Sharing college costs with children

[jazzcat73]

I have two high school age kids. Both are strong students with a reasonable shot at top schools. We will not qualify for any need based aid. We could afford to put the through school from employment cash flow and/or savings in taxable. However, I want to create an incentive for them to take the cost of education seriously, including considering the excellent in-state schools where we live and applying for merit based and other scholarships.

I would like to hear about your successful strategies for getting the kids to care about the costs of college. Thank you wise Bogleheads!

[TomatoTomahto]

The old "skin in the game" debate will now commence.

[Jack FFR1846]

Stafford loans. They are 100% the student's responsibility. The parent has zero responsibility and nothing to do with the application, even.

[Arabesque]

Skin in the game?? This argument always seems odd to me.

If you’ve raised your children to be responsible 18 year olds, then they know that college cost a lot of money, and their job is to do well. I paid for both of my children’s higher education, and they perform to the best of their abilities. I was very proud when the younger paid her housing deposit and didn’t tell me. She said it was just $500, not a small sum to her, earning $20/hour, but she knew it was a small part of her annual college cost.

Don’t worry. They will know. They will see some classmates, going deeply into debt to pay their own tuition. They will want extra money for clothes and entertainment, travel and opportunities. My children were always willing to work summers.

Trust your children and your parenting abilities.

[runner3081]

We are planning the following:
100% Paid books/tuition for 2-years of Community College, living at home.
100% Paid books/tuition for in-state University, living at home.

Anything else? They are responsible for it (i.e., room and board if they want 4-years away).

[KlangFool]

OP,

Why play game? Just tell the kids that how much that you are willing to pay and they have to come up the rest. If you are not willing to pay the full price, do not insist that they go to a more expensive college.

Please do not end up like one of the parents that did the followings:

A) Sponsored the kid to go to the expensive school.

B) Then, was laid off while the kid in college.

C) Insist that the kid take a loan to finish the college. Meanwhile, the kid could finish the college at the cheaper alternative loan free,

KlangFool

[KlangFool]

I have two high school age kids. Both are strong students with a reasonable shot at top schools. We will not qualify for any need based aid. We could afford to put the through school from employment cash flow and/or savings in taxable.

jazzcat73,

What happened if you are unemployed while your kids are going through college? Then, how much can you afford to pay? Can you afford to pay?

I was unemployed for more than 1 year while my son starting college. My daughter started college the following year.

KlangFool

[Grt2bOutdoors]

I have two high school age kids. Both are strong students with a reasonable shot at top schools. We will not qualify for any need based aid. We could afford to put the through school from employment cash flow and/or savings in taxable. However, I want to create an incentive for them to take the cost of education seriously, including considering the excellent in-state schools where we live and applying for merit based and other scholarships.

I would like to hear about your successful strategies for getting the kids to care about the costs of college. Thank you wise Bogleheads!

Let me offer this: You have 2 high school age kids who have put (I'm assuming here because few kids have photographic memory) "considerable effort" in their academic years thus far to establish a strong work ethic and dedication in achieving those strong study and test taking skills. With that in mind, you should then assume that they would prefer hearing about your desire for them to consider the best fit for their future academic accomplishments and career trajectory.

Have a conversation with each of them in a relaxed setting and tell them what you can and can not afford. But this idea of using a potential "stick" as an incentive is misguided in my opinion. Just tell them now, I can only afford X, if you want to attend Z you will have to take substantial loans which you have to co-sign most likely, outside of Stafford loans or if the schools will offer merit that defrays the cost to a more meaningful equivalent to a state school which is in our budget.

Have you OP asked them what career track they were hoping to pursue? Have you done your research on which of those excellent state school settings is most conducive to your children reaching their goals? Have you visited the campuses with your children?

[livesoft]

Why not ask your kids what would make them take the cost of education seriously? Ask them what is happening to their friends, too.

[Cobra Commander]

Just my two cents but having them be responsible for their fun money will be far more meaningful and at an age appropriate level that they will understand. I think you can otherwise have discussions with them about costs and whether the more expensive schools do or don't deliver appropriate value.

Guess I'm closer to being in college than kids going to college but that's what I did plus I covered a lot of my tuition from the GI Bill.

[riverant]

My parents had me take stafford loans each year to have “skin in the game.” Throughout college, I never once thought of these loans nor had them in anyway affect my academic performance. Upon graduation, they were just an annoyance.

If a kid wouldn’t otherwise take school seriously, a small loan that they don’t have to worry about until they graduate is not going to make a difference.

My plan is to pay 100% of college costs and I will instill the expectation that their job is to do well. Similarly, I won’t have them work minimum wage in high school to teach “work ethic”. They will demonstrate work ethic in many ways without receiving a paycheck, particularly a tiny one.

[KESP]

Skin in the game?? This argument always seems odd to me.

If you’ve raised your children to be responsible 18 year olds, then they know that college cost a lot of money, and their job is to do well. I paid for both of my children’s higher education, and they perform to the best of their abilities. I was very proud when the younger paid her housing deposit and didn’t tell me. She said it was just $500, not a small sum to her, earning $20/hour, but she knew it was a small part of her annual college cost.

Don’t worry. They will know. They will see some classmates, going deeply into debt to pay their own tuition. They will want extra money for clothes and entertainment, travel and opportunities. My children were always willing to work summers.

Trust your children and your parenting abilities.

+1. We paid for both of our daughters’ in state college expenses. They both received some scholarships, which helped quite a bit. As I’ve mentioned in other posts, they both graduated with honors, got jobs the summer after graduation and moved out. I had no doubt that they were going to work hard in school. Both have thanked us 1 million times over the past almost 10 years because they have friends that are still paying off college loans. It affects every aspect of their life, so we were very happy to have them launch on more solid ground. We don’t regret it at all.

