I’m amazed how many students have not saved anything towards their own college expenses. Every day I read the woes about low/middle income family kids who can’t meet their EFC. Hey, I get it, I was a single parent raising two kids for 23 years in a decent job, not career, but one that allowed me to be home every night with them and pay the bills.
I wonder when others started asking their kids to work and put money aside for college? I had my kids spend their summer work $$ freshman and sophomore year (14 and 15 years old) on their first vehicle but they had to work much more during their junior and senior years to help defray the costs of college and work study is an expectation while at college. I also took a 2nd and 3rd job once they were in high school for the primary reason to build their 529s as much as possible. No, we didn’t save tens of thousands but every little bit helps.
For those low to middle class families, what was your expectation for your child’s savings?
We aren’t low to middle class, but D has been working since freshman year. I did not require her to save for college as she had other expenses to pay for along the way. She paid 1/3 of the cost of her first car. She now pays 1/2 of her car note (2nd car) and her car insurance. In the spring, in addition to those expenses, she is required to save up enough for a year of books.
Very little. But we are family “one big pot” people. Any money they earned went into the family pot. They got what they needed and reasonably wanted. Just like every member of the family. This means the summer my daughter earned $8000 at an internship she didn’t have " extra money" it went to the family pot. When they live on their own they will have their own money. Since they don’t have any debt they are pleased with the arrangement.
They started working at 15. I don’t recall that savings was specifically “for college” but they did save for when they needed money (the rainy day). Both had put away more than enough for the college expenses we asked them to cover by the time they graduated from high school.
Every penny they ever got for birthdays or holidays - from the very first Baptism check - went into savings. As they won academic contests with monetary prizes, those went in, too. All the paychecks from hostessing, babysitting and teaching go into savings, too. They are currently 16 and 14, so hopefully more will be added in the coming years.
I am probably an outlier in that they really have no expenses they need to cover. I pay insurance for the driver. She doesn’t have her own car, and no need for gas money since she only goes to school and the dance studio. The only expenses they have are addictions to Starbucks and Panera, but they do get an allowance from us at the beginning of the month that seems to satisfy that. It’s all interchangeable, but at least they have the expectation of saving.
We haven’t really talked about what they are expected to pay for in college - and maybe realistically it will be nothing. But they should have a nice nest egg to get them on their way, hopefully.
I’m kind of resentful reading this thread because I couldn’t really find a job when I was in high school even though I wanted to. I worked at McDonald’s starting when I was 16. It started out okay, but soon they started having me come in one day a week and then sending me home early. Occasionally they told me they would give me more hours in the near future, but they never did. I stayed with it because every other place I could think to apply (rural area, so there weren’t that many) either didn’t call me back or wouldn’t take my application because I was a minor.
When I went to college, my parents paid tuition (state university) and I paid for books, my car, gas, insurance, and of course all clothing and incidentals. I attended college as a commuter, and didn’t pay any bills or rent, other than the car insurance. I worked all through college and made very good money as a cocktail waitress, as well as other jobs.
We have been much more slack with our kids, rightly or wrongly, but my D did work and saved money for her own expenses while she is at college. We do not give her money for going out, clothing, or incidentals. She buys some of her own books if they are second hand and not too pricey. She is expected to get a campus job next semester and work every summer or find internships.
I wanted my daughters to concentrate on academics while in school. They were responsible for their own spending money…we gave them their childhood savings account to start with and then they had to replenish with summer jobs.
We saved money in529 and they both went to good value state schools with costs under 30K (SUNY Binghamton and TCNJ)
@Lindagaf My D learned a hard lesson this past semester. Her first semester she worked 7 hours/week work study. The second semester she worked 7 hours/week work study, tutored Chem 2 hours/week and graded papers. It was tough keeping her 4.0 but she did it. She decided she wasn’t going to do work study semester #3 and didn’t sign up. She decided to grade papers for a math professor but that only worked out to about 10 hours/month. She was broke all semester and really regrets making that decision. She has signed up for 5 hours work study this upcoming semester #4 and will grade papers as well. It was tough not being able to go to the movies or out for lunch these past few weeks but a lesson learned for sure. The five hours ends up being $45± week and plenty for incidentals and fun while at school. Her summer earnings pay for her books, other school expenses and help pad her spending account for the school year.
I required my kids to either work, take a summer class or have an internship during summers in high school (except the summer after senior year.)
I’ve always paid things like car insurance and phone bills. They don’t have their own cars. My kids get $20/week allowance in high school and I give my college freshman $200/month while classes are in session- not during the summer.
My freshman has a full ride. His job is to keep that, do research or internships and enjoy things within the budget he has. He will be a TA next term, which is unpaid the first time and then $400/term after that.
If any of this wasn’t do-able for our family, we would choose differently. Grades and good opportunities are important to us, summer jobs less so. A full time unpaid high school summer research internship was the best thing ever for one of my kids- but I assure you I privately griped about how much better it would be if he actually made money.
