to live off summer earnings. We did provide a bi-weekly “allowance” to help cover misc. expenses

105

Just because a student doesn’t qualify for work study doesn’t mean he can’t work. I never had work study and yet worked on and off campus jobs all through school.

106

Garvey, I think your posts are articulate and thoughtful and clearly your parenting is equally thoughtful. I have a feeling that you will find a really good path that will work for all of you : )

I know this doesn’t apply to many reading this, but this entire thread has really made me realize the impact of health issues on the ability of kids to work, and consequently on the ways in which they are asked- or not asked- to help with their own finances. To me, it is “normalcy,” and this thread has made me realize that isn’t necessarily the norm at all.

107

@garvey – I think it is wrong for others to characterize the decision to ask for a specific contribution from your daughter as “penalizing” her – I think that’s got it backwards. If your daughter will be age 18 before she starts college, then she legally will be an adult. There are many young people in this world who get no financial support at all from their parents for college – they are adults and for various reasons (financial, cultural, parental conflict, etc.) they simply don’t get or expect parental contributions to their educations.

So young adults who have the benefit of parents willing and able to subsidize and support a college education are very fortunate. Whether their parents offer them a lump sum toward their college education, or take over some but not all costs, or are willing to pay for everything plus provide an allowance – they are all getting rewarded, not penalized.

The problem I have with argument that the child is “penalized” for having been responsible with her savings is that assumes that the responsibility for support of a young adult lies with the parents. Generally, it doesn’t. No young person, no matter how affluent the parents, has an entitlement to have a their parents pay to support them through 4 years of college, especially at today’s rates.

I am a parent who promised to to subsidize my kids’ college educations and also took on what I felt was a reasonable amount of personal debt to do so— but I am glad that my kids responded with gratitude for what they were getting and a willingness to take on the responsibility to cover whatever gaps that they were left with.

You will not be punishing your daughter if you don’t give her something she’s not entitled to in the first place. The only thing you really owe her is a clear set of expectations – whether the dollar value of her contribution is $0 or $500 or $5000. As your daughter has worked through all 4 years of high school, you and she probably have a realistic view of her current earning capacity, and of course that is going to go up over time. If she will qualify for work-study, you might want to find out what typical hourly rates are for work study jobs on the chosen campus – they can vary.

I remember specifically that when my daughter was admitted to colleges 11 years ago, her financial aid award from U of Chicago included a campus job for $5000 – that seemed high to me, but that is at least one college financial aid office that thought a freshman could earn $5000 over the course of a school year. She didn’t end up going there, in part because the financial aid award was so weak, so I don’t know whether it would have been feasible for her or not. I honestly don’t know how much money she earned or what her expenses were, because I wasn’t monitoring.

108

My parents paid for my education. I paid for my kids’ education. We were lucky to be able to afford it. They had no skin in the game. They paid for incidentals. They never disappointed us.

109

@calmom while I agree we are not required to pay for college, our income level will be held against our kids if we do not. They won’t get FA, no $ from parents…tough thing for a kid who can’t get merit.

Reading all these, I have probably spoiled my kid. Am I the only one who gives an allowance monthly?

110

^^ Nope, you’re not the only one. Mine get a lump sum for the quarter that covers books and most everything else. She has figured out best places to get near unused used books and budgets the remainder over the quarter. Also, if there is something special she needs/wants, we usually allow that in addition. As long as it is not expected, and is appreciated, I’m happy for my kids to not have to be as frugal as I did growing up.

111

I just meant “penalize” vis a vis the other children in the family. If she’s expected to contribute a lot more because she was able to save the money over time through hard work and thriftiness, who’s to say the other kids will be able to save as much? They probably won’t. Therefore, the Saver Kid would be penalized in comparison to her siblings.

112

That’s a good argument in favor of parents contributing their FAFSA EFC – but very few colleges meet full need. So there is still a lot of money to be paid that is not attributable to parent income or assets.

I do think that parents should take into consideration whether the student is eligible for federally subsidized loans and work-study in assessing the ability to contribute. Whatever the parenting concerns may be, it does not make economic sense for a student to take on an interest-bearing loan in situations where the parents have funds readily available. The availability of paid work may also be impacted by work study status. (That varies from one campus to another - as another poster noted, it is very possible for students to have jobs and earn money without work-study, but it may present significant barriers in some locations.

113

I moved back home as an adult to go to college. I graduated from a BSN RN program. This changed my life. It started the path to financial security. Later on I was able to put myself through a MSN, NP program and increasing my income and financial security.