[invest4]

What we have offered our 4 children:

* Community college for 2 years


* State university for the remainder


* All while living at home


People have different ideas about what is an acceptable education.

That is what we are willing to fund and was acceptable to us. If someone wants to live on campus or do something else, that is up to them.


Best wishes.

[Doctor Rhythm]

My take is that the default choice is to give them a free ride (assuming the cost is not an issue for you). The benefits of being debt-free when finishing school are substantial and certain, whereas the benefit of being required to pay your way are debatably hypothetical at best. Like others said, you should know your children and whether imposing a debt burden will be helpful or just a burden.

N = 1, but I take education far more seriously and studied much harder than most. I never paid a cent for it (current cost would be $400K).

[Jags4186]

My parents didn’t care about the cost of college, they cared about not supporting me after college. I would recommend you let your kids know that the money from mom and dad stops after graduation—and that support for education expenses stops after 4 years of undergrad.

[RudyS]

Ours did well academically in high school, and got into a top-notch state university. They worked hard at their studies, and I was proud, and lucky, to be able to cash-flow their tuition and room & board (many years ago). So, I didn't need to establish a cost-sharing procedure. This all depends on the individuals involved.

[neilpilot]

Many years ago, our daughter had to choose between:

#1: a quality in-state U that would cost relatively little due to in state tuition, a state scholarship and an academic scholarship.

#2: a quality state U that was 2 states over. #2 would cost 2-3x as much as #1 due to out-of-state tuition and no scholarship offer.

She agreed that #1 was as strong, or stronger, academically in her field of study. However, she really wanted to go to #2 since "so many of the other graduating seniors she knew were going to #1, and she wanted to break out of the pack.

I said we would pay the entire cost of 4 years at #1. If she decided to go to #2 instead, we would pay 50% of the increased cost over #1. She would need to take student loans for the other 50% (maybe $40k).

She chose #1 and it worked out fine.

[IowaFarmBoy]

We told our daughters that we would cover the cost of an in-state public university but that they were on their own for spending money, books, etc. This eliminated a lot of the nickel and dime requests. We also told them that if they received scholarships we would give them the equivalent of that money when they graduated. They have been out for 10-15 years now.

It worked out pretty well. Both landed significant scholarship money. One went to a less expensive school and we put some money into a Roth for her. The other chose to go to an out-of-state public university so we didn't have money left over did come out debt free. They both were in STEM fields and had well paying summer internships so each graduated with enough cash to easily cover start-up costs like deposits, relocation and have a small emergency cushion.

[Broken Man 1999]

My take is that the default choice is to give them a free ride (assuming the cost is not an issue for you). The benefits of being debt-free when finishing school are substantial and certain, whereas the benefit of being required to pay your way are debatably hypothetical at best. Like others said, you should know your children and whether imposing a debt burden will be helpful or just a burden.

N = 1, but I take education far more seriously and studied much harder than most. I never paid a cent for it (current cost would be $400K).

After around 18 years one would think parents would know their children well enough to judge their likely trajectory in college.

Some calling for community college and state universities while living at home just might be forcing a square peg into a round hole. The programs offered at various colleges and universities are not the same quality in all subjects, indeed not all universities even offer studies in every discipline. Some have excellent programs in discipline A, but mediocre programs in discipline B and C. You might graduate with the same degree, but suffer if your degree is from a college with weaker programs. I wouldn't start with the college already determined and try make the student fit. I can't see how that is the best route for the student, even though the cost might be lower.

Personally I think the best approach is to find the best opportunities for the desired field of study and then attempt to find the best fit from the identified programs for the student. And, "best fit" certainly could have a financial consideration.

I was an adult student and paid virtually nothing for my undergraduate and graduate degree as MegaCorp had a generous tuition benefit.

One of my daughters had the full college experience, sorority, trip to Europe. The other sometimes expresses her regrets she didn't have that experience, though she could have if she had wanted it.

Broken Man 1999

[greg24]

The next generation in my extended family was lucky enough to all have parents covering their college. They all seemed to take the cost of education seriously, and worked hard to win scholarships and keep costs low. And worked jobs during the school year and over Summers.

[DarthSage]

We pay for our DD19 to live on campus, even though we live very close. We wanted her to have the full experience--plus, she got a small scholarship to live there. She would have missed out on a lot if she lived at home, and college isn't just about academics, IMO.

Beyond that, we pay all costs except for books and incidentals. She has a part-time job--pulled down $15k last year, while making dean's list, so this isn't a problem.

As far as going the community college route--it's fine for some people and majors, for sure, but you really have to look holistically. Our youngest is doing dual enrollment (HS and college). The community college would have been free, but instead, he's going to the local branch of State U. (same one as his sister, and his autistic older brother, who commutes part time). We chose State U because (a) the community college has set programs, such as nursing---you have to take the exact classes they dictate (again, fine for some...); and (b) he wants to be a chemical engineer. Neither school has a chemical engineering program, but we felt the State U would have more rigorous calculus and chemistry classes, which will help him when he goes away to college next year. He'll also do some fun electives at the college next year--geography and Conversational French are two he's mentioned.

[stoptothink]

I have two high school age kids. Both are strong students with a reasonable shot at top schools. We will not qualify for any need based aid. We could afford to put the through school from employment cash flow and/or savings in taxable. However, I want to create an incentive for them to take the cost of education seriously, including considering the excellent in-state schools where we live and applying for merit based and other scholarships.

I would like to hear about your successful strategies for getting the kids to care about the costs of college. Thank you wise Bogleheads!

"However, I want to create an incentive for them to take the cost of education seriously, including considering the excellent in-state schools where we live and applying for merit based and other scholarships."

