We are planning on paying for college for all of our children. When our children were born we opened up savings accounts to put any money they received as gifts. Several years ago we realized that there was a lot of money in the accounts so we took about $5000 out and put it into a money market type fund leaving about $1000 in their savings accounts. Our kids really don't spend much money. The main thing they have used it for is to help pay for their 8th grade class trip to Washington DC.
So my question is...how to handle the $5000. I would like to have them contribute in some way to their college expenses. We have told them we would pay tuition and room and board but they would be responsible for books, spending money, etc. If we give them the $5000, even in increments, even though it is their money, I don't think they would get the sense of contributing/responsibility. Should we wait until they graduate from college? Then they can use it for graduate school or an apartment or car? Another thought...put it into an IRA and by the time they retire, they would have a really nice nest egg. Any thoughts?