Luckily we are financially in a good place where we can afford to pay private university costs all by ourselves. However, i am thinking if this would be a wiser decision ? will it make my son not realize the value of money ?
How do i make my son pay some of the costs? What’s the best method of loan he can apply but not pay lot of interest knowing that our family already has money to pay. Should we pay and tell him that 25% of is loan to him and that he should pay that back ? or is it easier to have him apply for loan even though it will result in unnecessary interest payment ?
Why is this an issue? You are fortunate to be able to afford the costs for your son to attend college. If you want him to help out…here are a couple,of suggestions.
Have him get a job and earn his discretionary spending money.
File a FAFSA form and have him take out the Direct Loans...but then you can give him a nice graduation present by paying them off.
We are full pay but did not make DD take it loans or have to pay us back. What we expect is for her to work hard and get good grades.
She was and is responsible for working summers, paying for books, and any extras. We fronted her a loan from us for her study abroad but she will pay us back at the end of the summer.
If I felt like she wasn’t appreciative or being financially irresponsible, it would be a different.
If you want him to pay off the loans, make him take out loans from an external source. Loans from the bank of mom and dad tend to get deferred indefinitely.
Echoing the words of @thumper1 “why is this an issue”? If you have the financial ability to pay, and are willing to do so, pay! Your S is fortunate that you have the financial means; why add a layer that might cause resentment and stress? If you are determined your S contribute, as already suggested, have him get a job for discretionary spending (that means you cover, tuition room & board). If your S can graduate debt free, you will have set him on a path to success without the encumbrance of debt and your relationship with him, free of financial resentment.
Having some “skin in the game” is a great way to make sure your kid takes responsibility and appreciates the costs. But if loans aren’t needed it seems like a big expense/burden. My DD is solely responsible for her spending money and books through earnings from her summer job. It’s a source of pride for her, while she’s extremely grateful that we are covering tuition. We have discussed making her responsible for additional expenses as she gets older. Next year she has to pay for her cell phone.
I’m a real fan of summer jobs for kids. Mine has had one since she was a high school freshman. Has been responsible for all her personal spending, cell phone bill, etc. It’s a great way for kids to learn responsibility, work ethic, accountability, and budgeting skills!
Agree with others that respect and understanding for money start well before college. However, there are things that you can do. Here is what we’ve done with ours:
First, teach them to budget. I highly recommend the app You Need A Budget, which is free for students the first year.
Fixed budgets. Each kid has $x in their college fund. They know that anything left over after graduation is theirs for grad school, to buy a car, down payment on a house, etc. this came into play during the college choice. My Ds chose more expensive programs in the end, but they did so with the full understanding of what this would “cost” them later.
Summer jobs are mandatory. Those funds are to be used for anything not tuition, room & board, books, or travel home. For oldest D, this means not only eating out and socializing, but also gas for her car (she has student teaching that she drives to). When she moved to an apartment, we put the money she would have spent on a meal plan into her food budget and broke it down weekly. Anything over that was out of her money.
My kids both have a healthy respect for money, and D is finishing her sophomore year with about the same amount of money in her bank account that she had when she left for school freshman year. That means that she is indeed covering her personal costs with her summer earnings and not dipping into savings.
I’m assuming you have provided a nice life for your son up until now. This includes things like taking him on vacations, living in a nice house, having good things…and you don’t require him to pay a share of the costs, right?
Another thing some folks do (we did…as full pay mostly) was require a minimum GPA for our continued funding of the expensive private universities our kids attended. If they didn’t meet our bar, we would have expected them to transfer to a less costly public university in our state.
I think that the time to raise kids who are not spoiled, who understand the value of a dollar, who do not get everything they want handed to them etc…starts at birth. If this is how you raised your son, then I see no reason why he should have to pay part of his college costs if you can afford to do this on your own without any hardships. If there is a hardship, then I would choose a less expensive school. And of course I am not trying to judge…many parents want their kids to contribute a small amount and that is perfectly fine ( spending money, books etc).
I have friends who make very high six figure incomes and were full pay for expensive colleges, which they paid for without asking their kids to contribute. Their kids were not spoiled. They earned their spending money by working summers, babysitting, etc. If they wanted the newest gadget that everybody else had, they had to help pay for it. One of my friends kids spent a month baking and selling cookies to friends and family in order to help pay for her phone.
I also know people who spoiled their kids and allowed them to have free range of their credit cards to buy whatever they wanted all through HS. These young adults continue to be spoiled today and are not expected to live within their means.
You are fortunate to be able to pay for any school that your son is accepted to. In my opinion this can be done while still teaching your son the value of a dollar. Again…not judging. Many parents want their kids to help in some capacity.
We had our kids pay their own spending money, for books, and for any expenses related to summer internships if they couldn’t live at home (examples: one kid interned for a Senator in DC one summer, unpaid. She covered her own expenses for that. Other kid researched on campus summers. She paid her own dorm fees. I did give both a bit for groceries each week, since they’d have increased my bill if they’d been home).