Seems as if many did not read your post past the statement that you could afford to send them anywhere but want them to seriously consider costs. That sentiment tends to get a quick response from the "college experience" posters. From what I read, this doesn't sound like a "skin in the game" question at all.

We'll likely be in a similar position and what we have decided to do is simply tell them "X is how much we have saved for your school" (they are 11 and 7 now, what they have in 529s currently covers 4yrs at local public). We will support their decision to go wherever they want, but that is what we are willing to offer in financial help and they'll have to figure the rest out if they want to go somewhere that will cost more. We will leave it open for them to make a serious argument that we should offer more, based on ROI (so, we are definitely listening if they get into HYPMS). Sure they may have to work or take on debt to get something that they want, but that is 100% their choice because the default option is free (to them); that's not "skin in the game", that's teaching fundamentals of financial responsibility.

We have 8-10yrs before these discussion occur, so I'll report back then.

IMO, offering to pay more without a rational explanation as to how one institution is better than another is just setting a bad precedent for them moving forward as adults- even if you can afford it. We'll pay to get them an objectively better education, stronger peer group, and future opportunities, not to get them what they think will be a better "college experience" (whatever that means).

[Nowizard]

Our approach involved incentive based on a choice, at least to some extent, of how much skin the child chose. We said we would cover any amount they received from scholarships and put that amount in an account for them. If they got a full ride, we would cover it, or we would cover whatever they received. That resulted in differing amounts for our two children, and we started it in Junior High, so they had a significant amount of time to make choices. We extended this through graduate school eventually, an MBA for one, a Ph.D. for the other, so it worked in our case and gave them a start with little or no loans.

Tim

[MrNarwhal]

I have two high school age kids. Both are strong students with a reasonable shot at top schools. We will not qualify for any need based aid. We could afford to put the through school from employment cash flow and/or savings in taxable. However, I want to create an incentive for them to take the cost of education seriously, including considering the excellent in-state schools where we live and applying for merit based and other scholarships.

I would like to hear about your successful strategies for getting the kids to care about the costs of college. Thank you wise Bogleheads!

The stick approach would be to require them to take out loans to cover (at least some of) the cost difference if they choose the more expensive option.

The carrot approach would be to offer them (at least some of) the cost difference in cash (either now or later) if they choose the less expensive option.

My parents sort of did the latter. I was left some money by my grandparents and it was understood that the money would be used to fund my education, with additional support from my parents if needed. I've always been cheap and ended up choosing a state flagship (in a different state) with full tuition academic scholarship. I think my parents were somewhat disappointed that I didn't choose a highly selective private school, but thanks to steady reinvestment and the bull market of 2009-2020 the funds I inherited are now allowing me to purchase my first house with cash, and quite possibly go through my entire life debt free.

[cockersx3]

We are in the same boat as the OP, and did a few things for both our kids:

• We gave them a maximum amount of money we'd be willing to spend each year on college, equivalent to the "all in" cost of our in-state flagship college. We also said we would not co-sign loans, and that any costs above that would be on them.
• We told them that we would pay for a maximum of 8 semesters, and that anything beyond that was on them.
• We told them that we would pay for books and school supplies, but they are responsible for all other entertainment / misc expenses other than room and board (which we pay).
• We told them that they would be required to take on the maximum Stafford loan amount each year. Assuming they made it through in 4 years, they'd be looking at a loan payment equivalent to a car payment - not bad for 4 years of school, and a significantly better deal than what their friends' parents were offering.
• We told them that, if they achieve a 3.5 GPA in any semester, we would pay off that semester's loans upon graduation.
• We reminded them that maintaining a high GPA and preparing well for SAT's will increase the amount of merit aid they can get for college, so it was in their best interest to continue to do well there.

So far it's worked out well. Both of our kids have focused their college searches on schools known to have good merit aid, as they figured out very quickly that some schools would be financially out of reach thanks to our budget and "no co signing loans" requirements.

Oldest ended up doing well on SAT's, and got great merit aid at a school that was a fantastic fit for her. I will say that her all-in cost per year was about $5K more per year than our budget, yet my wife and I decided that the school was a good enough fit for her to pay the extra cost. The "pay off the loan for GPA >3.5" requirement has definitely been helpful - so far has made it so that we are paying about half of the student loans she has taken out. She actually thinks we are crazy for offering this kind of deal, but we feel like it's absolutely worth it. She also loaded up on "dual enrollment" credits at our local community college, and thanks to that she's on track to get both a BS and MS in her major in 4 years. She will need to take a graduate class over the summer to make this work, which my wife and I are considering paying for as well.

Youngest is looking at schools now - some "reaches" that would only be achievable with significant merit aid (and we've been very, very clear about this), and others that she knows she can afford right now with her GPA/SAT scores thanks to "auto merit" at some schools. In fact, one of the schools she is seriously looking at would be about half our budget, so we've started talking to her about giving her some of that savings as spending money if she decided to go there. She has also been studying very hard for those SAT's, and has two scores so far that are pretty good. Also is working to keep her 4.0 unweighted GPA as she knows that this will help for merit aid. So we'll see, but so far so good.

Overall I think the message is that we set out specific rules and communicated them clearly and repeatedly throughout the process, but still maintained some flexibility at the margins for things we didn't plan for going in. I think that communicates seriousness on our part with how important we think college is, while also ensuring our kids know it's a community effort for which they still need to do her part. For what it's worth, our kids did not have any "rich friends" in high school, so when they (inevitably) compared our approach to those of their friends they saw quickly that it's still a great deal.

[aristotelian]

"However, I want to create an incentive for them to take the cost of education seriously, including considering the excellent in-state schools where we live and applying for merit based and other scholarships."

Seems as if many did not read your post past the statement that you could afford to send them anywhere but want them to seriously consider costs. That sentiment tends to get a quick response from the "college experience" posters. From what I read, this doesn't sound like a "skin in the game" question at all.

