Parents Pay for Most of College

We've debated here at Free Money Finance on who should pay for college -- parents, kids, or both -- but I've never seen any sort of stats on who actually does pay until now. Here's an interesting fact I found in the September issue of Kiplinger's:

More than 60% of parents plan to pay for the bulk of their kids' college costs.

Of course this is short on details so we need to accept it for what it is (and hope it's not misleading), but at the very least it gives us a direction on what people are thinking/doing.

As I've said before, we plan to pay for half of our kids' college costs, but they can earn their half of costs by scholarships and grants, so it's not like they'll need full-time jobs in high school to pay their portion. IN addition, as time goes on, I'm thinking that it's likely we'll end up paying for more than half. I still want them to pay for part and "work" for it (so they're more invested in their own education), but with the price of a college education continuing to skyrocket, I'm not sure they're going to be in a position to save that much.

How about you? What do you plan to do for your kids when it comes to paying for college?

Comments

[CF]

My parents were very frugal and weren't the type to buy us much (we had modest allowances and were expected to have jobs for our spending money), but my dad always said "I'll pay for your college, but after that you're on your own."

I intend to do the same for my kids, and here's why: as we all know, one of the best steps toward financial freedom is starting to save early. By having no debt coming out of school (and learning great money management skills from my dad), I was able to start socking away lots of money right off the bat (actually started an IRA in high school). Those extra years of compounding interest can result in literally millions more (start at 22 vs. 30 and your money will double an extra time)

I'd like to put my kids in the same position (so they can then do the same for their kids...).

[Amanda]

For my parents, our (my sister's and my) education was of utmost importance. Other things they were willing to sacrifice on in order to send us to the best schools we could get into and wanted to attend. They paid for 100% of our undergraduate education, and I plan to do the same for my children.
However, they always made it clear that after college, that was it! Both my parents have advance degrees that they fully funded themselves, and now that I am in grad school, I am doing the same. What blows my mind is how some parents are willing to front for their kids graduate school educations... enough already! They're adults!

[Cheap Like Me]

I had a friend whose parents said they would pay for four years of school, and that was it. It motivated her to work very hard -- she took International Baccalaureate and Advanced Placement courses to begin college with one year's credit under her belt, and then she was accepted into a 5-year program in college, so that in four years she earned her bachelor's degree *and* her master's. Great thinking on both parts!

[Katy Raymond]

We just finished paying 100% of our kids' college education. We told them we'd pay for four years each. One child took 5 years to complete her degree. We fronted her the $$ for year five, and she took the first year after college to pay us back every penny before she got married. Other than that, all three kids were debt free as college grads. We let the baby move back in for 2 months after he recently graduated, so that he had some time to find roommates and a job. Now he's situated and happy.

We provided tuition and basic room and board, but not spending money. The kids all had part-time jobs to purchase any extras they wanted. We aren't big believers in the Revolving Door. It would take a disaster of a very serious nature for us to agree that a child could move back home at this point. The more I observe, the more I think it's not a good policy for anyone involved.

[deb]

I don't have kids, but I went through this with my parents until 2 years ago when I graduated.

At the start of college, we agreed that they would be responsible for tuition and I would be responsible for living expenses and "fun" money. I worked summers to cover my share, and found a job my junior year (more for the experience than the money). I went to school in a very expensive part of the country, and my mom ended up sending me $100/month to help out with groceries since pretty much all of my summer income went towards rent and textbooks.

As it turned out, my parents had saved enough money for about 2 years worth of tuition - but they paid for it out of pocket instead. They thought that the money might come in handy when my younger sister started college during my senior year. They gave me the remaining college money when I graduated - and now I leave it happily parked in an index fund where someday it might help me buy a house.

As a grad student, I'm on my own - I cover all my expenses.

[justin]

This talks of what parents are planning on doing, not what parents actually do. Are there any stats on what they actually do?

As for me, I plan on no kids, but I would expect them to cover at least 1/2.

