I am feeling a lot of guilt here. We have a bigger sized family. Basically, in our mid 40’s, we had a surprise baby. Surprise!! And even after the birth, I laid in my bed in postpartum, looking at his sweet little face thinking “how are we going to pay for college???” I already had 2 children in college at this point. My 11 yr old visited me at the hospital and pointed out that I will be 63 when the baby graduates high school. To top it off, my husband has a heart problem, so we did not want to wait until 70 to retire because we don’t know how long he will be able to work, or live.
So here is how the financial aid has gone. One of the older kids has full tuition and fees scholarship, plus stipend (but does not pay room and board). The FAFSA at the end says our EFC number is $6100 per child. Another child has financial aid and scholarships, including outside scholarships, and work study, getting what we have to pay down to the $6100 about. It varies. We told him he did not have to take out the unsubsidized loans. And here is where it gets tricky. That oldest has a work study. I pay his bill at the beginning of the semester. Then his work study money just goes to his bank account. Our agreement was supposed to be that I took the money from his bank account. But I feel like a thief!!! I cannot do it. He is supposed to save it to put toward the next semester. However, he keeps eating out and on occasion, buying Steam games, so as a result, he has no money left and we keep paying. He can sign something at the college letting them take his paycheck to put toward his bill. I think we need to do that in the future.
Do you think we are obligated to pay the full EFC even if he has enough money to make this number lower? And for the record, my oldest was in the NICU and seriously medically needy so we postponed starting to pay our own student loans. For both of us, our parents did not pay at all. As a result, with the interest rates being as high as they were, and we had unsubsidized loans too, our loans kept going up while we were paying. We are now with Direct Loan and interest rates are much lower now. But we currently owe just over $75K. On the bright side though, we have saved enough money we could pay that off now, except that we are keeping that money to the side to pay for the rest of the children’s educations. We have not been irresponsible with money.
So the bottom line is…if your child can afford to pay for school, do you let them keep that money and pay anyway? Or do you make them pay? Assuming you have a tight budget and younger kids to put through college. If we had tons of money and no more kids to pay for, this would be a no brainer. We would just pay. But that is not the case.
We are not. No more college loans. And we pay at the rate of $1000 a month. We are simply only making the minimum payment so we can keep money in savings for college for the younger kids. We could pay it off now, but are not. It would clear out our savings if we did. Not our retirement savings, just our regular savings.
What counts is your own situation, you have two in college and two future college students. You want your husband to retire before 70, you probably have a mortgage and your own student loans.
You could tell them that they need to contribute with taking out their loans and/or working.
Have the work study money go into a savings account with no debit card. Then you can pay yourself back at the end of the semester.
Your son could save his summer earnings for games and eating out.
I think you need to make very clear to your son what “the deal” is. It sounds like you didn’t do what you said you would - take the money out of his account. If you didn’t tell him otherwise, he may think that you not taking it out means that it’s his to spend. If the way to keep him from spending the money he needs for next year is to take the money from his account, then do it. And if there’s a way to have it automatically put toward his bill, then definitely sign up for that.
That said, does he have any money to spend on himself at all? It is very hard to be in college and have nothing (I know, that’s how I went through school, and it was no fun and I missed out on a lot of opportunities, educational and otherwise). Going out to eat a few times and buying a game occasionally does not sound particularly irresponsible, especially when he’s working for the money. On the other hand, if he’s going out to eat all the time when he has a meal plan, that’s different. If his only way of making money is through this work study, perhaps you could agree on some amount of his earnings that he could keep, and then not feel like a thief when you take the rest. Ultimately, if you cannot afford to pay, then he will have to use all of his work study money to pay for school. But if he’s otherwise doing his part by working and earning scholarships, AND if you can afford to let him have some amount of his earnings to spend on himself, then I would do that. Also, if you need all of the work study money to pay college expenses, maybe he should take a portion of the subsidized loan to cover his personal expenses. I’m not an advocate of debt, but repaying a small loan will not be that difficult once he’s working, and his college experience might be better if he’s not poverty stricken while he’s there (assuming that’s the case).
You have no obligation to contribute the full EFC, to say nothing of paying more. There are parents who ask their kids to attend whatever school will give a full ride with their stats, and contribute a nominal amount towards the cost of education. Because you love your son, you’re making sure he can attend college, and that’s meant paying $6000 for his education despite having a moderate income (judging by your EFC) and a large family.
Perhaps your son doesn’t understand the effect of spending his work-study money. As @beth’s mom suggests, make sure he understands that the deal you’ve made is still in effect. When he doesn’t pay the difference between $6000-odd and what the college is charging your family, that’s less money for you to repay your own student loans, and less money for his siblings’ education.
