Ask the grumpies: Will your kids be paying a portion of their college costs?

bogart asks:

[Are] people are planning to have their kids pay a portion of college costs and if so, how much.

Background: I have 1 kid and expect to be able to afford to send him anywhere (this is more a function of an employer’s tuition benefit than household wealth, though we are not comfortably off). Both I and my stepkids (whose college I also helped pay for) graduated college with some debt, not an obscene amount (let’s say 1/3 of our first year’s anticipated salary had we gotten an entry-level college-graduate job). I’m inclined to expect roughly the same for my DC, with him either working summers (or whatever) and/or taking on (sensibly financed) student loans. But at this point that’s just a vague notion, not an actual plan. I’m interested to learn what others’ thoughts are on the pros/cons of college kids investing some of their own current/future $$$ on their education, with a note that I definitely know that needing to work lots while in college creates lots of problems for lots of people and don’t want that for DC. And also whether DC does or doesn’t cover what I’m (vaguely) thinking of as a reasonable amount isn’t going to have a big impact on our household’s financial well-being one way or the other. And that I realize I’m lucky and frighteningly privileged to be able to say that.

Related posts: Should parents pay for their childrens’ college?  You can read this deliberately controversial post for why we think the argument that people won’t care about their own education unless they’re paying for it themselves is not a great one.

We are planning on paying full tuition, basic living expenses, and textbooks/etc. expenses for our kids in college.  Probably we’ll also pitch in for one of those overpriced refrigerator/microwave units for the dorm room.  If there are any loans, we will take them on.

I figure they can pay for any extras (meals at restaurants… not sure what else… concert tickets?  plane tickets to visit significant others?  stuffed animals?) out of their earnings, either summer earnings or work during the school year.  My friend whose kid is at Brown is paying for full dining hall PLUS multiple restaurant nights a week, though she just had a conversation with him about that.  (But Mommmmm, the restaurants are so good here!)

Not sure about masters degrees– we will cross that bridge if we come to it.

I graduated with my parents paying the 0% interest subsidized loans they’d taken out on my behalf (we were very low income).  DH graduated with 10K of unsubisidized debt at ~8% interest that we scrimped like crazy to pay off ASAP.  I worked for spending money for extras during the school year and DH worked over the summers.

Paying college tuition is a great way to transfer money to the next generation while avoiding gift/inheritance taxes.  It also doesn’t have the problem of creating more expenses like giving someone a house downpayment would nor does it teach people to live large when they can’t really afford to like giving them cash or a fancy car would.  So if you can afford it, why not?

Leah adds:

I was super grateful that my mom helped me graduate debt free by picking up extra shifts nursing. I think the path to take depends on your family. I totally understood the value of what my mom did for me. I worked hard in college. I had a work study job, got extra scholarships each year, and worked for the school newspaper. There’s more than one way to teach being fiscally prudent. Do what works for your family.

Grumpy Nation:  Those of you who partook of higher education, who paid for it?  If applicable, what do you plan to do/did you do for your kids?


25 Responses to “Ask the grumpies: Will your kids be paying a portion of their college costs?”

  1. First Gen American Says:

    My mom would have paid for all of it if she had it, but she did not so I did the work, school, loan thing. I do think putting myself through college made me more employable. I was offered the most coveted job/training program there was at the time despite only having a 3.2 Gpa.

    I’ll also say several of my friends who help recruit will no longer hire people who have no work experience. It can be any job. The last person In this category I helped interview who did lots of volunteer work and had all the right answers and was super impressive on paper was a disaster. She didn’t last long.

    My older son who is a senior has worked summers and has a bunch saved. He uses his own money for incidentals even today so that is how it will continue. He will probably take out some loans if they do not accrue interest (not sure how it all works now). We can make the call if we want to pay them off later but he should have some skin in the game. He is very frugal with his own money so I think having to spend some small amount of it on his education will be motivating.

