These are the general parameters of what we will tell the kid about the Family Scholarship:
- We will pay for any in-state public. Kid will need to maintain a minimum GPA to keep the family scholarship. If kid fails to meet the GPA one term, then a portion of that semester’s costs turns into a provisional loan. If the kid meets the GPA again for the remainder of college, the loan is forgiven. If the low GPA continues then the loan is not forgiven and the kid is required to move home and commute to the local in-state public or to get a full-time job (or multiple part-time jobs to equate to full-time work). (In reality, those loan payments would be saved and gifted to the kid to help with establishing a household.)
- This is how much is in the 529 and other designated sources for your college, and its growth is dependent on market returns. If it exceeds the cost of 4 years of in-state costs, then the amount in it divided by 4 can be considered the new budget for college. If a kid takes more than 4 years to graduate, then when the 529 runs out, there’s no more financial assistance. Whatever money remains in the 529 after college can be used by the kid for grad school, Roth conversions, etc.
- Loans to outside entities (feds, private loans) are not allowed. The only loan possible is based on GPA issues, and that loan is between the kid and the parents.
- The family scholarship will pay for accredited institutions that fall within the budget (i.e. less than in-state costs or less than the designated resources divided by 4, whichever is greater).
- The family will pay for application fees for up to X number of institutions, none of which can be to schools that are impossible to meet the budget. If a kid wants to apply to impossible-to-meet-budget schools, it will be on their dime.