Setting up incentives for Kids to focus on academics in college

While we were trying to make a decision on private college for our child, I talked to one parent who told me that they had worked out an agreement with their daughter that as long as she did well in school ( A’s and B’s) they would pick up the tab for private school (i.e they would fund the education fully).

If their daughter went crazy (I think this school has a reputation for being a greek dominated party school) while at college and started earning C and D’s then they would make her pay a sliding scale of the costs they were incurring. They said this was an incentive for their daughter to focus on being a good student. She could graduate without debt and loans if she focused on being a good student. If she however decided that she wanted to “find herself” or “party till the wee hours of the morning” she could do that too, but on her own dime and would graduate with a lot of debt, since her parents would withdraw their support.

They did not expect problems, but since it was such a significant investment, they wanted their daughter to know what was at stake.

At first I thought this was kind of strange, but I have been mulling over this for a bit and I can “kind of” see the logic. Establish some boundaries and principles and then let the kid play within the boundaries, kind of thing.

Have any of the parents here tried this or some other incentives to encourage their kids to pay attention to their academics in college?

Please don’t come back with comments like “if they can’t trust their kid, woe on them” or “such a kid should not be going to private school” or some such thing.

Chime in with any ideas you might have.

If the parents will be withdrawing their support, where would she get the loans? Are they talking about a loan for $5500 and they would pay the rest?

Interestingly, Roland Fryer at Harvard has conducted a number of education experiments to see if financial incentives work for K-12 kids and their parents and the financial incentives did not lead to better outcomes.

@CheddarcheeseMN I did not probe them on how they would implement this, but the way the parent talked, it looked like they had found a way. This is a University kid though, not a K-12 scenario.

Oh my.

Our kids had merit awards at expensive private universities. The ONLY “deal” we made was that they had to keep,those merit awards, and that meant keeping a 3.0 GPA at their schools. If they lost the merit award, we would,have asked them to come back and attend a less expensive public university in our state.

It was not an issue for either of our kids to maintain that 3.0 GPA and their scholarships.

My parents made me take out some loans (back in the day, it was a large portion of the small tuition) and said that they would pay them off if I graduated. And I did, and they did. I thought this was very effective in me having ‘skin in the game’. Plus, they got an interest free way to defer payment.

By the time my kids went to college I felt that they understood the expense/sacrifice we were gladly making to fund their education (I did show them the first semester bill) and recognized that H and I expected them to work hard and do their best academically. We did not make any “deal” in advance but working hard at academics was implicit in our sending them to college. And as with the case above, they understood what was needed to keep the merit awards. Fortunately we had no problems on the academic front and both kids found time to enjoy themselves and get involved on campus as well.

@thumper1

How would that work though? Not saying this would have happened to your kids but can’t the kid just refuse if he/she wanted to? Would that effect their standing as a dependent at the University?

Depends on the kid and the major. If your kid is in a tough major at a school with grade deflation (and I think yours is headed off to a school with grade deflation, but don’t know about the major), you may just be cranking up the pressure to no avail, and driving your kid toward a breakdown (or rift with you). I believe both of my kids have pretty much worked as hard as they are able to in college. One graduated Phi Beta Kappa with no incentive from me except that she graduate in 4 years. The other has busted her butt at a very challenging schools. Not every grade has been an A or a B, but I have no concern that she has not been trying – her first year and a half in particular, she worked flat out almost every hour she was awake, including weekends. She had one very minor EC, and didn’t work during the semester because of academic pressure. My opinion – I raised my kids so they know what a financial sacrifice it is to send them to a good school, and they know what their job is while they are there. It would be almost insulting to pay for grades.

I didn’t get the impression OP was talking about paying for grades, just that there might be a financial consequence for poor grades (e.g, Cs & Ds) due to lack of effort. I think I’d be inclined to make our kids have more of a stake in the game if they weren’t putting in the effort. If they do put in the time and still don’t make the GPA to keep a scholarship, I don’t think I’d penalize them. We’re very fortunate our son has treated it like his money and has worked very hard to maintain a GPA necessary for a scholarship.

@VeryLuckyParent my kids were attending expensive private universities that we were fully paying for…minus their merit awards. There was NO WAY either of them could have paid the full cost of attendance at those schools. If they had lost their scholarships…we would not have paid for them either.

Undergrads are considered financially dependent on parents for school financial aid purposes.

How would these kids have come up with $48,000 or $58,000 a year to,stay at these schools without parent support?

Not sure how you think they could “refuse and just stay” when no one would have been paying the costs.

If the student lost a merit scholarship that is needed to afford the school (based on what the parents can and will pay), then s/he has no option other than to withdraw and either transfer to a less expensive school that is affordable or drop out of college entirely for the time being.

Parents can make any conditions they want for continued funding (or cooperation on FAFSA and/or CSS Profile for financial aid). This does not mean that all possible conditions that they could make are good ideas.

^ Yes, but the OP and the OPs’ friends thinks the child can pay for this expensive school on her own. The parents had “found a way” for the student to pay on her own if she doesn’t get good grades. For an independently wealthy student who has access to her wealth during the college years, the parents’ plan makes sense.

@thumper1

Sorry, I am not very well educated on the intricacies of who is considered dependent for financial aid. I thought they could just tell the parent “sorry” and get aid from the school since the parents would refuse to pay. If I understand you correctly, you are telling me they can’t do that?

We told our kids - one of whom was in legitimate risk of flunking out - that we would pay for college…once. If they got kicked out, they were on their own and needed to support themselves and pay for any future education costs independently. Fortunately, the issue never arose.

But individual course grades never entered into the equation. Getting a D or an F can be a useful learning experience and one that provides a much gentler consequence than many real world analogues.

On the whole, we feel it is our privilege to offer our children the best education that meets their needs, and paying for that education is our, well not pleasure, but perhaps a duty that we have freely chosen.

The school won’t care if the parents decide not to pay. This won’t net the kid one additional cent in financial aid from the college.

So @VeryLuckyParent if you pull the financial carpet out from your kids…keep in mind that the college won’t increase aid based on your unwillingness to pay.

Wait – you just went through the college admissions process, and you don’t know this? Almost all students are considered dependent until they are 24 years old, with only a few exceptions (eg, if they get married). They MUST provide their parents’ information for need based financial aid until then, even to get federal loans. Otherwise, why would any parent pay for their kid’s education? It really sucks for kids whose parents can afford but choose not to help with college, but thems the rules.

If this were the case, I—and everyone else in the country—would refuse to pay and let the school pick it up.

No. Financial aid is given out based on a combination of parents’ and student’s income and assets.

A student is limited in how much she can take in loans in her own name. The ceiling is $5500 freshman year, $6500 sophomore year, and $7500 each of junior and senior years. Does her college cost more than that?

We did the Net Price Calculators, found out we don’t qualify for any need based aid, so stopped there. Did not explore need based aid any further.

@VeryLuckyParent

We really didn’t qualify for need based aid either. But that didn’t mean we were willing to fund an expensive private school education for our kids if they were not meeting the academic requirements to maintain their merit awards.

Luckily, we never had to deal with this issue.

@brantly

The COA for her college definitely exceeds that by a good amount. Not sure if she got any merit aid or not. Did not check with the parent.

Hahaha, I always wondered about that, but just figured that there would be some way the college would catch this. Never dug into it, since it did not apply to us.