Should Kids Pay for Their Own College Expenses or Should Parents Pay It All?

Well, we're now into round three of a discussion on whether kids, parents, or a combination of both should pay for college expenses. For those of you who haven't been following this, here's a chronological listing of the posts on the topic:

• 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 - The main thought: "A recent WSJ.com/Harris Interactive poll reveals that 97 percent of parents expect their children to go to college and 80 percent plan to provide financial support for their children's education. Yet a little more than one-third of those polled have saved less than $10,000 toward that goal, while about half have saved nothing or aren't sure how much they've saved. That leaves one-sixth with savings in excess of $10,000."

• 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 - This really ignited the conversation. How? I said, "Our plan is to pay for half of our kids' education. They can earn their portions by working, scholarships, grants, etc. Both my wife and I paid almost all of our college tuition ourselves, and while making our kids pay so much seems a bit over the top, we do think they'll value the education more if they have to work for it."

• 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, Part 2 - This covers the "who should pay for college" question from many different perspectives.

As you might imagine, this last post generated quite a few comments of its own. Here are a few I want to share with you all:

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.

This is what I'm hoping my kids end up with -- a good sense of accomplishment and paying for something that was well worth the cost.

I've always said that my kids can fund their half of college costs from ANY source -- like academic or athletic scholarships. It gives them an incentive to work hard in high school. The next commenter liked this idea:

I like the way you described it (that their half could come from anywhere and not strictly cash out of pocket.) That makes it a lot more manageable to strike the balance between work and school and can help to minimize the student debt after graduation.

This commenter liked the idea as well:

I think your 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...

Next, the commenter who originally advocated that kids not work during school years clarifies her position:

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.

Next, we hear from a college professor who's seeing the issue from ground level:

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.

Next, we all discussed the issue of whether or not kids appreciate an education if it's all paid for:

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 loans so large that their education doesn't actually pay for them in the long run). It has a lot 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).

And this commenter didn't like my comment about a friend who wasted his parent's money at college:

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 a lot 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 roommate 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 a lot 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'd certainly have been better off not bothering. Just like it doesn't mean 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).

Next, we heard from a student:

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.

Finally, we hear from someone who wishes his parents hadn't paid for his college:

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 much 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.

So, at the risk of having the conversation go on indefinitely, what do you think of the issue? Anything to add?

Comments

[Jeremy]

I married young (after Sophomore year), which actually ended up better financially. I attended a private, Christian university in Oklahoma City (or Edmond, depending on how the wind blew), and being married allowed us some freedoms. We moved out of off-campus housing and got a cheap apartment. Eventually, we moved again to on-campus married housing, where we paid $370/mo for rent, free cable TV, free Internet (wireless from the University), and other paid utilities.

The other thing that made a huge difference is that I was able to get a job working for the university in the IT department. I worked very hard, and even ended up with a supervisory position, monthly salary, and a 50% discount on tuition for my wife and I, with a +5% discount each year after. The only thing that stunk was that right after I graduated I was laid off. As part of my contract, I had a certain number of weeks equal to the number of credit hours that I completed under my program (I think it ended up being 31). They waved that part of the agreement, and let me know my position would end June 30, giving me basically 2 months to find a new job.

As far as who paid for college, my parents took out a PLUS loan to pay for my first two years, and ended up just paying it off. However, I've been responsible for the loans after I was married, and now have accumulated just under $39k. I think there should be a happy medium between kids paying off all the debt and parents paying all the debt. I think parents would do well to start saving for their kids, especially in tax-free programs. I mean, why not? Investing in your kids is really investing in your future.

Another thing to mention regarding college is that industries change. I entered college in 1998 looking to land it rich in the computing industry, and ended up finishing in 2003 and unable to find even a lowly tech support position, even though I had been working part and full-time for 2-3 years. Sometimes the industry is not the same leaving as it is entering.

[abileneblues]

I work for a private university and used to work in the Financial Aid office.

When people choose a college, they are thinking about (as Jeremy mentioned) the end goal of a job. The purpose of that education is to get to that job. However, it is also to educate them for life and that life is going to have bills. With that in mind, I don't think that there is a one-size-fits-all answer to this question. If your child has reached a level of maturity in that they are responsible with money as well as being able to be responsible with the gift of an education, I see nothing wrong with you paying. If you feel that your child needs the experience of paying for college to help build that maturity and those good financial habits, by all means, work out a solution that includes them contributing to paying for their education.

The other big factor is the financial health of the family as a whole. I've seen parents pay all out for the first child and have no money and no ability to borrow more when child number two comes along. I've also seen students have to leave school because of tragedies that made the parents unable to pay and even needing the earnings of the student to get the family back on its feet.

And just to put a little bit of a spin on Jeremy's last point, I hope that students/parents aren't choosing a major/job with earnings (potential) as the only variable. Help your children choose something that they will love to do and that will give them a sense of fullfilment.

By the way, Jeremy. If you went to the school I think you went to, it's a sister school to the one where I work. We have a programming position open if you don't mind moving to Abilene.

