How have other families structured financial arrangement w/ kids?

I am interested to know how other families have structured an arrangement with their kids around paying for college. Our child will enter school as a freshman this fall. While we feel it important that she contribute towards tuition costs, we do not wish to see her take out expensive loans (and we are unwilling to take on further debt ourselves, or to cosign a loan with her). We will be funding our kids’ education through what we’ve saved through 529 plans that we started when each of the three of them was 6 months old.)

Our daughter has worked a part-time job through all four years of high school, and in general, has been very responsible about saving money and covering her own costs when it comes to “extras”: fun with friends, senior trip, et cetera. I am just wondering, As a practical matter, how have others in a similar situation approached the “talk” concerning finances?

Seems like the usual advice is that you should have had the “money talk” last year, before the application list was made, so that the financial parameters are known to all parties before deciding where to apply.

Did you previously give her any cost constraints with respect to selecting colleges to apply to or which one to choose among the admission / financial aid / scholarship offers?

Seems like you are lucky in that she is responsible with money, so that you are likely to encounter fewer money problems with her than some others will with less responsible-with-money kids.

Thanks for responding! So, my question really isn’t so much one of how the money piece will inform choice of where to attend - she is aware of what we are willing to cover - waiting to hear whether her 1st choice school will offer any merit aid - if it’s not enough to bring it in line with our flagship state school, she will have to decline the offer of admission.

What I’m really getting at is irrespective of where she ends up attending, we will ask her to contribute to covering her costs. Assuming there are other families with similar expectations of their kids, what did this arrangement look like for you? Did you ask your child to contribute what they’d saved from a summer job, for example? Or did you ask that they just cover their own expenses beyond tuition-room-board? A big part of our interest in having her help with costs is so that she takes seriously how significant an investment of time, money, and effort college is. We’d like to see her have “some skin in the game,” as they say.

If she does get a sufficient merit scholarship to attend her first choice school that would otherwise be too expensive, then wouldn’t having to meet the renewal criteria (typically based on college GPA) for that merit scholarship be sufficient “skin in the game” for her?

We are thinking it might be reasonable for her to contribute about $5000 / year. We are not wedded to this number. Interestingly, we are realizing just how much times have changed (and how much more expensive college has become!), since my husband was able to meet his parents’ expectation that he pay 50% of all of his college related costs, inclusive of tuition-room-board, and I was able to do as my parents asked, which was to cover 25%. Neither of us took on any debt to be able to do so.

How would your expectations of what she contributes vary based on the net price of the college she chooses? I.e. if she choose a college that is less expensive than your price limit, would your expectation of what she contributes be different (even though she is implicitly contributing by choosing a less expensive college)?

You make a good point, ucbalumnus - we are open to taking that approach, I am sure. If she ends up at a less expensive school, though, of which there is a very good possibility she might, we still want to ask that she share the financial responsibility.

We covered tuition, room, board, fees for our state flagship. Our kids earned enough merit money to cover the difference between the LAC they each chose and our state u. Their “skin in the game” was keeping the GPA high enough to renew the merit scholarship each year. We also expected them to have summer and PT jobs that covered entertainment, gas, spring break trips, and we pay their cell phone, car insurance, basic clothes. We are fortunate that neither they nor we had to take out loans to cover undergrad.

My only requirement is that D focus and maintain her scholarship. That’s enough skin in the game for me. Any money from paid internships will be hers to keep/save.

We pay for tuition, room and board,and health insurance, and D’s phone. The money she has saved from part-time work, small scholarships, and gifts goes towards books, supplies, supplementing the basic meal plan, public transportation, clothing, gifts, etc. She will continue to work summers (or more, if she can keep her grades up) throughout her college career. We consider this her “skin in the game” because, luckily, we can afford the in-state public school tuition (and weren’t interested in anyone going into debt). If she had insisted upon one of the several pricey privates she was accepted to, the bridge between one of those and the public may very well have been loans she would have had to take out.