We'll likely be in a similar position and what we have decided to do is simply tell them "X is how much we have saved for your school" (they are 11 and 7 now, what they have in 529s currently covers 4yrs at local public). We will support their decision to go wherever they want, but that is what we are willing to offer in financial help and they'll have to figure the rest out if they want to go somewhere that will cost more. We will leave it open for them to make a serious argument that we should offer more, based on ROI (so, we are definitely listening if they get into HYPMS). Sure they may have to work or take on debt to get something that they want, but that is 100% their choice because the default option is free (to them); that's not "skin in the game", that's teaching fundamentals of financial responsibility.

We have 8-10yrs before these discussion occur, so I'll report back then.

IMO, offering to pay more without a rational explanation as to how one institution is better than another is just setting a bad precedent for them moving forward as adults- even if you can afford it. We'll pay to get them an objectively better education, stronger peer group, and future opportunities, not to get them what they think will be a better "college experience" (whatever that means).

Of all the responses I really like this approach. We are in a fortunate position that a windfall will be taking care of our kids' education but if it weren't for that I think we would be doing something like you are describing. I have no problem supporting their education as long as they are good kids and I don't feel they are taking advantage of my generosity. If they want the expensive party school and don't have a good reason, then they get to pay the difference.

[DebiT]

My husband and I were first in our immediate families to finish college, and for me, grad school. He took many years to graduate, I was fortunate that state college and grad school was still very affordable (BA 1980). We got a late start on college savings, but I still managed to put away enough for 4 years of sleep away state school in California, and so they knew this was my budget. Our strong advice was to do college this way, and not get loans, but it was up to them.

They chose state schools. Additionally, having heard lots of stories from therapy clients about their kids being perpetual students, I told them I was budgeted for 4 years, no more, and if they took longer they would have to take loans. Results? Two graduates of California state schools, in 2007 and 2009, with no loans (for which they expressed gratitude for years). Two homeowners now in mid to late 30’s, with very successful careers . One was criminal justice who became a police officer, one was a business major who soon started his own company and is incredibly successful. (Interestingly, that one had way too much fun in college, while earning mostly A’s. He expressed some interest in pursuing an MBA at 22,with no real sense of why. When I said sure, why not, but of course you’ll need to get loans, he decided maybe it wasn’t necessary for him at all. Appears to have been right.)

My point? Skin in the game isn’t only about money, and avoidance of debt early on in life sure helps for home ownership. I am very proud of them, and more importantly, they are very proud of themselves, and rightfully so.

[edmundspenser]

I never figured out how to create an incentive. As it happened, I cared more about my kids going to a SLAC than they did! Luckily, my children grew up in an area where "dream colleges" were not an issue for competitive students and competitive parents. We were lucky--and you can't count on this, of course--in that both children were National Merit finalists. They chose not to attend the SLACS that gave them decent merit aid and went to state universities that gave them "free rides" (loathe that term.) As a result, my 529 savings are untouched, and thanks to the SECURE Act, the 529 money will fund their Roths for a while.

I suppose a good incentive would be to tell kids that you can/will spend X and they can have any overage for a house or whatever.

I saved a lot because I have seen what education loans can do--the colleges are not your friends in this.

I would also be wary of low cost state schools. My kids were lucky because they qualified for special programs--one had an outstanding experience; the other had an OK experience. They went to flagships.

I teach at a low end state school. I would never have let my kids attend! The students are not hardworking enough (some do very well indeed--get into med school etc, but that is not the norm). The teachers are overworked, have not had raises in many years--morale is low.

[sailaway]

We are planning the following:
100% Paid books/tuition for 2-years of Community College, living at home.
100% Paid books/tuition for in-state University, living at home.

Anything else? They are responsible for it (i.e., room and board if they want 4-years away).

If your kids have something specific they want to study, make sure you understand any difference in getting into that program as an incoming student vs a transfer. It is generally easier to get into a school as a transfer, but some programs are easier to get into as a first year.

One way to split the difference is to use CLEP, AP or dual enrollment, or even the local community college to get credits while still in high school. Then you have enough credits to graduate in 2-3 years, depending on major requirements, but still have the advantages of a new student just because you are coming out of high school (more merit aid available, honors programs, some majors, etc.).

[fourwheelcycle]

My father always told me he would pay the full cost for tuition, room, and board at whatever college I could get into and wanted to attend. He said I would have to work summers, and at school as necessary, to pay for my books and all personal expenses during college. I ended up going to a top private college, and I remember working to unload the dining hall dishwashing machine as one of my student jobs.

[ncbill]

I have two high school age kids. Both are strong students with a reasonable shot at top schools. We will not qualify for any need based aid. We could afford to put the through school from employment cash flow and/or savings in taxable. However, I want to create an incentive for them to take the cost of education seriously, including considering the excellent in-state schools where we live and applying for merit based and other scholarships.

I would like to hear about your successful strategies for getting the kids to care about the costs of college. Thank you wise Bogleheads!

All scholarships?

My kids paid for undergraduate via the U.S. military, primarily ROTC scholarships.

I cash-flowed room & board & anything else not covered by their annual book & monthly stipend.

That doesn't include the grant most schools give ROTC scholarship recipients, regardless of need.

Which is designed to cover part (usually ~1/2) of room & board, though some schools cover it all.

One kid re-applied & moved on to a service academy after their first year, saving me paying even room & board.

So I told the kids to say they paid for their college education.

[NiceUnparticularMan]

I suppose I am not clear on exactly what outcome you are trying to achieve. Do you want all the options considered, or do you want to try to channel the decision to a specific choice?