[Mira]

I am a student and currently doing a summer internship to save up for the upcoming academic year (I check out FMF during my lunch break). I also work on campus when classes are in session. As someone stated in a previous post, students (or any other individual) place greater value on the things they have to pay for.

I grew up in the West Indies in a family unit where money was always in short supply. I remember having to contribute to the costly high school and community college exit examination fees and being driven to study harder so as not to waste years of my birthday- and Christmas-gift savings.

And you know what? At the end of it, I was awarded a full scholarship to pursue my undergraduate degree at a US university. With the BS degree and that scholarship complete, I'm working again to pay my way through the graduate degree. Additionally, I recently received two partial scholarships as a member of various student organizations. I value these scholarships and view them as being paid to learn and produce good grades.

I hope students out there can see the value of the money they receive from external sources like scholarship programs and parents and find ways to maximize their educational experiences. I know too many individuals, especially from home, who would love to go to university but cannot secure the financial backing to get a student visa.

I'll have to stop here in order to wrap up my lunch activities.

[Amanda]

I realize that it is not possible for all parents to pay for their children's higher education. However, that being said, I think it should be a parental goal. Giving your children the gift and benefit of financially supporting their college career is probably the most substantial and meaningful gift you will ever give them. It is absolutely one of my biggest goals to pay for my children's undergraduate education, and I think that if other parents can contribute to their child's schooling, then they should.
That being said, I think that it should be obligatory for children in college to work part-time jobs or internships throughout their four years. They should definately be responsible for bringing in their recreational money and learning to save as well.

[check]

I think students need to pay for themselves and parents only help if they feel their kids need it.

Having just graduated less than a year ago, I noticed students are more frugal when it is their money and knowing that if they spend it all, they can't afford to go to the movie next week or go out and eat at X restaurant for a friend's bday the following week.

Learning to live frugal is a skill by itself. You learn to buy books from half.com instead of the student bookstore, you learn to borrow books from friends, ask around for books, etc...

With that said, there is a fine line between doing that and having your kid work 3 jobs to support themselves. Maybe the kid needs to realize, I either gotta cut back on expenses or increase income. I know there are some exceptions like med school that makes this logic harder but thats what loans are for. :)

[annab]

I think most people reading this blog are going to be proactive and informed when it comes to college costs, so the decision not to pay can be addressed by emotional or philosophical standards, as opposed to purely economic ones. The question on whether or not to pay for your child's college implies that you actually can afford to do so.

So this comment is independent of the debate on who pays for school, but I would say to put the same (if not 1,000x more) research into choosing a college as to choosing a home or car. You want to find someplace that is going to be a good return on your investment, but not more college than you can afford.

I think that quite a few parents do not inform themselves about the college application and financing process and have a mistaken understanding of what they or their child can afford. This is like when a person gets "upside down" in their house or car payments because they didn't assess the –total- picture before they bought the item. There are plenty of smart students that qualify for aid, but are strapped with significant debt before they properly start on their careers. Or, they are unable to finish their educations because they can not afford the total cost after the first year, due to tuition increases or aid reduction.

If you go to http://chronicle.com, (website for the Chronicle of higher education) and search for student debt and aid, you can find articles about the average loan debt, college costs (and their inflation rates).

At the colleges themselves, it can be useful to see what is the typical aid package, what is an optimal aid package, how many hours are students permitted to work (at a campus job) and what is the job market near the college if work-study isn't adequate to cover the costs. Also, what is the graduation and job placement rate, and how coursework taken at a community college or AP high school classes transfer into college. This should be done before the child even steps foot on the campus (like how you never test-drive the car until you’ve figured out the financing)

Also, what "intangible" aid is going to be offered by the parents, if at all. A child that agrees to go to a local university or college may be able to commute (even if they don't live at home), which reduces the amount of aid needed (room and board on and near campus is often much higher than in areas a little farther out.)

Information like this can help the parent decide (before the college visits even start) what the total financial "picture" will be for their child and for the family overall.

[annab]

Oh -- forgot to mention that when looking at the aid package, use the family's actual income (or look at the average income of families entering the school.) You may find that your child qualifies some types of aid, but not others. So you may steer towards schools that gives out more of the kind of aid you can use.

[Lori]

When I was in college my parents were struggling, but they wanted me to do the best I could and concentrate on school. The deal we had was I had to work during the summers and give them $1000.00 per summer towards my education. And anything I made after that I could keep. $1000.00 was a lot of money to me in the 1990's. But it made me appreciate the sacrifice and importance my parents put on education.

Currently now I have three boys that will soon be entering high school. We have told them that we do not promise a car or a computer or nice things, but we will do our best to make sure you will get a good 4 year college education. Anything after 4 years they have to pay for. That being said, I do expect them to have summer jobs. I will expect them to pay for car insurance, gas, etc.. But my husband and I will make sure education is taken care of.