Most young adults are good kids at heart; we’re just a little clueless at times. Maybe your son doesn’t realize this is a real issue for your financial situation, or maybe he doesn’t even know he’s spending that much money. If you gently point it out (“We just want you to keep an eye on your spending, to make sure you have the money for tuition payments”) he’ll likely pay more attention to the account balance next semester.
As for the feeling of guilt when you transfer work-study money, I assume you speak to your son once in a while at least. Next time you chat - over the phone, skype, facetime, text, etc. or in person - tell him: “Just so you know, I’ll transfer the money for this term’s tuition next week, okay?” You’ve let him know, so you don’t feel like a thief. He knows the transfer is taking place, so there’s no “My account is $XXXX lighter than it was last month? What the heck happened?” moment.
And try to repay your student loans, faster than the minimum payment if you can spare the money. If your husband’s health is a risk factor, having a fair amount of debt is dangerous. Things happen - that’s life - and in the event that, heaven forbid, someone in your family incurs significant medical costs or your husband can’t work for a while, you’ll be glad you minimized indebtedness.
I think you staked his first semester with the understanding he’d work and pay the difference for second semester. If he doesn’t want to do that, he can take the loans. I don’t think he should get no spending money, but he needs to understand that if he earns $100/wk and spends $75, he’s not going to have enough to pay tuition when it comes due (or the billed amount from the college). Review his budget with him, maybe agree that he needs to flip the spending/savings to $25 spending, $75 savings. He may still need to take that student loan too. Most student find they need the work study money just to live. I really don’t think his taking a $3000k loan will be a problem.
You need to reconsider holding on to that $75k. It’s much more expensive than you may have thought (i.e. not just the cost of paying interest on your own student loans), possibly to the tune of $9000/year!
It’s probably costing you close to $4000 per year in interest ($75000 x 5%) AND maybe $2500 in missed Pell grant for each of your 2 kids currently in college (estimate of $50,000 above asset protection amount x 5.6% = $2800, subtracted from $6100 EFC = $3300 EFC).
Consider paying off the $75k (or at least pay down to the asset protection amount) and then applying for a HELOC to have access to low cost funds for other kids’ college expenses.
Are you having your kids pay tax on up to $4000 in scholarships if necessary so that you can get up to $2500 x 2 in free money for the American Opportunity Tax Credit?
Any guilt I had would be gone the second my kid told me he didn’t want to work this summer. Unless he has some once in a lifetime opportunity that would preclude working, I would have no tolerance for that. I think you need to sit down with him and let him know that going out to eat 50% of the time and not working in the summer is not consistent with his and your financial position.
Look at it this way. Every dollar he soaks from you is money/food/tuition not available to your younger kids. This is his SECOND summer not working? H3LL to the no. You might even say he gets off his butt or no further tuition is forthcoming. Not a nickel.
I am ashamed to admit…I did not understand the post about the tax thing. But on the note of the interesting being paid…the money saved is invested. A little less than $40K was in the account that had to be declared on the FAFSA. We have been earning an average of 7-8 percent a year on them but paying just over 3% a year on the student loans. So we come out ahead by 4% per year on average. The other portion is under stock options and things like that so they do not have to be declared, but actually are vested, so we can take out as we use it. We have to pay income tax on it and declare that income on the FAFSA. But this year, our oldest is a senior so we won’t have to do the FAFSA next year. So we can take out this year without having to put it on a FAFSA.
Boy, that would not fly at our house! You need to explain that there are three other kids to be educated, and you hope to retire at some point – and a perfectly able bodied kid needs to work in the summers in your family at his age. By the way, if you are paying for his phone or letting him drive your car, and he insists on this attitude, I would yank both of them.
My youngest night stocked at Walmart when she had trouble finding another job one summer. This should simply NOT be a choice at this point for him at this point. Let him know what he has to cover – books, spending money, and whatever additional you expect him to pay of tuition or whatever. Then take the money for the tuition as soon as it hits the account. If he wants to eat out, have textbooks, etc., he will work.
My S moved out of the dorm second year and because it was such a hassle started to eat in restaurants more as well as order food on line then delivered. It racked up the costs tremendously and we contacted him to put a stop to that. I bought him a slow cooker and gave him ideas for making things he liked that would last throughout the week. I think initially he was oblivious to how costly it was and lazy about time management for shopping and food prep. He was vey apologetic. I second the idea of a summer job- it was not an option for my S starting the summer as a rising college freshman. There was an exception made one summer when he took CC classes and worked on personal projects. But the summers have to be productive in some way. They have to grow up. Good luck OP.
I’m confused about what you said about assets and FAFSA. Savings and checking accounts are one type of asset, college savings accounts, savings bonds, stocks are investments and they should also have to be reported.
Also when your oldest graduates, why wouldn’t you have to file the FAFSA still for the brother?