  2. Alyce Says:

    My parents paid 300 towards my college costs – it was literally the amount they dropped me off at in NYC to cover my books, winter boots, and a winter coat – and that’s the last time my parents gave me money for my expenses. I went to a school with very generous financial aid for low income kids, and I worked multiple jobs throughout college to cover my costs. I literally did not know that I could have taken out more loans to pay the expected family contribution portion of my tuition; I signed up for the payment plan and paid 10% of the balance every month.

    I feel very strongly that having to work and pay for school and cover my living expenses taught me very strong financial skills in a safe environment. i.e., when I made money mistakes, I wasn’t at risk of losing my housing or not being able to eat. And I learned how bad it felt to borrow money from a friend for a concert ticket and not have the money to pay them back (and picking up another short term job working coat check at a sketchy dowtntown club to be able to pay my friend back ASAP), and I have literally never had any consumer debt for buying more than I can afford since. And the responsibilities increased over time – by the time I was a senior, I was in an off campus dorm and not on a meal plan and cooking for myself – but I could totally handle it.

    But I only graduated with 15K of debt from my fancy pants undergrad (6K of which was from studying abroad when I couldn’t work but had expenses from travel and exploring). Paying off my student loans meant that when it came time for grad school, I actually had a sense of what the debt would mean, and I made educated decisions on the front end – only applying to law schools that had loan repayment programs (pre- public service loan forgiveness, institutional programs at elite schools were the only option), and researching the terms and conditions of their programs to make sure it was flexible enough to cover the type of lower paying public service work I expected to do after graduation. Even though I left grad school with an insane amount of debt, I already had a plan for paying it off and the debt didn’t stop me from buying a house, saving robustly for retirement, having emergency savings, getting married, having a kid, etc.

    It became apparent when my friends started settling down and having kids that they missed out on really developing good financial habits when they were younger. Because you can talk to your kid about money, but it’s in practicing setting priorities and deciding to make an expenditure or not that people’s financial habits are ingrained. And I personally wouldn’t want to pass my wealth on to someone who didn’t have good financial habits.

    And the last thing I’ll say is that, it’s rare that a college kid is going to use the extra time they have because they don’t have to work to study harder or have amazing internships. I mean, those people do exist – my husband is one of them – but the average kid just uses the free time to be lazy/party/take it easy/have fun with friends, etc.

    No, the real last thing – I totally agree with First Gen American when she says working made her more employable. And as a hiring manager myself, I value “regular work” more than internships, because to me, it shows the applicant is willing and able to work.

    • nicoleandmaggie Says:

      Randomized controlled audit and laboratory studies suggest that you and FGL are in the minority— firms hiring people out of college strongly prefer internships over any other kind of employment. At least for technical and business jobs.

      • Alyce Says:

        I’m not surprised by those study results. It’s just another form of professional gatekeeping, and people generally preferring to hire people that have similar experience to their own (myself included).

        I also don’t hire out of undergrad. Pretty much all law students have internship experience as they apply for their first jobs out of school. As far as I’m concerned, they’re only useful for demonstrating interest in a particular area of law. I don’t think internships build significant substantive legal skills, at least not for the specific job I hire for. New law grads generally need training from scratch, so applicants with regular work experience is a meaningful distinction, especially if a student went directly from undergrad to law school without working in between.

      • First Gen American Says:

        I had relevant global work experience as well….that got me in the door for an interview. But, I was very surprised when the interviewers spent time asking about my non-relevant jobs. I even told one of them that I almost didn’t add them to my resume because I didn’t think they mattered. I do believe those jobs helped me get offers from multiple employers.

  3. yetanotherpfblog Says:

    I got need-based grants that paid for all my college expenses, though I still had a part time job to pay my tax bill (iirc, grant money going to room/board/non-tuition are taxable), have some pocket money, and travel costs to fly home every Xmas and summer. Also to accrue savings to open a Roth IRA, because I was a financial nerd even then.