[Jay]

I generated angry comments when I wrote in a post that I planned to help the kids as best I could when it was time for college, but ultimately it was up to them, and it's odd how financing college has so quickly become such an expectation of parents. People who can't read commented as if they had not even seen the part where I'd help as much as I could - which frankly could mean paying most of it IF, and that's a gigantic if, that were possible. IIRC the college part was in the context of teaching the kids that they would in fact need to support themselves when they become adults, and be preparing for and thinking about that ahead of time, something I never got from my parents and am still recovering from 27 years after hitting adulthood.

There is also less but still somewhat of an expectation that kids should be able to go to a college that costs real money, not a state school. Nor enough of an expectation that colleges should be subject to the market and run like real businesses that can't increase their prices at several times the general rate of inflation year after year after decade.

I went to college - a pretty radical thing in my family - by paying for a state college on my own dime, with my father putting me up during most of that time and my mother tossing me $100 toward books a few times.

[Dan]

I believe its somewhere in the middle also - if a student can do well academically, the parents should support the student and assist them in their academics. Jobs interefere severely with school work, and the hard work put in to the academia will no doubt someday payoff. However, it is important to get real world experience as well, so if you can't pull more than your 160k worth of weight in grades, you should get a part time job to save your parents some funds.

[Miranda]

I’m declaring a state of emergency on Financial Literacy! The numbers speak for themselves. Last year more students filed for bankruptcy than graduated from college and teens admit to spending 98% of what they make instead of saving it. Our society has created a self-serving, entitled generation that expects more for less.

In the US, every 7 seconds someone across America drops out of school (that’s over 1 million students every year). Translation—only 53% of all high school seniors graduate from high school and the one third that do graduate do not have the skills to do anything other than minimum wage work. Today the U.S. ranks 24th in the world in math, the average college student graduated with over $19,000 in debt, and the average in credit card debt is $2,700.

Parents need to prepare their children for the reality ahead and need to lead by example because financial accountability takes years of discipline and hard work. And if you don’t teach your children or grandchildren anything—teach them that. Coming September 1st Money Made Simple. Stay Tuned.

[WisdomNeeded]

We need to be careful about taking a "one size fits all" approach to this question.

I was an extremely curious and motivated kid. For example, I spent the summer before college working 16-hour days / 6-day weeks studying and working on an engineering project. This was not for any class or job, but just following my own passion. My parents wisely allowed me to do this, even though it meant not earning any money.

I was similarly enthusiastic in college, and double-majored in two challenging disciplines at a top-tier university. Again, my parents allowed me to devote myself fully to school, with no work responsibilities during the academic year. They paid as much as they could, and I took loans to cover the rest. (My academic success did enable me to earn above the norm in summer jobs.)

I did very well in college (and participated extensively in extra-curricular and social activities) and have done very well financially after college. I'm convinced that having zero work responsibilities during the academic year was the best option for me, although I recognize that, for the reasons cited by others, it's not for everybody.

[Return the Love]

I'm a high school senior, and it looks like I'll be paying my own way through college for the next six years, considering I'm persuing a degree in Pharmacy.

I understand that this can be done, but how exactly. Yes, I need to take out loans and get a part time job while I'm at school. Can someone who's actually done this give me the step-by-step on how to survive for six years? So far I've been unable to find any information online or through friends. This site has answered a few questions though.

Thanks. :)

[Tom]

I am paying the last two years of my kids college. They get to pay the first two years.

I sent my child to private college. The first semseter was way too costly, so I cosigned with her on a two bedroom house near college. She got to rent the second bedroom, and took a full-time job on third shift. I felt comfortable doing this because she had always been an "A" student and was very respoinsible. Things worked out, and she nor my husband and I have had to take out one penny of college loans.

[BC]

I have read a few threads like this today and as usual I am alarmed by the fact that there is one nuance of this discussion that I have not seen mentioned on any of the posts I've read this morning. Government financial aid is based on the entire household income of if the student. Because of this I was actually lucky to come from a poor family as a considerable amount of my education was taken care of by pell and tap(new york state) grants. I did however end up with about 30K of college loans between two undergraduate and one graduate degree. I am very close to paying those off now at 31 years old.

My point is that the government expects parents to contribute to the education of their children. I think that affluent parents with responsible children should feel some responsibility for helping out but if you cannot afford to pay for your children AND you are above the goverment aid line than you yourself have possibly been irresponsible with your money and your kids could probably use the education that comes from paying their own way as they probably did not get it from you.

I do not plan on paying full tuition for my children but I will certainly help them to the extent that I level the playing field compared to those who are getting government aid. They should not get penalized for my success. I know plenty of people who paid much more for the same education that I have because their parents had money but managed it poorly and could not make up the difference from where the government would have contributed.

[Apoth]

Parents should continue paying into their offspring investments, but not pay it all. Freshman year is where many parents (Yes, you!) will find that "angel" or "good-kid" squandering that hefty tuition/fees and other college expenses. Make your kid pay for semester or year one and then reward actually going to class and good performance with paid education.