I note we also want our HS junior to apply to our top in-state university, and specifically by the deadline to be considered for merit scholarships. In the event he was admitted to that university, possibly with a merit scholarship, and also other colleges, we'd want him to give serious consideration to all those options before making a final decision. And to that end, we have been having open conversations on our thoughts about college, different education paths and their pros and cons, and so on. In the end we have promised that if he does his best in school it will be his choice, and we will not require him to work during school or take out loans and such. But we trust him to make his choice for good reasons, which we plan to have an ongoing discussion about.

So does he need more incentives to take all this seriously? I don't think so. I suppose in theory he could think if he saved the family money by taking the state university (maybe merit scholarship) route, it would be unfair if he did not personally and directly get that financial benefit. So if he feels that way we can discuss options. But as of now I am not sure it will be necessary because I don't know if he will think that way in the first place.

By the way, one of us went to a top-ranked university, once of us went to a state university, and we both ended up successful--in fact in financial terms, the more successful one went to the state university. There is no big mystery as to how--the one who went to the state u. then went to a highly regarded business school and had a successful career in business, the one who went to a top-ranked university went to a top-ranked humanities grad program for many years before finally deciding to go to law school instead, and the business career easily outearned the combined humanities/law career.

So we are living proof that any concept of a generally higher "ROI" as applied to college rankings, even as to the top colleges, is highly dubious if that is being defined by things like career earnings. And our son knows all this, we have discussed it frequently. On the other hand, maybe he will disagree with us in the end and see a potential financial benefit to his choice that we are dubious about. We shall see.

[KRP]

I have two high school age kids. Both are strong students with a reasonable shot at top schools. We will not qualify for any need based aid. We could afford to put the through school from employment cash flow and/or savings in taxable. However, I want to create an incentive for them to take the cost of education seriously, including considering the excellent in-state schools where we live and applying for merit based and other scholarships.

I would like to hear about your successful strategies for getting the kids to care about the costs of college. Thank you wise Bogleheads!

Let me offer this: You have 2 high school age kids who have put (I'm assuming here because few kids have photographic memory) "considerable effort" in their academic years thus far to establish a strong work ethic and dedication in achieving those strong study and test taking skills. With that in mind, you should then assume that they would prefer hearing about your desire for them to consider the best fit for their future academic accomplishments and career trajectory.

Have a conversation with each of them in a relaxed setting and tell them what you can and can not afford. But this idea of using a potential "stick" as an incentive is misguided in my opinion. Just tell them now, I can only afford X, if you want to attend Z you will have to take substantial loans which you have to co-sign most likely, outside of Stafford loans or if the schools will offer merit that defrays the cost to a more meaningful equivalent to a state school which is in our budget.

Have you OP asked them what career track they were hoping to pursue? Have you done your research on which of those excellent state school settings is most conducive to your children reaching their goals? Have you visited the campuses with your children?

This made me stop and think...I'm not sure I would ever steer a kid into debt instruments, given that makes it easier for a youngster to potentially misjudge and overpay for a given undergrad degree, and potentially generate future anger at their parents. Most college age kids aren't in a position to fully understand the implications of debt. But I agree that the kid needs to have direct exposure to the costs in some form.

Responding to the OP:

Our kid is operating on a sliding scale:
GPA >= 3.5 (any major they choose) means they pay 1/4 of all costs, with their cost rising to 1/2 of all costs when approaching academic probation GPA. Kid ended up choosing a school where 1/4 of costs were within reach via a minimum wage summer-only job, so focus could be on GPA during the school year. About halfway through now, kid's participation in school activities is good and the kid has been on dean's honor roll each term so far (insert favorite rite here). But this kid has never been trouble, and as all parents know, you get whatever kind of kid you get, and you work forward from that starting point as best you can. Good luck OP!

[Pdxnative]

We spent a good deal of time talking with our kids about different college options and what would fit them best. We didn’t put selective schools on a pedestal but were honest about how they might differ from the flagship. However, we made it clear that the state flagship offered a solid education and one could do a lot worse at many privates and out of state publics. In both cases we talked about what sorts of experiences they might have in and out of the classroom with peers, faculty, speakers, academic events, social options, academic rigor, etc. We talked about what fields might interest them and how different schools might help them develop academically and professionally.

Our approach on the financial side was to communicate that we had budgeted for the state flagship but we’d work with them as they came to better understand what would best fit. They knew that more expensive meant opportunity cost for all of us. Because of the earlier conversations they had a pretty good sense of the value of different schools and knew what it meant to have the options they did. So, when they ended up at very selective schools it was something we all felt was the right choice and they really didn’t need any set of financial incentives to appreciate it.

Everyone is different so I wouldn’t presume to tell you how to parent. But a few cautions as you’re thinking this through:

—you say you have strong state schools. That’s great. I’d consider when thinking about this how you’ll feel if the financial incentives drive your bright kid to a less strong out of state public (or a private) because it’s cheaper. Personally, if I lived in Michigan and my academically oriented kid could go to, say, Utah State for a lower cost than U Michigan I’d have reservations about that. So think about that side of it too.

—I see community college mentioned here fairly frequently. That can be a good option for the right student. But I’d make sure to look at your own kids and their current pathways when assessing whether you should base a budget on this path. The more advanced HS students these days are pretty accelerated and in most cases are well beyond what a CC can offer (in math, English, history, language, etc.).

It’s great that you’re trying to provide some clarity about your thinking, and the likely budget, to your kids. To me, that’s the most important thing.

[Dregob]

We are planning the following:
100% Paid books/tuition for 2-years of Community College, living at home.
100% Paid books/tuition for in-state University, living at home.

Anything else? They are responsible for it (i.e., room and board if they want 4-years away).

We happily paid for an empty nest. Yes, the kids did well. Bad grades would have changed our generosity.

