Offering my son a kickback

Parents Forum
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<p>Im trying to provide a way for my son to have a stake in the game as far as college expenses and would like some opinions. </p>

<p>What im thinking is that he would pay for X dollars per year. As an incentive to get scholarships, cheaper schools, etc ill pay him back 25% of the difference between our cost and EFC. </p>

<p>Example: EFC is 22K. Costs after scholarships/etc is 18K. x=3K</p>

<p>My son would pay 3K per year, but I would pay him back 1K at the end of the year (25% of 4K). </p>

<p>Smart ? Stupid ? Flawed ?</p>

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<p>I teach a seminar on aligning incentives with desired outcomes in the workplace. (i.e. if you reward people for speed, don’t be surprised when your error rate starts to rise… since people start to make mistakes when they push to be faster to get the rewards…)</p>

<p>So I would make sure that you know what outcome you are shooting for. A degree at the lowest price possible? That your son gets a degree in four years/8 semesters with good grades and a sense of purpose in his life, an education, and an idea of what he wants to do professionally? The lowest out of pocket cost for you without sacrificing educational quality? The highest GPA possible for him to facilitate med school admissions?</p>

<p>Etc. All systems are smart, stupid and flawed… you need to focus on the outcome and then move backwards. Maybe your incentives will incent him to skip college all together. Is that the outcome you want?</p>

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<p>It also depends on the kid. I have one kid who has to have immediate awards and anything delayed to the future just doesn’t register for him. And if it came to an on the spot decision on some fun or studying, these incentives would just go out the window. On the other hand, i have one who wouldn’t even need these incentives at all.</p>

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<p>Thanks for the posts. In aswer to your question blossom about what I am trying to do…I guess I hope to make EFC just that, a family contribution not a parental one. I see so many of my friends with kids who diluge their parents with college expenses without any thought to it, without any stake in the game. Also I see parents trying to use money as a weapon to force grades/majors/etc. Both attitudes bother me.</p>

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<p>We pay for tuition, room and board, books and travel home for some breaks. After that he is responsible for his own expenses. Clothes, vacations, going out, concerts etc…are not our expenses. He also earned some merit based aid and we consider it his job to comply with the requirements of his scholarship.</p>

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<p>Why don’t you have him pay books and spending money? It helps keep the book cost down… they are MUCH more frugal about finding cheaper options, returning rented books on time, etc. when it is their money. That sounds a lot easier than your accounting. We also required our kids to pay the expenses if they took any unpaid summer internships where they could not live at home. As one kid was a political science major and wanted to be in DC for a summer, she worked and saved ahead to cover that expense. So… for us it was easier to just designate certain expenses for them to pay than to try to set a dollar amount.</p>

<p>Agree, too, that part of their “financial” responsibility is to meet any ongoing merit scholarship requirements.</p>

<p>Ah… editing because I re-read the original post. You are trying to have an impact on what school he picks to begin with and his scholarship applications. Most families just tell the kids how much money there is, and that is that. Sometimes they offer the kid some money for grad school (or just give it to them) if the kid picks a cheaper option than the amount on the table.</p>

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<p>A couple of variables that may come into play for you:
1/Your EFC is $22k…however the university financial aide offices has your COA at $35k or something in excess of the EFC amount
2/The scholarship monies are applied not to your costs, but the amount of grants the college offers your child…so that your costs remain the same
This happened to us. The suggestions from intparent and proudparent may provide the incentives you are seeking. We used some of both for our daughter.
-APOL-a Mum</p>

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<p>Mathematically, in theory you could run into trouble depending on the numbers. Eg.</p>

<p>EFC=22K, CAS=$4400, difference = $17600, .25*difference = $4400. So if the CAS is less than $4400, you are actually paying the S more than the CAS. Of course, if this is a great number for you, then maybe that’s ok. :)</p>

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<p>I would just tell him that he needs to work in the summers and save money to cover costs and if you want to give him a kick back, put those funds into an account for a future downpayment on a house, just don’t tell him that. I don’t think that you should start with a “program” unless there is an issue. </p>

<p>Come up with a figure that you can afford and tell him he has X$$'s for college from you. He can either come up with the difference or find a less expensive college. Make that number something that forces him to contribute. If you don’t define a number you run into all kinds of problems I think.</p>

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<p>I like your idea. We wanted the same outcome, but handled it a little differently. We drove DD down to the bank, watched her withdraw a big junk of her savings and send it to her college for tuition. We paid the balance (after FA). DD was raised since childhood to “save money for college.” So, when the day came that she had to withdraw the majority of her savings and give it to her college, it should not have come as a shock - BUT IT DID. :wink: .</p>

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<p>In theory I’m not opposed to students savings going towards their tuition, however I think this is something that should not just be left at “you’re saving for college”. That’s a vague concept for a teenager. If you plan to trot your 17yo down to the bank for a shock and awe moment, which clearly it was, a heads up along the way of what to expect would have been the respectful thing to do. Yes, respectful. In advance, a year…whatever…be very clear and say “prior to going to college we will expect you to withdrawal $X, or %X, of your savings to put towards your college tuition. I know we talk about saving for college but I just want you to be clear on what that means so we’re all on the same page.”. Call me crazy but I if that’s what I expected from my child (and I find nothing wrong with it) I would have wanted to make sure we were all clear.</p>

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<p>I told my children if they pay 100%, I will buy them a car when they graduate. I set the standard at basically the equiv. of a new Honda Civic. That would save me money, get them something they need a lot when they graduate, you get the idea.</p>

