I received several interesting comments to my post titled Comments: College Saving Reality Check: What You Can Do to Save Enough for Your Kid's College Expenses and How to Pick the Best 529 Plan. A couple were initiated by my comment that my wife and I plan to make our kids pay for half of their own education (through saving, work, scholarships, etc.). But not everybody agreed with this plan. Here's the first comment:
One of the best things my parents ever did for me was pay for my college. I came out with a degree and nothing else, which is a lot more than most folks. It took me a long time to appreciate this. It's one of the main reasons I've been able to come as far as I have. I understand the point about valuing the education, but if/when I have children I'll do my best to do for them what mine parents did for me.
And as if that wasn't enough, here's an expanded version of the same from another commenter:
I think it's a good idea to have the kids pay for part of the education, such as book money, fees, and for clothes, and other "household expenses". But no more than that. Their primary function in college is to get an education, and having the time to pursue internships, research/work in their field, or the time to really concentrate on their grades is extremely important. Consider: most people today go to college, so the competition for jobs is fiercer than what it was in years past when a degree was a bonus, not a requirement. It's not enough just to "get the paper" if you want the good job/graduate program that follows -- this is already the case, and will definitely be so by the time your children go to school. This means that it's important to have good grades -and- experience in the field if the student really wants to succeed. By the time your kids get to school, that combination may be a minimum requirement. So school should always come first.
The point of saving for a child's education is to ensure that they get one. This is difficult when you work and go to school, depending on your field and if your job will even accommodate your schooling. Most unskilled jobs don't pay a lot, which means students have to work longer hours than what they might have done when you were in school. This competes with time that can be spent studying. There are always campus jobs, but those may not cover the expenses needed if the child is meant to pay most of their own way. Also, don't underestimate the demands of classes -- it's not like high school, where a student could work and still get good grades. It's the difference between the housecat and the lion -- a college student may really not be able to successfully balance the two.
In my opinion, if not working means the child can't attend college, then it's probably a better idea to have the child defer college until the money is saved so they can really focus on their studies. As a parent, you want to maximize the investment you put into the child, and it's important to know what your priority is: teaching the child responsibility at 18, or preparing them to achieve in school.
It would be helpful to evaluate the true demands of a college education and then plan accordingly. As far as the responsibility, it's hard to start that at 18. Start small...let the kids use their allowance money to buy school supplies, clothes for school when they are younger, etc. Work on time management, and budgeting with them early so they learn to minimize cost. But don’t ever forget that it’s their success in college that’s important, not just the fact they attended.
Let me clarify my position on this issue.
As stated, my wife and I plan to have our kids pay for half of their educations themselves. They can do this in ANY WAY including scholarships (which is the most likely way they'll be able to pay for half of it -- other than loans, which we are not in favor of). As most people know, there are a good number of merit scholarships available -- for good grades, leadership, athletics, some extracurricular activities, etc. If our kids work hard in high school and are disciplined, getting a couple of these scholarships, shouldn't be an issue. So they will have a big incentive to do well as they reach 9th grade (and then above that as well) -- it could mean thousands of dollars for them.
In addition, I disagree that working during school is 1) an impossible hardship and 2) not valuable in any other way. When I was in college, I worked all four years of undergraduate schooling and both years during my MBA education. Was it difficult? Not really. It was challenging at times and did force me to be disciplined and plan a bit ahead, but what's wrong with that? Those are useful skills in the "real world." And did I appreciate my degree more because I worked for it? You bet! Finally, my work experience during college helped me get into grad school and then (ultimately) get a job. You see, the job a student has at school doesn't have to be flipping burgers at McDonald's. It can be helping the school to raise funds from alumni or running a movie theater on campus -- both jobs that I held that gave me valuable work experience in addition to good pay.
I know several people whose parent's paid 100% of their college costs. For every one person that did well in school and now has a decent job, I know three who blew off college and now work selling farm equipment insurance. I even know one guy who took the money from his parents (they gave it to him instead of paying the college directly -- bad mistake) and didn't even enroll in school! He just spent it having a great time. Some (probably most) people don't have much respect for their educations when they have no financial stake in them. I don't want to risk this happening with my kids.
I had to pay my own way through school at 18, and I'm none the worse for wear. I did have to take out some loans, but the amount that I left school with after 4 years of college was less than the tuition for one year. I managed to take classes, work (including 2 6 month internships away from school), and run for the cross country and track teams successfully.
I think the lady is a bit off base thinking that delaying their kids maturation by 4 years while they try to get good grades is a better way to go than to make them figure out how the real world works before they are full bore stuck in it.
Posted by: Blaine Moore (Run to Win) | June 13, 2006 at 01:50 PM
I like the way you described it (that thair half could come from anywhere and not strictly cash out of pocket.) That makes it a lot more managable to strike the balance between work and school and can help to minimize the student debt after graduation.