[Wannaretireearly]

I want to pay for all reasonable costs. I’ve probably saved for 50% in 529’s. I hope kids get into cost effective UC’s.

If out of CA, kids will have to contribute significantly. Loans etc.

This is unfortunately, a cost/frugal decision and discussion. I see no reason not to include my kids with the discussion, including financial impact. The only question I have is when to have these kinds of financial discussions? My eldest is a HS freshman & is beginning to understand how hard he will need to work to get to any in state UC..

[gips]

our kid’s sat tutor was 2x the cost of a kaplan class but he was able to determine what the kids needed to work on and built a rapport with each kid. the extra money for the tutor had something like a 20x return in merit scholarships plus they all became better writers for life. great roi.

we told our kids we’d pay for any school but it had to be demonstrably better than our state school. they were all admitted to top schools, we forbid them from working as freshmen to make sure they focused on gpa. they all had summer jobs/internships and without us asking, they all worked pt jobs soph-senior years.

good grades, paid for their own books and incidentals, worked pt, that was enough skin in the game for us and post-graduation they all found great jobs. and i’ll add they all have liberal arts degrees.

finally, i’ll share what my business partner told me which i took to heart: “send your kids to the best college you can afford”. the key is that each person has to figure out what they can afford.

[SmileyFace]

finally, i’ll share what my business partner told me which i took to heart: “send your kids to the best college you can afford”. the key is that each person has to figure out what they can afford.

My Father-in-law made this quoted remark to me and I simply said "but that college doesn't provide the additional $150,000 in value it would cost me for a simple 4 year degree" and his eyes went wide as he had no idea what the big price tags had become.

OP: I raised my kids understanding both the value of money and value of an education. That was the only strategy I needed. I didn't need to pay them for grades nor force them into debt to go to college nor force them to work multiple jobs thru college to pay for it. (They got jobs but on their own to have extra spending money).

[London]

I went to college for free because my mom was a librarian there. I drank every beer in close proximity over four years. If I had to pay for it, I would have done the exact same thing.

If you want your kid to share in the cost; go ahead. But I don’t think the outcomes are any different.

[Jack FFR1846]

What we have offered our 4 children:

* Community college for 2 years


* State university for the remainder


* All while living at home


People have different ideas about what is an acceptable education.

That is what we are willing to fund and was acceptable to us. If someone wants to live on campus or do something else, that is up to them.


Best wishes.

This is theoretically the cheapest way. I did this myself but initially was not planning a 4 year degree. The problem that can occur is that where you think this would be a 4 year total time, it might very well be 6 years. Why? Every 4 year college and every major within the college has their own plan on what is accepted as an equal course from the community college. Of my own 2 year associates, ONE English course transferred. One. Not one year, one course. So indeed, I had to take the entire 4 year curriculum minus one English course.

My younger son was considering going 2 years to community college, then transferring to the nearby state college. I looked into this and found that a lot of information was online at the 4 year college. The community college actually has a department for students who want to transfer. What I found was that going to the major at the state college, they would spell out exactly what courses are transferrable and they are not all used for the associates degree, by far. So even in a system meant to go to community college and slide into state, at least in the majors my son was interested in, either he would need to take courses that would not add up to an associates or lose credits moving over.

Courses are NOT equal from one college to another. For myself, my Physics course in community college were not calculus based. I actually thought I'd still be able to shoe right into Physics 2 in the 4 year. I attended the first class and was completely lost. I ended up taking Physics 1 and 2 in the 4 year school. Calculus is different between even 4 year schools. My older son transferred from a mediocre college where he attended the first year. Once transferred into the excellent engineering college, although his math all transferred, he looked carefully at the new college math and found that nearly half wasn't covered by the other school. He ended up re-taking for no credit because there was so much not covered and of course, math doesn't stop with one year in an engineering degree.

So my advice from a financial position is either to know absolutely that courses will transfer and will be equal or simply start at the college where you plan to finish. In my own case, I did my Freshman year, bringing in my community college background and a number of night classes at the same college. I transferred to an excellent engineering college after my Freshman year and spent 4 years there. Part of this, however was that I ran out of money and went on an 8 month co-op to earn. I took a couple courses during co-op and also took summer courses so my time in college was very unusual.

[randomguy]

finally, i’ll share what my business partner told me which i took to heart: “send your kids to the best college you can afford”. the key is that each person has to figure out what they can afford.

Defining best is equally as hard. Your best might be my worst......

In the end we all end up projecting our life experiences and biases. It is easy to write down the cheapest path. Is it the best? Who knows. It is hard to compare the social growth of some kids who get together with friends, figure out how to rent an apartment, feed themselves, and so on to the kids who stay at home and have parents who cover that stuff. How many CC fail to make the jump to the 4 year school because it is one more thing. How many of those 4 year degrees are hard because of sequencing issues and the slight difference in material covered in the prerequiste course. And so on. Of course there is also the opposite. Those kids that needed another year or two with the parents before they can step out on their own. And a whole bunch where it makes no difference.

But as always with incentives make sure you are incentivizing what you want. Do you want them to be english majors instead of stem cause it is easier to maintain a 3.0 GPA? Pass up an in field internship cause they are making more money waiting tables? And so on. It is a fine line. I tend to lean towards that 18 year old already have enough skin in the game given that effects on their life that money just doesn't matter much.

[stoptothink]

finally, i’ll share what my business partner told me which i took to heart: “send your kids to the best college you can afford”. the key is that each person has to figure out what they can afford.

My Father-in-law made this quoted remark to me and I simply said "but that college doesn't provide the additional $150,000 in value it would cost me for a simple 4 year degree" and his eyes went wide as he had no idea what the big price tags had become.

OP: I raised my kids understanding both the value of money and value of an education. That was the only strategy I needed. I didn't need to pay them for grades nor force them into debt to go to college nor force them to work multiple jobs thru college to pay for it. (They got jobs but on their own to have extra spending money).