My oldest didn’t get a lot of merit at the school where she wound up. She worked for books and incidentals and paid some tuition from savings and took out a small student loan. I paid the vast bulk of her tuition and room and board. She has a good job out of school. My next one got a very nice merit scholarship as well as some financial aid. I do not want her working first year, so I pay tuition and room and board. She pays for books and incidentals from savings. She will have to take out loans and so will I because we spent so much on her sister. We will cope. I guess my point is that I want my children to make grades, keep their scholarships and get launched after school. That’s their skin in the game. I will finance their education to the extent I am able. It’s my responsibility to make sure they’re able to make a good living.

This was the Thumper family plan. We did it with both students.

  1. Kids took the Direct Loan every year. Our graduation gift to them was repayment of that loan...but they didn't know that until graduation day.
  2. Kids had to work to earn all discretionary spending money, and pay for books. We did not give our kids spending money...and we also didn't ask how much theynwere spending. This was their earnings...and their responsibility.

We paid everything else. My salary was deposited into my checking account auto deposit…and it was withdrawn monthly as well and sent to some college for a LOT of years.

Is that what you want to know @garvey

It is, @thumper1. I am definitely curious about all of the variations of these arrangements. We are still
sorting through what will be our approach and it is very helpful to hear how other families have made these arrangements work. Thanks for sharing!

Our requirement for both kids was to maintain the required minimal GPA, core curriculum, prerequisite courses, high coursework load and everything else required to follow their chosen academic path (which were very loaded and ambitious) in their colleges. They had to get their degrees and complete all majors, certificates etc within four years or less (son did in 3.5, so we did not pay for the last semester), they had to find paid full-time professional internships every summer (the money went to their IRA accounts, and the balance covered their living costs). We refused to pay for study abroad, fraternity fees etc. But we did not require them to take part-time jobs, or to take college loans. Both of them spent a lot of time volunteering for a non-profit, but they had to ask our permission since we covered their living costs, and they could spend this time working and making money.

Similar to @thumper1 , we paid for tuition, room and board, and fees, and expected kids to cover discretionary spending and books.

We also required that our kids maintain the GPA required to keep their merit awards. One had a decent amount andn the other a smaller amount. But we were clear…that if they lost the scholarships, they would not likely be returning to their expensive private universities.

Both graduated with fine GPAs!

Oh…and we ONLY were in it for the four year plan. We did not pay for courses beyond the regular four years of college. One kid took courses one summer…and that was on her dime.

Do you have reason to think she won’t take it seriously? If so, maybe she needs a gap year.

We are full pay. We have given our children a maximum for what their tuition room and board can cost because $65k is out of our budget for three kids. If the cost after merit aid doesn’t fit the school is out.

Their skin in the game is the amount of the Stafford loan. They can either take the loan or pay it from their own money if they wish. This year they were gifted money from a relative that all three will be using to fund their share. They pay their own entertainment/food (beyond meal plan). If not on meal plan, we help fund groceries but will not pay for expensive meals out. My oldest has substantial personal income from his coops. He pays his own expenses while on coop but pockets the rest. I do not require him to chip in any extra beyond the Stafford loan amount.
I’m very satisfied with how this plan has worked for us. Our kids know exactly what they need to cover and there are no surprises.

We are also having our kids take the direct loans. We will likely repay them, but it helps float the costs for now. I expect mine to have jobs during summer and during the school year. I don’t expect them to be able to put themselves through college like I did, times have changed, but having a job and paying for your own costs beyond tuition, fees, books, dorm, meal plans, is reasonable in my book.

We gave our DD a budget equal to a bit more than our pricey state flagship. We told her that if she chose to go to a scholarship school, the remainder is hers to spend on grad school, travel or whatever. She took the full tuition scholarship, and we are now helping with med school. We didn’t want to be responsible for open ended costs, and likewise didn’t think it was fair to pocket the savings she earned.

I’m thinking of taking this approach to a hypothetical future wedding.