This kindness provided by my parents to allow me free room and board and car allowed me to graduate with less debt.
This was a catalyst that set me on a different path in my life.

I absolutely want to help my child with whatever I can afford. This will give me great joy and pride. I understand how this can help set her up to achieve financial security if she doesn’t have huge student debt.

114

“There are many young people in this world who get no financial support at all from their parents for college – they are adults and for various reasons (financial, cultural, parental conflict, etc.) they simply don’t get or expect parental contributions to their educations.” (post by calmom)

Well, I certainly know kids whose parents did not pay anything for college. In fact, I know of parents who kicked their “young adults” out once they turned 18, saying they were no longer their responsibility. Presumably because DCF could no longer charge them with neglect.

This is not the population that is posting on this forum. Would this be a model for anyone’s parenting here?

My daughter lives in a working class city with working class peers working at low pay jobs. None of her friends have a chance to go to college, even the bright ones, because parents refuse to pay. Is this a model anyone wants to consider?

Some of them wait until age 24, when financial aid is based on their own income. Some have parents whose incomes were too low to matter on FAFSA anyway, but their low income also means they cannot pay for college for their kids.

These hard-working young people continue to work in restaurants, dry cleaners, or even fast food places while they do college a course or two at a time.

I am sure that in essence most parents here agree that consistency is important, and that there are many ways to handle this, but I really don’t think our obligations to our college age kids starts at zero. Or that our kids are excessively "privilieged: to receive support during the college years.

Our parental obligations used to end at 18 and that is still true legally. But the phase of young adulthood now extends to 30 for many. I read that 82% of college grads are living at home, and experience bears that out (mine aren’t because I live in a studio).

Let’s get real here. It’s tough to make enough money to live, for some parents as well as many kids. Add college on to that, and it’s even tougher.

If you have the resources, I think the goal should be long term financial self-sufficiency for our young people, and sometimes parental help in the short term can enable that.

In the meantime, let’s not use parents who contribute nothing, for whatever reason, as some sort of baseline so that anything above that is “entitled.”

115

We have no financial arrangements with our kids. We supported our oldest one through college and first low paying job. Never expected anything back. Now when he earns more than I do, he shows his appreciation by sending us on vacations and giving us gifts we would not buy other wise because we are on a tight budget paying for a private school for our youngest one now. Again, no financial arrangements with her. Don’t expect anything back. Our parents did the same for us.

116

We are fortunate enough to have saved up in a 529 plan to pay for State U level of funding for our kids. I also helped steer them to good value schools…they both ended up at the “parent pick” which was chosen based on the criteria they had. Both are these were good state schools (SUNY BInghamton and TCNJ).

We also had heard that it is good for them to have some “skin in the game” so we had them take out the $5500 type loans and said we would pay it back if they maintained a 3.0 average.

117

I don’t think that helping our kids through school makes them entitled. If you can pay for your kids to attend college, and they’ve shown they’re responsible enough to handle it, why would you make it more difficult for them?

People forget that things don’t always turn out the way we plan. I know several families who encourage their kids to work and save what they can, but they don’t make them pay college expenses the parents can afford just for the sake of paying. Divorce, illness, disability, even death have changed the playing field for some of these families. I understand lower income families pooling parent and child resources to get their kids through school, but making kids pay when you don’t need the money because you don’t think earning a degree is enough of a vested interest seems pretty risky to me.

118

There are class issues on a thread like this, kind of elephants in the room if you will. Values, fears and hopes vary somewhat as a result. Here’s to the good outcomes for all of our kids, however we arrange things.

119

We said guaranteed student loans, no more than that and paying for your own fun money. And keeping your GPA up for merit awards as others have said and no more than 4 years

120

I am not sure why people are so opposed to loans and ‘skin in the game’-- I was a very good student, and I was very motivated to go to university which I did of course. But there were moments where I was just feeling done, tired, a bit overwhelmed and wondered if it was worth going on to finish and yes – knowing that I would have loan debt and if I quit and still had the debt but no degree did in fact give me pause as to maybe it was totally doable to keep going. It made me think twice a couple times and I muscled through.

And spending money is definitely theirs to deal with – summers and a little part time job is all they need. I have one who burns a hole in her pocket with $$ and I am certain if the till seemed endless (not her own) it would be worse.

Oh and honestly, what the heck is wrong with letting a younger person take limited debt for their own long term good?? So what if I have a nice car, or a great vacation – I earned that and when the kids are in their 50s they are welcome to do the same!