    At least for me, not having student loans made me a lot freer to apply broadly for summer internships, study abroad, and post-grad opportunities in a way that if I had debt to pay off immediately would have made me a lot more conservative and anxious. Obviously YMMV, but I was glad to not have that hanging over my head.

    • nicoleandmaggie Says:

      DH didn’t even know he had student loans until some months after he had graduated. So having them didn’t really affect his college experience at all… and if he hadn’t been married to me I’m sure he would have just deferred them until he graduated from grad school, at 8%/year when inflation was 2%. Would that have been better than scrimping and saving for a year, I don’t know.

      I had no student loans and also had a Roth IRA from college earnings! #financialnerd

  4. delagar Says:

    My parents paid half of my tuition and books, and I paid everything else — but in 1980 you could do that. My tuition and books together never came to more than 800, and I lived at home and rode my bike to the local university (University of New Orleans). Graduate school I paid for by myself, which was possible because I had a stipend as a TA which paid my tuition and gave me $600/month. (Enough to live on in 1990, though not enough to buy health insurance.)

    My kid had every cent of his four and a half years at a state university paid for by my father, who had started a tax-free savings account with the state for him the day he was born. It let him graduate debt free, which is going to make it possible for him to go to graduate school, if he decides on that route.

  5. bogart Says:

    Thanks all! It is interesting to read/hear comments.

  6. Alice Says:

    My own college payment situation was convoluted– my parents’ divorce agreement included college expenses as something they were supposed to split beyond what each kid could cover themselves. By the time I was applying to college, though, they’d spent 7 years going to court every other year over my dad not paying child support. We had to make a case for not including his income and assets in my financial aid applications. They didn’t accept the letters/documentation for the first two years, but did by the start of my third year. That third year was hugely different financially than the first two. I was able to cover myself fully on my own once they took him out of the equation.

    With my own kids, I plan to encourage them to cover what they can, but I’m also planning to pay pretty significantly. If there’s a big mismatch between the school’s expected parental contribution and the actual, it can be damaging to the kid’s education/finances and to the relationships between the kids/parents. It would be different if I legitimately couldn’t afford to cover a big percentage (most likely all), but if I can? Paying for college is in line with the kind of mom I want to be and the kind of setup for life I want my kids to have.

    • Jessica Says:

      I was going to bring this up – if parents can afford to pay for college and choose not to, the same school will be much more expensive than it would be for a student with lower expected parental contributions. That’s something to consider in this discussion.

      My college was covered through a mix of scholarships (tuition+some additional scholarships – I chose the school with better merit aid) and parents, and I did a combined undergrad-grad school program so that I wouldn’t have to pay for grad school. I am extremely grateful that my parents were able to give me that jump start to graduate without debt. I don’t think that I could have managed the workload of the combined undergrad-grad degree if I was also working part time (in fact, I quit my part-time engineering job shortly after grad classes started, because I was too busy/overwhelmed). So for me, the parental help actually allowed me to get the extra grad degree with no additional semesters/cost, which has helped increase my salary since then.

      Also, my friends that manage their post-grad finances the WORST are the ones with lots of college debt. Their higher amounts of debt make them feel like they will never get it paid off, so why bother scrimping / might as well just take on more debt. (I’m sure some of this was learned in childhood, while some of it seems to be based on financial stress).

      Families should do what’s best for them, and parents should certainly not put themselves in a precarious position to pay for kids’ college. But I don’t buy the argument that kids don’t learn to be responsible if parents pay for their school.

  7. omdg Says:

    My parents paid for my undergrad and living expenses. I worked for money and largely paid for my own expenses over the summers. They felt strongly that when I was in school I should be focusing on my studies, so that’s what I did. I plan to do the same for my daughter provided I can (which I currently anticipate being able to do).

