Kids 4 year college money .. is this a good idea ?

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Metsfan91
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Re: Kids 4 year college money .. is this a good idea ?

Post by Metsfan91 »

lazybones18 wrote: Mon Nov 22, 2021 5:47 pm Instead of just paying for my kids 4 year college why don't I lend the same money to them

If they are doing financially well after college, they pay me and I can invest the same money for my grandkids, use it for myself or even forgive it depending on the circumstances
if they are not doing so well financially, I can chose to forgive the money I gave them for college

goal here is not to give them free money and make them value the money + education more

we all know what happens when you give people free money :sharebeer

thoughts ?
Bad idea. As a parent, it is your responsibility to raise them. I'd think sending them to college and paying (as in not expecting return) for it fall into parenting responsibility.
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JoeRetire
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Re: Kids 4 year college money .. is this a good idea ?

Post by JoeRetire »

lazybones18 wrote: Mon Nov 22, 2021 9:57 pm this idea was derived from my own journey. if I didn't had student loans and other commitments when I graduated, I would have blown all that money away on unwanted stuff. Paying back for my education was tough but it helped me with value education & money a lot more.
When I was young, I always knew I would be paying for my own education. We didn't have much money, and with a large family, paying for college was out of the question. I worked hard and paid my own way. But even if I didn't have to pay for my education, I was never the type to blow money on unwanted stuff.

I knew that I would find a way so that my kids wouldn't have to do what I did. My wife and I waited until we were financially secure to have kids. And we saved enough money, and avoided enough debt, so that we could pay for our sons' educations, and they could graduate with no debt. They have never blown money on any unwanted stuff.

I'm proud to say that both sons are working on the same plan for their children. I place a very high value on education. And even though my education was somewhat less expensive than theirs, both sons place a high value on education as well. They are extremely grateful for being able to graduate debt-free while so many of their friends could not.

There is more than one journey that will lead one to valuing education, fiscal responsibility, saving, etc. I knew what my sons needed. You likely know what your children need.
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DrivingFun
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Re: Kids 4 year college money .. is this a good idea ?

Post by DrivingFun »

dogagility wrote: Wed Nov 24, 2021 5:57 am having instilled the benefits of an education during childhood is more motivating.
This right here is the key IMHO. By the time the kid is no longer a kid, it's more often than not too late to do much of anything to change this particular course. Motivation aside, I do believe there is significant value in having some debt and responsibilities/discipline that this entails.

I'm planning to cover a large part of my kid's education. Frankly I have no idea how much education will even cost in 10 years, so their 529 is just an approximation. Yet I want them to have some skin in the game to get them ready for larger financial responsibilities that will surely follow.
manatee2005
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Re: Kids 4 year college money .. is this a good idea ?

Post by manatee2005 »

DrivingFun wrote: Thu Nov 25, 2021 11:15 am
dogagility wrote: Wed Nov 24, 2021 5:57 am having instilled the benefits of an education during childhood is more motivating.
This right here is the key IMHO. By the time the kid is no longer a kid, it's more often than not too late to do much of anything to change this particular course. Motivation aside, I do believe there is significant value in having some debt and responsibilities/discipline that this entails.

I'm planning to cover a large part of my kid's education. Frankly I have no idea how much education will even cost in 10 years, so their 529 is just an approximation. Yet I want them to have some skin in the game to get them ready for larger financial responsibilities that will surely follow.
I always hear about skin in the game here with regards to tuition.
My son is a freshman now, and his future depends on this degree and that’s skin in the game enough for him to get him motivated to study and do well. Not to mention the self-esteem hit of failing and being back at home thinking if he has what it takes to get a college degree while the people he met in college are progressing toward their dreams.
He spent the halloweekend this year studying for his math test (on which he got 94) without me saying anything and without me putting any kind of loan repayment terms between us.
bikechuck
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Re: Kids 4 year college money .. is this a good idea ?

Post by bikechuck »

lazybones18 wrote: Mon Nov 22, 2021 5:47 pm Instead of just paying for my kids 4 year college why don't I lend the same money to them

If they are doing financially well after college, they pay me and I can invest the same money for my grandkids, use it for myself or even forgive it depending on the circumstances
if they are not doing so well financially, I can chose to forgive the money I gave them for college

goal here is not to give them free money and make them value the money + education more

we all know what happens when you give people free money :sharebeer

thoughts ?
Everyone's family is different. In our case both of our daughters were self motivated and good students. Neither my wife nor I hovered over them in Middle School or High School to nag them about doing their homework or demanding that they get good grades they just did all of that on their own. We did praise and congratulate them for their academic successes along the way and that was enough. I think that repeated checking on them would likely have backfired and they would not have done as well but again all kids are different and what worked for us might not have worked for others.

Both daughters had summer jobs and part time jobs during the school year from the age of fifteen on. That gave them "walking around" money and spending money in college. We paid for tuition and room after their partial undergrad scholarships. They both borrowed some money as undergrads and they understood that was their responsibility but after graduation our portfolio was doing well enough that we paid those loans off for them.

Both attended grad school (one for a partially funded Masters and the other a fully funded PhD). We helped financially in those years too to supplement their spending money but I never would have considered that help to be a loan.