$150k is more than the median NW for someone my age (41). Can you imagine the "normal" family making these decisions; the difference in costs can be truly life-changing in many cases. We're bogleheads with a 7-figure NW, but $150k is still a heck of a lot of money to us; it's nearly what we bought our home for in 2015. We are not taking these decisions lightly, even if we can afford it. If we do decide to pay an extra $40k/yr for our kids' school above the local public, there has to be an objective reason why and they will know exactly what the opportunity cost was (ie. a heck of a home downpayment or start on retirement we otherwise could have given them).

[gips]

finally, i’ll share what my business partner told me which i took to heart: “send your kids to the best college you can afford”. the key is that each person has to figure out what they can afford.

My Father-in-law made this quoted remark to me and I simply said "but that college doesn't provide the additional $150,000 in value it would cost me for a simple 4 year degree" and his eyes went wide as he had no idea what the big price tags had become.

OP: I raised my kids understanding both the value of money and value of an education. That was the only strategy I needed. I didn't need to pay them for grades nor force them into debt to go to college nor force them to work multiple jobs thru college to pay for it. (They got jobs but on their own to have extra spending money).

$150k is more than the median NW for someone my age (41). Can you imagine the "normal" family making these decisions; the difference in costs can be truly life-changing in many cases. We're bogleheads with a 7-figure NW, but $150k is still a heck of a lot of money to us; it's nearly what we bought our home for in 2015. We are not taking these decisions lightly, even if we can afford it. If we do decide to pay an extra $40k/yr for our kids' school above the local public, there has to be an objective reason why and they will know exactly what the opportunity cost was (ie. a heck of a home downpayment or start on retirement we otherwise could have given them).

I would make the point again that each person has to figure out what they can afford. I'm guessing If you had $100mm in savings your need for ROI for an additional $40k per year in spend might be different than it is now. we don't have $100mm in savings but we were in a position to pay for difference in school quality moving from say top 40 to top 10-15. Clearly, each persons view of affordability, school quality and ROI is going to be different and our decision may not be right for you or the OP.

[SmileyFace]

finally, i’ll share what my business partner told me which i took to heart: “send your kids to the best college you can afford”. the key is that each person has to figure out what they can afford.

My Father-in-law made this quoted remark to me and I simply said "but that college doesn't provide the additional $150,000 in value it would cost me for a simple 4 year degree" and his eyes went wide as he had no idea what the big price tags had become.

OP: I raised my kids understanding both the value of money and value of an education. That was the only strategy I needed. I didn't need to pay them for grades nor force them into debt to go to college nor force them to work multiple jobs thru college to pay for it. (They got jobs but on their own to have extra spending money).

$150k is more than the median NW for someone my age (41). Can you imagine the "normal" family making these decisions; the difference in costs can be truly life-changing in many cases. We're bogleheads with a 7-figure NW, but $150k is still a heck of a lot of money to us; it's nearly what we bought our home for in 2015. We are not taking these decisions lightly, even if we can afford it. If we do decide to pay an extra $40k/yr for our kids' school above the local public, there has to be an objective reason why and they will know exactly what the opportunity cost was (ie. a heck of a home downpayment or start on retirement we otherwise could have given them).

I would make the point again that each person has to figure out what they can afford. I'm guessing If you had $100mm in savings your need for ROI for an additional $40k per year in spend might be different than it is now. we don't have $100mm in savings but we were in a position to pay for difference in school quality moving from say top 40 to top 10-15. Clearly, each persons view of affordability, school quality and ROI is going to be different and our decision may not be right for you or the OP.

If your budget is limitless I suppose it doesn't matter what you pay (be sure you have enough left for that $500,000 wedding too - just reading that other thread - LOL). I am guessing the OPs isn't if they want their kids to understand the value they are getting.
For us - choosing the cheaper school meant having enough left over in 529 to fully fund graduate school as well. That was definitely the better value.

[AnEngineer]

I have two high school age kids. Both are strong students with a reasonable shot at top schools. We will not qualify for any need based aid. We could afford to put the through school from employment cash flow and/or savings in taxable. However, I want to create an incentive for them to take the cost of education seriously, including considering the excellent in-state schools where we live and applying for merit based and other scholarships.

Give/promise them a fixed amount of money no matter what they do for college. Then they directly benefit from any cost savings and are heavily incentivized to weight the benefits of spending more. Or was the point for you to save money?

[gips]

finally, i’ll share what my business partner told me which i took to heart: “send your kids to the best college you can afford”. the key is that each person has to figure out what they can afford.

Defining best is equally as hard. Your best might be my worst......

In the end we all end up projecting our life experiences and biases. It is easy to write down the cheapest path. Is it the best? Who knows. It is hard to compare the social growth of some kids who get together with friends, figure out how to rent an apartment, feed themselves, and so on to the kids who stay at home and have parents who cover that stuff. How many CC fail to make the jump to the 4 year school because it is one more thing. How many of those 4 year degrees are hard because of sequencing issues and the slight difference in material covered in the prerequiste course. And so on. Of course there is also the opposite. Those kids that needed another year or two with the parents before they can step out on their own. And a whole bunch where it makes no difference.

But as always with incentives make sure you are incentivizing what you want. Do you want them to be english majors instead of stem cause it is easier to maintain a 3.0 GPA? Pass up an in field internship cause they are making more money waiting tables? And so on. It is a fine line. I tend to lean towards that 18 year old already have enough skin in the game given that effects on their life that money just doesn't matter much.

I completely agree, each person will have their own view of affordability, quality and ROI. Additionally, those views will probably be different for each kid, There is no one size fits all answer, each of us struggle to find the right answer given our context and the needs of our kids.