    I found that my post-college employers did not care one little bit about my various random college jobs. It would have been better to have done something substantive like an internship or research job, but I didn’t know how to get one of those when I was an undergrad.

    I also did not find that I was bad with money or adulting when I graduated. I am sure not having loans helped me with this, but also I have always been incredibly risk averse and a compulsive saver. When my husband and I bought a house, we were the only people I know without parental $$ who put down 20% and who budgeted our house taking into consideration the amount of money we would have to pay for daycare once we had a kid. What was difficult for me was learning about paying for car insurance, car repairs, health insurance, saving enough for retirement, taxes, etc.. But, those are things that most of my friends who had jobs during college also had trouble wrapping their minds around also.

    • omdg Says:

      Forgot to add that bc I worked over the summer and made $, I was able to start my Roth IRA at age 18. Financial nerd here as well! My parents were financially savvy if not rich, which obviously was helpful in this.

  8. Chelsea Says:

    I grew up in Florida where, if you jumped through some hoops, you qualified for a 100% scholarship + book stipend to a Florida university. My grandparents had put money into Florida prepaid, which covered my room and board, so I was fortunate that I graduated without any debt and my parents didn’t have to foot any of the bill.

    I did work some small on-campus jobs for spending money during the year and did internships during the summers, but it didn’t add up to a substantial amount of money. In grad school, I had an assistantship that paid for my tuition and living expenses (I had student health insurance, which was cheap). DH did the same, and I’m always thankful we’re not still paying off college loans.

    We plan to do everything we can so that our kids are able to do the same. Bright Futures still exists (and hopefully will still exist in 10 more years!) and my husband’s college has a tuition benefit. We hope that one or the other will help significantly with college expenses. We also have 529s for each kid, but there are 3 of them, and there may be a point when they are all 3 in college at the same time, so we may have to take out some loans if we can’t cash flow the balance.

    • nicoleandmaggie Says:

      The nice thing about having multiple kids in college at the same time is that colleges take that into account with financial aid. By having ours 5 years apart we’re missing out on any chance of financial aid.

  9. Lisa Says:

    My parents would have paid for my college education, but I received a full-tuition scholarship that covered the bulk of the costs. They did pay for books and lab fees, etc. I lived at home. All of this was right in line with my dad’s philosophy that, while I was a student, my job was to study and do well. I never had a job of any kind until halfway through college when I started working in a lab. I suspect that they would also have contributed significantly to a graduate degree, but by then I was married and getting a PhD in science, so I had full tuition coverage plus a reasonable stipend. In the end, they generously donated some of the money they had saved for my college to my husband when he started medical school.

    DH’s family had the opposite approach – he was encouraged to join the National Guard to cover school through the GI bill and take classes at the community college because they were cheaper. I don’t think his parents contributed much to his education. I also think that these strategies to reduce the cost of college backfired. The CC courses didn’t prepare him so well for his transfer to the local university, so he ended up having to take a few things twice. The “meh” record he had then made it hard to get into medical school and he ended up doing a MS before starting. So in the end, it cost A LOT more for him than it would have if he had just started at the university and been able to focus a bit more on school. Obviously, everything worked out fine. But it would be nice not to have those MS loans on top of the med school loans.

    As parents, we fall into the first camp – we will pay for our kids’ college experiences as much as we possibly can. I think that getting a campus job for spending money can be a great idea, especially if it’s in a helpful field. But in my opinion, graduating should be their main job, so that they can get “real” jobs.

  10. Steph Says:

    My parents saved more than enough for me to go to an in-state public school, which is what my sibling did, and then they applied the remainder to medical school. I was lucky enough to get merit scholarships that made up the remainder of the costs for a SLAC. If that hadn’t happened I would have had unsubsidized loans. (Merit scholarships at my alma mater went away after that though, in the wake of the last recession.)