I also insisted both kids have paying jobs (not for their parents) summer before frosh year. Between that and graduation gifts, plus some money they’d saved over the years, they were well positioned frosh year.
Other rule we had was finish in 4 years and be able to support yourself when you are done. Might have bent that one for something like health reasons, but didn’t tell them that. Both got it done. One got a consulting/research job, the other entered a funded PhD program.
You do it by example. We aren’t wealthy, but our kids never had to worry about food or clothes or shelter. But we wanted them to understand that not everyone is as fortunate and to learn the value of helping others, so we took them with us when we volunteered almost as soon as they could walk. Now that they’re in college they understand that not everyone is as fortunate as they are so they don’t squander opportunities. If you volunteer, encourage them to join you.
Our kids have had part-time jobs since they were in middle school (mowing grass, pet sitting, etc.) By the time they were teens they had part-time jobs. As soon as they started working we taught them how to budget their money. If your son doesn’t have a job encourage him to get one this summer. He should be able to raise ~$3k or so. He could use that for spending money during the school year.
I don’t see the point of having him take out loans. That doesn’t teach people to work for what they want, it teaches them to borrow for it. I don’t think that’s the message I’d want to send my teenager.
If your family spends the day after Thanksgiving sorting donations at a food pantry instead of shopping for Black Friday, that sends a message about gratitude and giving back. If kids see Mom and Dad taking a meal to a neighbor who just got out of the hospital, shoveling the sidewalk for an elderly person on the block, and driving a work colleague to and from chemo-- even when it means not going to the gym or skipping the weekly poker game, that sends a message about what the family values.
If you’ve been raising your kid to appreciate how lucky he is, and to make a point of noticing that others are not (and rolling up your sleeves to help) then paying his tuition doesn’t seem problematic. I went to college with some uber-wealthy kids-- some of whom spent their weekends partying at fancy clubs, most of whom were the first to organize a blood drive, coat drive, teach reading in a low income after-school program, or use their language skills as volunteer translators at the local ER. These kids didn’t wander around campus wondering “how can I help”, they knew how to help, because they had watched their parents do so many things growing up.
I was shocked to visit one college friend and see the grandeur of where she’d grown up. She worked two jobs on campus to pay for her expenses (pizza, shampoo, train tickets home), she seemed to live the same lifestyle as the “scholarship kids” as they were known back then, and she was first in line to organize an event or a fundraiser or a program to get out into the community and fix something that was broken.
Part of it was her religious upbringing and part of it was what she had seen as a kid. Enormous wealth, which came with enormous responsibility to use her time wisely.
Agree that having a kid borrow, who doesn’t need the money, sends a very mixed message. Why borrow if you don’t have to? Kids can have skin in the game by working a job, volunteering, and using their talents to help other people.
I had a multimillionaire roommate in undergrad school. Frankly, I had no idea her family was that wealthy until many years later when I attended her wedding. She was humble, down to earth, and moneynwasnt her first priority. She also was one of the first to help out with just about anything.
Teach your son the values of giving back…that goes a long way in life.
Jobs do more than help a kid earn money. I had a grad school recommendation written by a professor I got to know through a paid job on campus. I never took a class with him, never even stepped foot inside that department, and he taught something so obscure I’m not sure I knew what it was. But he was my “supervisor” on a project (I got it through the campus employment office, so it was nothing exotic or sexy) and told me that if I ever needed a recommendation to reach out to him. Two years later when I decided to apply to business school I called him- and he said he’d get the recommendation out to the transcript office (which handled applications for alums) within 48 hours.
I think it’s healthy for kids to “have some skin in the game,” as they say. Husband and I made our daughter pay for her books. I think it was a good experience, and the part-time job she had on campus ended up being key in her landing a good internship later on. A win-win.
I would have him get a job for his spending money and do not give him a credit card. When it comes time for a car - a moderate second hand car. If he wants to go on spring break he should pay. Juggling a job and school is a valuable lesson. The most basic job opens up opportunities down the road.
I agree “spoiled” is not about money. But it is a good thing for anyone to learn money management, and get a good sense about what these dollar amounts are and how hard it is to earn the money to cover them. Having them cover personal costs like beer and pizza outings and sundries and entertainment, maybe some of the cost of books, a part of the room and board charges can give them a real life grounding in that respect.
My kids all swore that living off campus would save everyone a lot of money. Yes, for some, that is true. But in their cases, at best, it was close by the time you throw in the security deposit (which you often do not get back), household goods, household maintenance items, food if you are not disciplined in cooking your own meals and shopping carefully, etc, etc. They learned that because we dispensed exactly what the room and board through the college would have cost them over the year in measured amounts.
The Direct loan is a good guide for what borrowing money for college entails. Most students these days borrow those amounts so it’s not like they are getting something unusual. It’s pretty much an automatic acceptance to get those loans in the kids names.
Discussing the financial ramifications of choices is important so that it’s clear that they know what things cost. It’s amazing what smart young adults don’t know if it isn’t laid right out there, especially when they are used to having the stuff automatically covered. Stuff like cell phone bills, deductibles in insurance, dental costs, eye wear costs, true cost of owning a car, etc, etc.