Posted by: annab | June 13, 2006 at 01:50 PM
edited: I wasn't trying to imply that working through school is bad in general -- specifically I said that if the only way the child can afford school is for him to pay for it all out of pocket while they attend, it might be better to wait until they can work less before they start college. I have seen students who were not able to afford to pay for even the basic costs with their campus jobs (parents unable to help) and the real work outstripped the coursework. All that scholarship money can be lost after a semester if the grades dip. I don't think it's unreasonable to say that working _too much_ isn't beneficial, especially in majors where the grades are essential to further advancement like pre-meds/pre-laws, who basically need A's.
Posted by: annab | June 13, 2006 at 02:01 PM
I teach at a community college, and most of my students work to pay their school bills. It's nothing unusual. In fact, it's half-expected in my part of the world to get a part-time job while in school. Instructors have to be flexible and keep their students' work schedules in mind. It's different at more prestigious schools where kids from high-income families have parents who can afford to pay the whole bill, or grandparents who set up a trust fund. My students are often the first in their families to go to school, and many of them are on their own.
I paid my way through school. When I was 16 and old enough to get a summer job, my mother handed me the little passbook for my savings account (back in the days before digital) and I saw that my "college account" has a whole $20 in it. I knew they'd helped my oldest brother through college, so I thought I might get a bit of a boost. Not to be. I worked, took out loans, married too early (big mistake, marrying Mr. Deadbeat), and ended up paying for the whole thing myself -- including grad school (at least there I got an assistantship which paid my tuition and a stipend).
While I wouldn't want to see my son saddled with the same school debt I came out with, I do expect him to contribute to the cost of his education, by working and by getting any scholarships he can pick up. But education costs are so high these days that paying your own way through isn't like it was in my parents' day, when you could get a job at the soda fountain part-time, and work full-time in the summer and pay down the whole thing. Kids do need help if they're to come out of school without massive debt.
I fully expect my son's education to be a family project. We've saved part of the costs, he's working to help pay part of it and will probably work part-time while he's at school, he may have to borrow some, and we'll contribute what we can.
Why not just pay for it all? Because what kids have to pay for themselves they value more, from that first toy bought with their own allowance, to the iPod they saved up for by mowing lawns. As an undergrad, I saw kids from rich families whose parents paid their way and who pretty much blew off their educations, doing the least they could get by with. And why now? Some of them already had positions in Daddy's company waiting for them. Now I see my own students who are paying their own way through school, and who understand the value of what they're paying for. They're in school nearly every day, and if they can't be, they let me know why. They get their work done, and if they're not tops academically, they're still good students.
Posted by: Stock Mama | June 13, 2006 at 02:18 PM
this is just a response to your pizza-eating fear factor in China comment on mymoneyblog.
Chinese people wouldn't be scared of pizza. They eat everything (especially the Cantonese).
There's some jokes about this: "You know, if Adam and Eve had been Chinese, they would have eaten the snake"
"The only thing with four legs that Chinese people won't eat is a table."
Posted by: inagm | June 13, 2006 at 02:20 PM
Cute.
For the rest of you who aren't aware what I said, I left a comment at MyMoneyBlog in response to Jonathan's comment that Fear Factor's "gross food" segments are simply regular foods taken from the other parts of the world (Jonathan is in China on vacation now). I suggested that if they ever did a "Fear Factor China", they could offer pizza to be eaten. Imagine their horror!!!!!!!! ;-)
Posted by: FMF | June 13, 2006 at 02:33 PM
Stock mama said it way better than I did . Also the choice of college is key. A community college will more likely be willing to work with students, but a 4-year private institution is not going to. So it's helpful not to get "more college than you can afford", which is an easy trap to fall into for high-achieving HS students.
Posted by: annab | June 13, 2006 at 02:36 PM
I agree with FMF that working during college isn't a hardship, but I think more students could work smarter. I studied Computer Science and I did entry level helpdesk, computer lab monitoring and programming. I could have served food in the lunch line for the same pay, but the practical exposure to my profession was immensely useful upon graduation.
Posted by: Duane Gran | June 13, 2006 at 02:42 PM
"I know several people whose parent's paid 100% of their college costs. For every one person that did well in school and now has a decent job, I know three who blew off college and now work selling farm equipment insurance."
Conversely, I knew a lot of kids who tried to pay their way through college and still dropped out. Bolstering your arguement with anecdotal evidence isn't very useful and is quite insulting to those who were fortunate to have parents pay for school, and yet are hard working and have a good work ethic.
Posted by: | June 13, 2006 at 04:05 PM
It goes both ways as far as paying for college goes. There are lots of students that don't take school as seriously because they aren't paying for it, and there are also lots of students that can't handle going to classes and working (or end up taking out lloans so large that their education doesn't actually pay for them in the long run). It has alot more to do with the student than the financial situation. You shouldn't pay for your kids education if he's the type of kid that isn't going to work hard at school (and you should know your kids well enough to know if this is true or not), but you also shouldn't refuse to pay for college out of fear that it will cause them to suddenly completely change their work ethics (plenty of kids succeed in high school and most of them aren't paying their own way through that).