It was a long haul but somehow we made it through on our middle income salaries.
lws
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Re: Kids 4 year college money .. is this a good idea ?

Post by lws »

If you can't afford it they may have to borrow.
Contribute what you can.
Folks do that all the time.
Dottie57
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Re: Kids 4 year college money .. is this a good idea ?

Post by Dottie57 »

dukeblue219 wrote: Mon Nov 22, 2021 7:07 pm I wouldn't.

If anything you're punishing them for working hard and getting a good job by forcing them to pay you back. Someone who can do the first part isn't going to learn an even stronger work ethic by having to pay back their parents.

A slacker who drops out of college and has their loan forgiven by parents isn't motivated anyway.

Let your kids start life on a clean slate. It's hard enough to get your feet under you as a 22 year old anyway.
Graduating from college with no loans was the best gift my parents gave me. Clean slate. They paid for a state college.
I’ve thanked them many times over the years.
Vtsax100
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Re: Kids 4 year college money .. is this a good idea ?

Post by Vtsax100 »

I don’t get this obsession some people here seem to have about not paying for college for their children. My parents paid my tuition, never asked for a penny of it back. It didn’t make me not appreciate a dollar, it didn’t make me unsuccessful, poor work ethic, etc. I mean look, Im even on Bogleheads! I feel like if you think paying your childs tuition is going to cause any problems for them going forward then the problem already exists.

I think I would add that if anything it strengthened my appreciation for not having debt. I’ve really enjoyed buying a big glob of Total Stock Market every month for the past 20 years rather than paying it towards debt. Now that is a true gift to give someone.
DrivingFun
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Re: Kids 4 year college money .. is this a good idea ?

Post by DrivingFun »

manatee2005 wrote: Thu Nov 25, 2021 11:41 am I always hear about skin in the game here with regards to tuition.
My son is a freshman now, and his future depends on this degree and that’s skin in the game enough for him to get him motivated to study and do well. Not to mention the self-esteem hit of failing and being back at home thinking if he has what it takes to get a college degree while the people he met in college are progressing toward their dreams.
He spent the halloweekend this year studying for his math test (on which he got 94) without me saying anything and without me putting any kind of loan repayment terms between us.
I think you misunderstood my statement. I didn't meat it in relation to it being a motivator. I merely mean that if you never had responsibility of paying something off diligently, making required sacrifices, etc. It could be that much harder when the sums of money get larger as you get older. A lot of us are here because we're good at that sort of thing. but it's a skill that was learned. Many of us learned that lesson out of necessity, conversely many/most of our kids won't have to because of our success. That in itself could be problematic.
manatee2005
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Re: Kids 4 year college money .. is this a good idea ?

Post by manatee2005 »

DrivingFun wrote: Thu Nov 25, 2021 8:38 pm
manatee2005 wrote: Thu Nov 25, 2021 11:41 am I always hear about skin in the game here with regards to tuition.
My son is a freshman now, and his future depends on this degree and that’s skin in the game enough for him to get him motivated to study and do well. Not to mention the self-esteem hit of failing and being back at home thinking if he has what it takes to get a college degree while the people he met in college are progressing toward their dreams.
He spent the halloweekend this year studying for his math test (on which he got 94) without me saying anything and without me putting any kind of loan repayment terms between us.
I think you misunderstood my statement. I didn't meat it in relation to it being a motivator. I merely mean that if you never had responsibility of paying something off diligently, making required sacrifices, etc. It could be that much harder when the sums of money get larger as you get older. A lot of us are here because we're good at that sort of thing. but it's a skill that was learned. Many of us learned that lesson out of necessity, conversely many/most of our kids won't have to because of our success. That in itself could be problematic.
Mine was a more general comment that I’ve heard over the past year about parents making kids pay for some college to have some skin in the game.

Saddling kids with $1000/month student loan payments isn’t how I would teach them financial responsibility. They’ll have rent, car payments, grocery bills, power bills etc that will teach them financial responsibility anyways.
Parkinglotracer
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Re: Kids 4 year college money .. is this a good idea ?

Post by Parkinglotracer »

I'd do what you want to do. you prob know them better than any of us do. I bet they will be fine. let us know how it goes.
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celia
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Re: Kids 4 year college money .. is this a good idea ?

Post by celia »

lazybones18 wrote: Mon Nov 22, 2021 5:47 pm Instead of just paying for my kids 4 year college why don't I lend the same money to them

If they are doing financially well after college, they pay me and I can invest the same money for my grandkids, use it for myself or even forgive it depending on the circumstances

if they are not doing so well financially, I can chose to forgive the money I gave them for college
If they are doing financially well, they can use their income to pay for your grandkids, or give some to you in your old age. Why not let them choose, since they did so well?

If they are not doing so well financially, what happens if you choose something other than to forgive the debt? Besides not having much income, should they also be saddled with the "student debt"?

Since you're considering forgiving the loan either way, just don't make the loans. You don't want to pay them; you want to pay the college (big difference with potentially different student results). Then, maybe you can even get some college tax credits for your dependents who go to college.
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