[Minimum Wage]

I paid 90% of my college costs, and earned a chunk of that before I ever got to college.

I once lived in a college town and the students who were paying their own way would complain about exorbitant rents, and the flak would eventually get ink in the student newspaper, and there would usually be a landlord quoted as saying that all of his rent checks come from parents (not the students themselves).

[Mrs. Micah]

My grandfather left me some, my parents gave me some, and I covered over 60% in scholarships. My parents told me it was scholarships or in-state school. Actually, or in-state with scholarships.

I plan to help my kids out, but I'm going to make them apply their butts off for scholarships. No way we're ignoring free money.

[beastlike]

Paid for it myself, would have been nice if my parents paid but would I have tried as hard.... hmmm, gotta think about that one.

By the time my kids reach college age, it will cost 1/2 mil for four years of college, I don't think I'll be a huge promoter of school...... Trades? Owning their own business? etc?

[orthros]

"Plan" is the operative word here. The vast majority of parents with teenagers have saved less than $10,000 for college according to Kiplinger's. Likewise, just under half of all workers "plan" to have a pension when they retire... when studies show that only 15-20% of them will actually have one.

We are a nation of unbridled optimists, which is usually very good but a severe handicap when it comes to long-term planning.

[plonkee]

I would prefer to pay for tuition, room and board,leaving the kids to pay for books, beer money and educational experiences. There isn't quite the same culture of working whilst at uni (as opposed to in the holidays) over here - many universities are not big fans.

However, I don't actually have kids, so this is a bit of a moot point.

[Anitra]

I am a fairly recent college graduate, and an only child. I went to a fairly expensive private university, where about 1/3 of my price was covered by scholarships, 1/3 by traditional student loans, and my parents picked up the remaining 1/3 (the "expected parental contribution"). I stayed in the dorm, so that price included my room and board. I also got a very small allowance from my parents (about $80/month); large enough so I could buy necessities (books and supplies), but small enough that I needed summer jobs if I wanted any "fun" money. They also made it clear that they would only pay for four years; if I wanted a graduate degree or needed extra time (common at my university), I'd have to find a way to cover it myself.

As a result, I worked summers and off-and-on during the school year (no work-study money for me and no car, so I could only get jobs that were privately funded). I paid for my last semester out of pocket, and graduated after 4 1/2 years with $20,000 in debt, a relatively small amount compared to my peers.

My husband was not so blessed. The oldest of three children in a low-income family, he attended the same university, but received slightly less in scholarships. His parents could not help him with expenses at all, so he took on lots of extra loans and worked 20-30 hours/week during school and 50-80 hours/week during breaks. He was never able to do any extracurricular activities, and, during his last semester, was getting his sleep in the form of two 2-hour naps per day. He made it out in four years, but with over $80,000 in debt.

It's easily arguable that my husband should have chosen a less expensive school. As a result of his experience, both he and his parents are not at all upset that his younger brother is living at home and going to a community college for now.

As other commenters have said, there's a big difference between what parents plan to do for their children, and what they can actually afford. My parents were able to stick to their plan, because they had plenty of savings (though not earmarked specifically for my education). My husband's parents supported his decision to go to a prestigious university, but couldn't offer any tangible support.

[Lord]

This is clearly a measure of whom they asked since the majority of parents could not afford to do so even if they wanted to.

[Thrifty Penny]

Unfortuately, I was not one of the lucky kids whose parents paid for college. I was scared to death about paying for college, and I started researching scholarships as a freshman in high school. Then, I learned about financial aid. I consider myself "lucky" because my mother's income was considered poverty level so I qualified for 100% financial aid. I also received scholarships based on academic merit. I worked part-time during college to gain experience within my field. However, I graduated with a large amount of debt.

My boyfriend experienced a different story. He's an only child, and his parents paid every cent of his tuition. He graduated college debt free! During college, he didn't appreciate them. He nearly failed out of college! Also, he lacked work experience in his field because he never had a reason to work. He got an internship because I kept nagging him. He is grateful now for his parents because he watches me struggle financially.