    I don’t think having to work towards your tuition increases your commitment to the degree – my observation is that it just makes students more stressed. I liked working 7-10 hours/week for fun money, but it was nice to work less during high-academic-stress semesters. Summer jobs are kind of a different story, but I would still prioritize a paid internship (I wish those weren’t generally lower pay than a regular summer job, though)

  11. kt Says:

    My parents had an awkward financial aid situation because my father owned a small business, and it counted against his income. They contributed to tuition, I covered all food and books, and I had loans. We had to have some tough talks on whether I could continue at Caltech or would have to withdraw. Managed to make it through, and I’m certainly grateful to them. I remember hand-delivering one tuition check to the bursar’s office.

    Working through college (during the school year and summers) was formative for me. I learned a lot from waitressing etc, and in particular formed ties with the other students who had to work such jobs to pay for school and the staff who were mainly immigrants, at least at one job. I also had my only celebrity encounter this way (lunch for Stephen Hawking). It was probably non-ideal that I was unable to ever afford to buy a computer, but it was also fine since I learned the art of dumpster-diving and the skills in computer repair and hard disk reformatting that have served me through life afterward. You really learn the command line when a main computer is a last-gen SparcStation broken so that you can’t use a mouse with it, and I learned many Linux skills because Linux is free as in beer. I also learned lessons in both empathy and practicality that served me well in teaching at the university level; I could not afford to buy new editions of all the textbooks (or buy them at all) and so I got good at working across editions, etc. Later, when constructing syllabi and homework, I was able to efficiently help students in similar situations.

    In retrospect, these are problems I could handle as a college student. I was not ever homeless (like some friends), I did not go hungry, I did not have to provide for family out of my small paychecks, and I actually didn’t graduate with that much debt. It felt like “just enough”.

  12. SP Says:

    I kind of love this topic, because there is not really a right answer (though there are probably some WRONG answers), and people have such different experiences.

    My parents paid about ~$1k total, but I went locally and lived at home for a small part of it, and they covered some adult expenses (medical, car insurance). I had scholarships and need grants and worked part time, and had some loans – ~$30k, not insignificant for the time. Still, I naturally was a saver and risk adverse, even as a kid. I don’t think it would have mattered much in my college or early post-grad experience if my expenses were paid by my parents. I was also financially naive enough to be unconcerned about taking out some student loans. After working a paid engineering internship, I quit doing other jobs during the school year because they paid much less than internships. That was a good call. My p/t work never stressed me out, school was always the priority and I do better well with some competing demands. I (not unintentionally) pursued a stable & lower risk career path that would make decent money right away. My only experience with people whose parents paid fully for top tier educations for them was when I did study abroad, and it was enlightening. My friends from that time weren’t less responsible with money than I was – they simply had access to more money. They sometimes had to ask their parents for permission (for money) to do certain trips or activities, where I just did what I wanted without any parent input. (But parents generally said yes because they were reasonable requests.) I distinctly recall some college internship friends (including my husband!) talking about how cool Roth IRAs were, but the fact that I missed out on $2-3k/year savings during college really doesn’t seem to have had a profound affect on my finances (Disclaimer, I have access to a megabackdoor roth right now, so easy to make up for that.)

    My spouse was similar, except he had way more scholarships, more savings from working super hard at (relatively) low paying high school jobs, and thus no loans, and also was less risk adverse in some ways. (I think being willing to pursue grad school in hopes of landing an ok tenure track job, versus taking a decent paying job out of undergrad, takes a certain acceptance of risk or belief in oneself that I did not have.)

    I am leaning towards paying for my (one) kid’s expenses in full, unless she gives me a reason to think she is taking it for granted or not taking it seriously. I wouldn’t expect that if she turns out to have values similar to either parent, but who knows?

  13. Matthew D Healy Says:

    My parents paid most of my undergrad; I worked on campus 15 hours a week. I also worked summers as a camp counselor at the camp where I had gone as a kid, but that paid very little. The fact that my parents could afford most of the cost (at a public flagship) was what enabled me to spend summers in the Northwoods instead of staying at home and working retail or whatever in summers.