[gips]

finally, i’ll share what my business partner told me which i took to heart: “send your kids to the best college you can afford”. the key is that each person has to figure out what they can afford.

My Father-in-law made this quoted remark to me and I simply said "but that college doesn't provide the additional $150,000 in value it would cost me for a simple 4 year degree" and his eyes went wide as he had no idea what the big price tags had become.

OP: I raised my kids understanding both the value of money and value of an education. That was the only strategy I needed. I didn't need to pay them for grades nor force them into debt to go to college nor force them to work multiple jobs thru college to pay for it. (They got jobs but on their own to have extra spending money).

$150k is more than the median NW for someone my age (41). Can you imagine the "normal" family making these decisions; the difference in costs can be truly life-changing in many cases. We're bogleheads with a 7-figure NW, but $150k is still a heck of a lot of money to us; it's nearly what we bought our home for in 2015. We are not taking these decisions lightly, even if we can afford it. If we do decide to pay an extra $40k/yr for our kids' school above the local public, there has to be an objective reason why and they will know exactly what the opportunity cost was (ie. a heck of a home downpayment or start on retirement we otherwise could have given them).

I would make the point again that each person has to figure out what they can afford. I'm guessing If you had $100mm in savings your need for ROI for an additional $40k per year in spend might be different than it is now. we don't have $100mm in savings but we were in a position to pay for difference in school quality moving from say top 40 to top 10-15. Clearly, each persons view of affordability, school quality and ROI is going to be different and our decision may not be right for you or the OP.

If your budget is limitless I suppose it doesn't matter what you pay (be sure you have enough left for that $500,000 wedding too - just reading that other thread - LOL). I am guessing the OPs isn't if they want their kids to understand the value they are getting.
For us - choosing the cheaper school meant having enough left over in 529 to fully fund graduate school as well. That was definitely the better value.

while we paid for our kid's choice of school, we wanted them to understand the value vs spend. We allocated a fixed amount for each child's education including grad school. Spending more undergrad meant less for grad school. two of my kids took the middle ground, the schools they chose left them enough for one year of grad school. our third child spent his whole budget but honestly, it was probably the right choice as he needed the additional support a good, small, private lac offered.

sounds like you are happy/satisfied with your strategy, heartfelt congratulations

[SmileyFace]

My Father-in-law made this quoted remark to me and I simply said "but that college doesn't provide the additional $150,000 in value it would cost me for a simple 4 year degree" and his eyes went wide as he had no idea what the big price tags had become.

OP: I raised my kids understanding both the value of money and value of an education. That was the only strategy I needed. I didn't need to pay them for grades nor force them into debt to go to college nor force them to work multiple jobs thru college to pay for it. (They got jobs but on their own to have extra spending money).

$150k is more than the median NW for someone my age (41). Can you imagine the "normal" family making these decisions; the difference in costs can be truly life-changing in many cases. We're bogleheads with a 7-figure NW, but $150k is still a heck of a lot of money to us; it's nearly what we bought our home for in 2015. We are not taking these decisions lightly, even if we can afford it. If we do decide to pay an extra $40k/yr for our kids' school above the local public, there has to be an objective reason why and they will know exactly what the opportunity cost was (ie. a heck of a home downpayment or start on retirement we otherwise could have given them).

I would make the point again that each person has to figure out what they can afford. I'm guessing If you had $100mm in savings your need for ROI for an additional $40k per year in spend might be different than it is now. we don't have $100mm in savings but we were in a position to pay for difference in school quality moving from say top 40 to top 10-15. Clearly, each persons view of affordability, school quality and ROI is going to be different and our decision may not be right for you or the OP.

If your budget is limitless I suppose it doesn't matter what you pay (be sure you have enough left for that $500,000 wedding too - just reading that other thread - LOL). I am guessing the OPs isn't if they want their kids to understand the value they are getting.
For us - choosing the cheaper school meant having enough left over in 529 to fully fund graduate school as well. That was definitely the better value.

while we paid for our kid's choice of school, we wanted them to understand the value vs spend. We allocated a fixed amount for each child's education including grad school. Spending more undergrad meant less for grad school. two of my kids took the middle ground, the schools they chose left them enough for one year of grad school. our third child spent his whole budget but honestly, it was probably the right choice as he needed the additional support a good, small, private lac offered.

sounds like you are happy/satisfied with your strategy, heartfelt congratulations

We took a different strategy.
We set no hard limits nor allocations nor specific budget nor ever told our kids how much we had in 529s and how much we would he willing to stretch beyond the earmarked funds. We told them apply where you want them we will discuss what's possible. They knew we weren't rich and understood the goal they were getting out of an education so I simply told my daughter that got into a high priced stretch school that she would have to convince me that the pricetag would be somehow better than the similarly priced private school that gave her a large scholarship. I am glad she made the decision she did.
There is probably no one right strategy. However, I personally don't believe having your child have skin in the game is going to somehow make them more responsible.

[Glockenspiel]

I don't know if there's any way to incentivize them to do their best in school while also having them pay part of the cost. Is the goal to have the kid shoot for a lesser school because of the cost of some highly selective schools? Is the goal to saddle them with debt after graduation? Is the goal to have them work a 20-40 hour/week job WHILE also doing school full-time?

I'd just involve them in all decisions, talk through everything that you're thinking, with them, and that you'll support them if you all agree on a school.

[guyfromct]

My wife and I have discussed this at length for when we have kids, our plan is to be willing to lay full in state tuition and cost of attendance for the well regarded state flagship. For elite institutions e.g. Harvard, Princeton, Duke, MIT we would also pay full tuition and COA. But for schools that don’t offer a tangible improvement over the state flagship, our willingness is to pay no more that state flagship tuition and COA, with the child having to pay the difference.