There is lots of evidence that suggests that working on campus is beneficial to students beyond the extra money that is brought in (I have not seen studies that compare on campus to off campus work though).
Posted by: Nick | June 13, 2006 at 04:14 PM
4:05 pm -- It's insulting to me that you'd leave a comment like that and not be man/woman enough about it to claim it.
Posted by: FMF | June 13, 2006 at 04:18 PM
Sorry, that was me who left the comment.
Posted by: Him | June 13, 2006 at 04:23 PM
Ok, so now I'm especially insulted. ;-)
Posted by: FMF | June 13, 2006 at 04:32 PM
Alright, now I can see where your point of view is coming from (I clicked through to your site and checked out your net worth statement).
Still, I think my point was valid. It especially hit home with me because the guy who wasted all his parents' money was my best friend in high school. Smart guy too -- B+ to A- student. But when he was handed $10,000 at a time...
Posted by: FMF | June 13, 2006 at 04:37 PM
As someone in college right now, paying for all of it and working part-time during the year (and full-time during the summer), I agree, working during school is extremely doable. During my first year (which was last year), I took an above average number of credits and worked part-time on campus, but it's all about managing your time.
Sure, if you spend all your free time out partying, then of course it'd be hard to manage a job and get good grades, but as long as you're sensible and try, it's not an impossible hardship by any means.
Posted by: twins15 | June 13, 2006 at 09:16 PM
I think you're plan is a great compromise! Only a couple of my friends did not work during college, a majority did. In both situations my friends are doing well, but I would say that those that worked during college are doing better.
Working while college teaches you some of the best lessons about the real world. The saying that you use 10% of the things you learn from class in your job holds true in my opinion. The other 90% is the time management, risk management, socialization, and other soft skills which become critical once you graduate. Not to mention the fact that internships and my work experience probably helped me land the job I have today.
If you can't handle work and get good grades, I think there's a much deeper problem that needs to be addressed, and it doesn't have to do with intelligence...
Posted by: Financial Freedumb | June 14, 2006 at 12:33 AM
your not you're...damn the grammar! :) I need to recheck before hitting that Post button...
Posted by: Financial Freedumb | June 14, 2006 at 12:37 AM
Oh, and about that comment, "In my opinion, if not working means the child can't attend college, then it's probably a better idea to have the child defer college until the money is saved so they can really focus on their studies." I would add a huge warning on this piece of advice...I've seen first hand, a couple of my friends putting off college to work, and now they are having the hardest time going to school...Once the cash starts coming in, it's really difficult to just give it up and go back to school.
Posted by: Financial Freedumb | June 14, 2006 at 12:41 AM
If the cash is coming in, why should they give it up? If they aren't saving the cash for college (which is really the reason they put off college) then obviously it's not going to work.
Do internships generally happen while you are taking classes at the same time? The co-op program I worked through was nice because you worked full time (making alot more money than I'd have made at any on-campus or off-campus job) every other quarter.
The best friend you mentioned obviously wasn't that smart if he wasted $10,000 of his parents money.
Anecdotal evidence is entertaining, but it goes both ways. My best friend and roomate in college was extremely intelligent but he had to pay for whatever he couldn't get covered in scholarships and that didn't make him any more likely to go to classes (his brains got him through 3 years of mechanical engineering, which is to say he's got alot of student loans left after dropping out of school). This doesn't mean every smart kid who tries to work his way through school shouldn't bother because it's a waste of money, but he's certainly have been better off not bothering. Just like it doesn't you shouldn't ever just give your kid the money for school because they'll simply waste it. It depends greatly on the kid you are talking about.
If a kid is going to party and waste their parents money, they're probably going to do the same with their own money (and time).
Posted by: Nick | June 14, 2006 at 09:46 AM
I think that I would have done considerably better in college if my parents hadn't paid my way as much (though I did end up with some loans). I was a perfect example of the kid with a lot of potential, who didn't do his best, because I knew that I could always re-take the class the next semester if things didn't work out. I ended up graduating, but my GPA pretty much stunk. There just wasn't mch incentive for me to work hard - my parents threatened to stop paying, but they didn't do it.
Another thing that I'll agree wholeheartedly with (that was mentioned in a previous comment), is that kids who are not rich shouldn't be going into private colleges, to get some random liberal arts degree. If there's a specific degree program that can only be had at an expensive private college, then you've got to analyze the cost vs. benefits. If you've got rich parents who are going to pay your way, then it's no problem. But there are *far* too many people (on internet forums and such) who come out of private college with *huge* debts, and a bachelors degree in History, English, Social Work, Psychology, Sociology, i.e., fairly useless degrees. Then they find that they can only make $30k with those degrees. The cost-benefit equation must be looked at before college starts. There's nothing wrong with getting a liberal arts degree - just don't pay $100k to get one if you won't be able to afford to pay it back.
Posted by: Rich | June 19, 2006 at 09:23 AM