    I had zero debt when I finished my BS.

    In grad school DW and I ended up with some debt because fellowships ran out before we finished; we deferred the debt during Postdoc years and paid it off pretty quickly once both of us were in real jobs.

    • Matthew D Healy Says:

      DW and I have no kids, so we’re putting as much as the IRS allows into 529 plans for my niece and nephew (he’s in his second year at a public flagship; she’s still in high school). My mom is also contributing to the 529s. And of course my brother and SIL are paying what they can. Niece and nephew will both run up some debts, I dunno exactly how much.

  14. First Gen American Says:

    One more thought on this. I had a friend who’s dad attached a lot of strings to paying for his education. He did not want to be an engineer, but his dad only would pay if he was an engineering major. He lasted 3 years and hated it so much that he quit. This set him back for many years.

    I tell my kids that they can major in whatever they want, but they have to be okay with the lifestyle the corresponding salary provides. I don’t care if they are rich or poor. They need to be at peace with having to rough it for a while if they don’t pick the most lucrative of professions.

  15. xykademiqz Says:

    We paid the eldest’s college expenses in full. He worked at Subway in high school, also worked at a dining hall freshman and sophomore year of college, then started making a little money as a lab assistant the last two years. This was all for his pocket money and some savings. He’s always been frugal, and we have shared with him what little money-savviness we have. He was able to focus on his studies and not be too stressed, got a great GPA, and is in grad school now. Our plans are to pay for college for all our kids. We planned for it, we can afford it, and we would feel bad knowing we could’ve helped them not take on any debt but didn’t. As for learning the skills regarding money management and such, I didn’t live in this county till I was in my mid-twenties. I didn’t known anything about credit cards or any financial instruments, absolutely zero clue about how things worked in this country (financially and otherwise), so I had to learn how to live here completely from scratch, and I did. So I am not too worried about the kids acquiring specific skills; my attitude is that people can pick up whatever they need when they need to, and we are here to help.

  16. Turia Says:

    Q. and I are very much of the ‘kids should graduate from undergrad with no debt’ mentality. Neither of us incurred any debt despite having six degrees between us. Q. lived at home during his undergrad and had parental support, and I had some minor parental support, worked in the summers, worked during the year (never more than 10 hours per week), had scholarships, and lived very frugally. Neither of us went through the US, so our experiences (and our costs) were quite different. I could pay for my tuition with a good summer job (not the case these days in Ontario). Scholarships with TAships paid for graduate school.

    Graduating debt-free x 2 was the single biggest financial advantage we had over our peers and is largely why we have our family, because we could afford to spend $30k in fertility treatments.

    We max their RESPs out every year (Canadian system where the government matches contributions by 20% up to a certain amount each year), and plan to add to this as necessary to cover basic living expenses, books, etc. We also think they shouldn’t do a graduate degree if they’re going to incur debt (unless it’s for a professional degree and they have a clear career path).

    We teach at an institution where the students all have to work full-time jobs to afford to go to school, while also taking out loans, and it’s a disaster. They drop courses when it’s too late to get the tuition refunded, because it turns out they can’t balance school and work like they thought they could, but the loan they took out to pay for that tuition stays with them. We don’t want our kids trapped in that cycle. And we also don’t want them to feel that they ‘have’ to choose a particular degree because of the potential earning power/debt repayment options. If they want to go the humanities route, as we both did, we want them to be able to do that without the stress of the climbing debt load.

    Our kids will be hugely privileged, we know that. And if they’re failing all their classes we might have a talk about whether we’re going to continue to foot the bill or whether they need to take some time off to rethink what they want to do. But I never want to say to my kids, like my father said to me, “I think it’s good for you to struggle”. The world they’re going to enter as adults in no way resembles the world that I experienced. We don’t want the debt albatross around their necks.

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