What they tuck away in savings and in CDs is part of their own money - for their own start in life post college. Similarly, we aren’t touching their 529 plans for college - our intent is to pass it down to grandchildren. DH’s parents paid for his college, I paid for my own. His opportunities after college were much greater than mine so we’ve always said we are paying their college costs. We are just fortunate to be able to do that.
My D has a job during the summers and school breaks. She has always been good about saving, and the money she earns covers her cell phone bill, clothes, and whatever other personal shopping/expenses she has during the school year. I expect that to continue next year when she heads to college.
If I understand it correctly (and I always preface any financial advice I give with this disclaimer, lol), it is not optimal to have the kid earn money before college because they just take it right off the top, and I believe it’s also taxed pretty heinously.
I know if D17 takes the full tuition scholarship she earned at one school, she’ll have to pay some pretty hefty yearly taxes on it @-)
We’ve had 529’s for them since they were born, but most of our pre-tax money goes (and has gone) into our retirement. We don’t want to be a burden to them when we’re old.
The girls jobs at college will be to get good grades and to graduate in time. They have the rest of their life to work for a paycheck, in my opinion. College is their job. And I can say this having worked a full time job and gone to school at night. It is hard to work and go to school at the same time, and I don’t want that for my girls.
They did have to pick schools that are affordable for us, because we’re also debt-averse. They’ll thank us when they’re 40.
A thing to remember about college savings in the kiddos’ names…any savings in the kid’s name is assessed as an asset at 20% it’s value for fafsa EFC purposes.
In parent name…5.6%.
For many students this won’t matter at all. But if your student is on the cusp of being eligible for something like the Pell Grant…20% of savings could make a difference in their EFC calculation per fafsa.
Nothing. Low income, full Pell. I had been working since my early teens but it went to things like a car, phone, food, etc. (Car = necessary for work. No public transportation here.)
Scholarships or grants that pay qualified education expenses (tuition, most fees, books) are not taxable. Even if your child receives enough grant money to be taxed on it (for room, board, transportation, etc), it is still a GOOD THING. No one is in a 100% tax bracket, so there is still getting a benefit.
My kids have not had great summer jobs and haven’t saved much. One played her sport summer between junior and senior year, and the ROI on that is more than she could have ever earned as she decided to play her sport in college and got an athletic scholarship. It has worked out for us. She’s a saver so if she ever gets money, she saves it. The other has had jobs but she’s a spendthrift. I tried to make her save half of everything she earned but she didn’t. She doesn’t have much spending money at all when at school and she’s okay with that. She does the free things on campus (and almost everything is free on campus), she doesn’t eat out much (has meals at her sorority and can take snacks and drinks from the cupboard there). She does have a bad Starbucks habit.
Once you get savvy about the financial aid system, you understand that money sitting in a bank account in the student’s name is not at all helpful for financial aid … so the last thing you want is to have the kid sitting on college savings for incidentals when it’s time to fill out the FAFSA.
My daughter had essentially 0 saved in January, but she worked a lot of hours in a good retail position the summer before college – so probably about $1200 or so in the account when she started in September. Once she was in college, she was 100% responsible for paying for everything other than what was in the bill from the bursar. So for year #1 I paid tuition, room & board-- she paid everything else. Year #2 the meal plan was dropped, so I was still paying the “room” part but the “board” part shifted to her.
She had no problems making ends meet from earnings during college. She did have a credit card in her own name which was useful for dealing with temporary shortfalls. She also attended an urban college with plenty of work opportunities – she typically had multiple work-related income streams each year, both formal and informal. (Formal – like a job with a pay check – informal, like doing odd jobs on the side. She once told me that other students would pay her $40 to clean up their dorm rooms for them, and that their rooms were a total mess, but it generally only took about an hour or so to get the job done.).
My son dropped out of college to work and then returned, as a transfer, the same year my daughter started college. This was in the early 2000’s and his income from full time employment was in the $25K annual range. Over the course of 3 years he managed to save maybe $10-$15K. Even though he had been living independently for 3 years, he was still young enough to be a dependent for FAFSA purposes when he reapplied to college – so I could see very clearly what a difference his earnings & savings made to the FAFSA calculation. His FAFSA EFC $10-$12K over and above my daughter’s – all attributable to his savings and earned income. One problem for a student is that whatever they save from earned income is double-counted, first as earnings, then as savings.
So a better option for a parent would be to nudge the high school student into paying their own expenses more, while augmenting parental savings. For example, stop giving the kid an allowance and shift whatever the parent would pay into the parent college savings account (Parental asset are not “taxed” as heavily with the FAFSA formula) Or let the kid used their own savings to pay the cost of things like college app fees – assuming the family would not qualify for fee waivers.
There are other good reasons to encourage a high school kid to get a job – it’s just that the college financial aid system as presently set up doesn’t reward that-- so it might be better to focus on the other reasons.
I worked at McDonald’s starting when I was 16. It started out okay, but soon they started having me come in one day a week and then sending me home early. Occasionally they told me they would give me more hours in the near future, but they never did. I stayed with it because every other place I could think to apply (rural area, so there weren’t that many) either didn’t call me back or wouldn’t take my application because I was a minor.