I'll take the pros from our experiences. I'd make sure my child applies for scholarships. I'd pay a certain percentage of his/her college costs. Remainder should be covered by scholarships, loans, and grants. I want my child to be grateful. I'd require him/her to obtain an internship or part-time job to gain experience in him/her field and for spending money.

[Mordred]

I was lucky in a way because my parents did not start off rich. They were pretty poor when I was growing up however my father got some lucky promotions over the years and was VP when he retired. My extended family gave us savings bonds for birthday/Christmas presents, and I remember when I was 5 cashing them in to start a brokerage account. My father managed that for me and when I was 16 he converted it all to high yield CDs (or bonds - I don't remember) which came due a certain amount each year for 5 years. My parents made it clear, that this was the money that I got - that was it. They came due and it was like 7k, 9k, 11k, etc. for the 5 years.

I first chose an out of state private school and had to get loans (my grades were not good enough to get scholarships) to cover my tuition as it was double my first years bond amount. I had to get a part time job on campus (about $200 a month) so I could have spending/gas money while I was on campus. Once I took a deep look at my college and what I wanted, I realized a cheaper state school would work as well. So I transfered to a local community college, and now I was paying instead of $14k a year, I was paying $2k a year. My second bond came due, I paid off my loans, and had money to spare. I still needed to work for spending money, etc. I also took internships over the summers which paid about $10k so that I gained work experience, and also got money.

I eventually after 3 semesters graduated with an A.S. degree and transferred to a major state school. The costs were double (About $2k per semester and $1k for housing) but I was able to afford it, but I still worked about 20 hours a week so I could have spending money. I graduated in 4.5 years with 2 A.S. degrees and B.S. with about $50k left. I stayed in for an M.S. but since I taught, I was paid $1k a month, and tuition was waived. So all I had to pay for was room and food and entertainment.

A decade later, I have my own son who is 13, he has the same kind of account I do - which has all of my bonus money and stock options from years past stuck in it for investing. In a few years I am going to do the same thing, and stick it in bonds or something of the sort so they come due at certain times, and that is all he will get. He has to figure out how to get the rest of it - and work for his spending money. I also have about $500k in the bank on my own .. it is just I know how to save now that I have been through the "ramen noodle" meal days of college.

I guess .. the best thing I see from everyone's posts above:

1) Be clear with your kids on what you are going to pay, and what you are not going to pay (tuition, room/board, books, car insurance, beer money, etc.)

2) Make sure you put controls in place so that your wishes from #1 are followed (by putting technical limits to deny access to account monies you do not approve).

3) Don't pay for everything. They have to work a little to understand what it means to be a part of society. It does not have to be much. If they work 10 hours a week - that is $60 bucks for pizza and beer or what not a week.

4) Make sure they work during the summers if they are not taking classes (or even if they are). Internships in their field help out dramatically. They can set you apart from the kid with a 4.0 trying to get the same job right out of college.

5) Have a financial review party once a year. Do this like over Christmas break. If you are paying for insurance, car payments, present the child (young adult) with a statement of what they owe you (based on #1) and what you have paid on their behalf. This way there are no surprises when they graduate and have to pay you back (if you pay car insurance for them but they owe it to you when you graduate, etc.) and also show them that these things are not free in life and things they will have to pay for when they get out of school.

6) When they are done with college, give the money left over to them. If this is in a UGMA/UTMA account this works great. This creates the illusion they are paying for college and makes them work hard for their education. They also will save what money they have for when they graduate. Make sure #2 is in place but you can remove them when they graduate.

7) Finally, money is not a thing to fight about. Your kids might throw fits about not wanting to work, etc. Just hold firm, and at the end of the process they will thank you. At the end of this process, depending on where they go to school, they will have money left over or have little debt, they will have job experience, they will understand lots of things that take adults years to learn, and they will be as best prepared as they can be for life.