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College and money

Posted by on Jun. 12, 2014 at 8:19 AM
  • 13 Replies

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?

by on Jun. 12, 2014 at 8:19 AM
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Replies (1-10):
fantasticfour
by Grumpy on Jun. 12, 2014 at 9:33 AM

 So the 5000 is additional to what you are going to pay for college?  I would definitely wait until they are out of college and on their own to give it to them then.  Unless of course you want to.

Maime13
by Bronze Member on Jun. 12, 2014 at 6:53 PM
2 moms liked this

It's great that you are planning ahead like that I'm sure that they'll appreciate it. Of course, they should really, really appreciate your offer to pay tution and boarding at a 4 year college! That is no small investment!

If you want them to contribute then I'd suggest summer jobs to earn spending money and books for the school year. Then you could give them the $5,000 as a graduation gift when they get their Bachelor's degree.

MidwestMama55
by on Jun. 12, 2014 at 7:01 PM

I think opening an IRA for each of them is a wonderful idea, and a wonderful gift! Good for you for paying for college. We saved early and did the same. We do not make them contribute to college financially (we see that as our responsibility), but we do require that they choose a major they can actually support themselves with someday, and they make the best grades they are capable of making. If they fail to do either of those things, they can finish paying for college themselves. 2 in college, 1 to go, and they all feel that's very fair.

atlmom2
by Susie on Jun. 12, 2014 at 7:36 PM

My dd has IRA's but she put the money in herself.  She has had an IRA since she was 19.  The best time to save for retirment is before the age of 30.  The more you can save before then the better off you are.  Remember this generations won't have pensions, or Social security.  They need to save everything themselves. 

my2kidsmom9498
by Bronze Member on Jun. 12, 2014 at 8:23 PM
1 mom liked this
I like the IRA idea.
suesues
by Silver Member on Jun. 13, 2014 at 7:08 AM

as long as you have enough for school and not taking any loans I would do IRA Have you figures out all expenses and tution increase ect ?

Ewa101
by Bronze Member on Jun. 13, 2014 at 7:27 AM

I admire you for being able to save so much for college.  What stage of the game are you in right now?  How much time until they actually go to college? 

I like the idea of the graduation gift,  or the IRA account.  When they start out after college they will have so many expenses, that putting money into an IRA might not be on top of their list. 

We have not been able to save up for our children's college expenses - we are immigrants, who started with $2000.00 in our pockets, and no family to help us.  We paid our own college tuitions, bought a house, and somehow through loans and borrowing from our own retirement accounts, we paid 2 out of 3 college tuitions (the third one is starting college right now).  At this time, my oldest daughter is planning her wedding, and believe me, this is more expensive than a downpayment on a house.

So, my point is that there are many expenses after college, and if you have $$$ to spare, make the kids take up jobs to pay for some of their expenses, and I am sure that there will be a point in their lives that you'll be happy to be able to contribute the $$$ you saved up for them.

ItsaJOB
by Bronze Member on Jun. 13, 2014 at 9:23 AM
1 mom liked this

It is very generous of you to pay for everything.  My DH and I are quite capable of paying for everything for our kids AND A car to boot, if we wanted to.  We don't, and won't.  The reason?  Many college kids who have everything given to them, do NOT appreciate it, nor do they make that extra effort to pass or even go to class sometimes...unless they have some sort of accountability for it (their money).  What we did for our oldest, was....made him pay the tuition for the first semester FIRST.  If he was successful in handling the coursework and not goof off and party, we pay the 2nd semester.  It was pretty much 50% thereafter.  We continued to pay tuition, but he paid houseing. This is how it worked for child number one.  2nd child, basically the same thing, except, she paid ALL tuition the first year because she lived free at home, however, we bought a car for her to use.  We paid the tuition the 2nd year.  Once she successfully completed her Associates Degree in Liberal Arts to transfer to a 4 year school, we turned the car over to her to keep. She now has that responsibility for maintaining her car.  Child number 3, a different story.  She does not want to go to a 4 year or even 2 year college...yet, she says.  But, this fall, she has decided to take a course in the city and has a decision to make.  Either pay for rent/living expenses OR use that money (her savings) for a car and drive from home (1 hour commute, 4 days a week).  We will pay for her course.  They have all had to have some accountability.  If my kids knew they had that extra money to do as they wish and didn't have to pay for anything...guaranteed they would spend it foolishly at their young age and furthermore, probably wouldn't even have bothered to get a summer job.  In your situation...I'd probably put it away in some sort of account that earns some better interest while still making them get summer jobs for their 'fun' money or their 'want' items. Our kids money goes into a 'preferred' stock account that earns about 4% per year. Can't beat it.  It doesn't get removed until 'rent time' for the one daughter and is dedicated only for her rent.  The oldest knows his is sitting there and when he finally lands a job, it will be his to use for rent (he moved back home shortly before Christmas and is  now finishing up school on-line.