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<p>Mitch, I think your plan is excellent. We did something somewhat similar, but won’t be “paying” my D back annually – we’ve told her that her “take” will be available to her for study abroad or other unusual expenses, or after graduation for approved expenditures (grad school, a car, to subsidize a low-paying first job in her field, etc.) I think she really liked taking an active role in the financial end of things – she went after merit and scholarship $ with a vengence, and came up with an awesome package at a terrific school. Definitely a win-win for us! :)</p>

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<p>WE used incentives for D to go to school with Merit & at a lower price than brother. No loans, and she got to takeover the third car and soph yr she could bring it to school with her. We also told her we would help her out with abroad programs- but we were non specific as to how much.</p>

<p>I know a kid whose # 1 school was $50+K and her second choice was $24K (she got a big scholarship there). She had to write a list of reasons why # 1 was so much better and it had to be based on factual reasons not emotions. She had a tough time creating that list. Went to the $24K school & her parents are thrilled to pitch in on spending $ (if she went the other school there would be no extras for anything.) and she loves where she is.</p>

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<p>My D turned down the gift of a car at graduation (it was not tied to her school expenses, though). She got a job in a city with great public transportation, and decided it wasn’t worth the hassle and expense. I put some money in a CD for her to put toward a car someday (yes, stayed within the IRS gift limit!).</p>

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<p>“In theory I’m not opposed to students savings going towards their tuition, however I think this is something that should not just be left at “you’re saving for college”. That’s a vague concept for a teenager.” BlueG.</p>

<p>It wasn’t a vague concept for my teenager. She was told since before she could read that she should save her money for college. Whenever she got birthday money from relatives (except iTunes cards and gift cards) or when she was paid to babysit, do yard work, or clerk in an office - from the time she was 2 until she was 18. When she wanted something (that was reasonable), I told her I would buy it for her because she “needed to save her money for college.” If she needed money to go to the movies with friends or get pizza - that was on me. When she opened her bank account when she was six, she was told that was for college. There was nothing vague about it. When she learned how much college cost, she knew she could not save that much. We said, that is okay, you pay what you can, we will cover the rest. She did not completely drain her account because she needs spending money “at college.” It was all about “respect” - self-respect. Thanks for asking Blue.</p>

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<p>*What im thinking is that he would pay for X dollars per year. As an incentive to get scholarships, cheaper schools, etc ill pay him back 25% of the difference between our cost and EFC. </p>

<p>Example: EFC is 22K. Costs after scholarships/etc is 18K. x=3K</p>

<p>My son would pay 3K per year, but I would pay him back 1K at the end of the year (25% of 4K). *</p>

<p>I’m a little confused. </p>

<p>Are you thinking that merit scholarships are applied to EFC to reduce EFC? That’s not how it works.</p>

<p>To reduce your EFC then scholarships have to be SO BIG that they cover all of need, and then “cut into” EFC.</p>

<p>$50k = COA</p>

<h2>$22k = EFC</h2>

<p>$27k = “need”</p>

<p>So for your son to reduce your EFC, he’d have to get a HUGE merit scholarship of over $27k. While that is possible if your son has high stats and is applying to schools that give huge merit, but it’s not likely going to happen if he’s just applying for private scholarships which have smallish awards and are only for freshman year. </p>

<p>However, if your son were to apply to school that awarded him a free tuition scholarship, then:</p>

<p>$50k= COA</p>

<h2>$35k = Free tuition scholarship</h2>

<p>$15k is your remaining cost. </p>

<p>So, your EFC savings would be $7k. So then you’d give him 25% of that. </p>

<p>Is that right?</p>

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<p>Or you are all on the same team as a family. Every scholie, grant or reduced COA school she applies to helps the family as a whole.</p>

<p>Her incentive is she gets to enroll, attend and hopefully complete her college education in a fiscally responsible manner.</p>

<p>Her reward is four years of an education where she took advantage of everything the school had to offer and gave back to that community to enrich the schooling for others. Her reward is something she earned.</p>

<p>I think and hope as a college student mature enough to do so would want to minimize the financial impact as much as possible while still seeing the value of the education she would be receiving for the cost.</p>

<p>But I am also of the mindest that there are no “dream schools” there are just dreams and they can be fulfilled in many ways and at many schools.</p>

<p>As a team member she is entitled to all the info both good and bad about the realities of purchasing a college education and her role as a team member needs to be defined from the beginning of the search, heck before 9th grade in my opinion.</p>

<p>My 5 were all made aware of the financial situation regarding college, what loan debt means and what we as a family could do together for each other. Heck, I moved my family 3000 miles to a state where college could be made affordable if they didn’t qualify for merit or financial aid. There were 4 in high school at the time, they gave up friends, teams, ECs so they could all benefit at some point.</p>

<p>Worked out for us, but the same concept can be applied…the expectation that she would need some financial kickback from you in order to look for scholies or influence other decisions just seems to not be fair to her and who you want her to be.</p>

<p>Again her reward is she is being provided with the option to attend college, which some students are not given. Her earned incentive is her completing a degree program better educated than previous adding to her growth.</p>

<p>Kat
ps instead of daughter for OP, son</p>

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<p>“But I am also of the mindest that there are no “dream schools” there are just dreams and they can be fulfilled in many ways and at many schools.” Katwk.</p>

<p>Love this!</p>

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<p>*“But I am also of the mindest that there are no “dream schools” there are just dreams and they can be fulfilled in many ways and at many schools.” Katwk.
*</p>

<p>Right! The dream is your career, not 4 short years in college.</p>