I guess there's another point I'm trying to make, here, as well.  Each child is different.  They do not choose the same path, so we've had to make adjustments to how we will contribute to their education, yet be fair about it and still let them contribute in some way.


atlmom2
by Susie on Jun. 13, 2014 at 10:25 AM

We paid for dd 23 and she graduated massage school with honors. She did work though school and saved quite a bit in IRA's and put $10,000 on a new car.  We would rather have her do that than pay for college.  We had enough money saved for her for massage school by the time she was 18 anyway. 

DD 20 is doing well and never misses class.  She goes to a smaller school and they take attendance in most classes and part of your grades are attending class.  I do agree that some do not appreciate it. 

They couldn't afford to pay for college.  DD goes to a private school which is more than $40,000 a year. 

Quoting ItsaJOB:

It is very generous of you to pay for everything.  My DH and I are quite capable of paying for everything for our kids AND A car to boot, if we wanted to.  We don't, and won't.  The reason?  Many college kids who have everything given to them, do NOT appreciate it, nor do they make that extra effort to pass or even go to class sometimes...unless they have some sort of accountability for it (their money).  What we did for our oldest, was....made him pay the tuition for the first semester FIRST.  If he was successful in handling the coursework and not goof off and party, we pay the 2nd semester.  It was pretty much 50% thereafter.  We continued to pay tuition, but he paid houseing. This is how it worked for child number one.  2nd child, basically the same thing, except, she paid ALL tuition the first year because she lived free at home, however, we bought a car for her to use.  We paid the tuition the 2nd year.  Once she successfully completed her Associates Degree in Liberal Arts to transfer to a 4 year school, we turned the car over to her to keep. She now has that responsibility for maintaining her car.  Child number 3, a different story.  She does not want to go to a 4 year or even 2 year college...yet, she says.  But, this fall, she has decided to take a course in the city and has a decision to make.  Either pay for rent/living expenses OR use that money (her savings) for a car and drive from home (1 hour commute, 4 days a week).  We will pay for her course.  They have all had to have some accountability.  If my kids knew they had that extra money to do as they wish and didn't have to pay for anything...guaranteed they would spend it foolishly at their young age and furthermore, probably wouldn't even have bothered to get a summer job.  In your situation...I'd probably put it away in some sort of account that earns some better interest while still making them get summer jobs for their 'fun' money or their 'want' items. Our kids money goes into a 'preferred' stock account that earns about 4% per year. Can't beat it.  It doesn't get removed until 'rent time' for the one daughter and is dedicated only for her rent.  The oldest knows his is sitting there and when he finally lands a job, it will be his to use for rent (he moved back home shortly before Christmas and is  now finishing up school on-line.

I guess there's another point I'm trying to make, here, as well.  Each child is different.  They do not choose the same path, so we've had to make adjustments to how we will contribute to their education, yet be fair about it and still let them contribute in some way.



btherese
by on Jun. 13, 2014 at 5:10 PM
1 mom liked this

That's awesome! I think it'd make a great college grad gift for each one, that way they can use it to get started in life. Every young adult is different; you might find each one has different needs by then.

I have 4 kids and unfortunately, I am not able to pay for their college. My 21 y.o. has been paying his own way through college and has a very small amount of debt he accrued from the university but is now doing as much as possible at the community college. He has a job with the school district and a summer job lifeguarding at a resort hotel. I couldn't be more proud.

The 18 y.o. graduates tomorrow from HS and his GPA, sports, and applying to scholarships has allowed him to start college nearly paid for, although he will also work pt.

The HS students and ES school-aged child have a little ways to go, but I have already explained to them that they have to make their own way in the world, college or not. That and a ton of prayers from mama.

Bless you and your kids and much luck and success to them!

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