Money Smart Kids
Who Pays for College?
Mom and Dad shouldn't bear full freight for their kids' college education. Think of paying for school as a joint venture.
By Janet Bodnar, Editor, Kiplinger's Personal Finance
August 2, 2006
Not too long ago I was asked to appear on a radio talk show to discuss whether parents should expect their children to help pay for their college education. One financial-aid director has labeled this a "new phenomenon," and in some quarters it's considered to be controversial. To me, it just makes good sense.
In a column two years ago, I advised parents to "think of paying for college as a joint venture." Even if you're financially able to pick up the whole tab, I wrote, "kids should at least be expected to earn their own spending money."
But in some families, kids say they are shocked when Mom and Dad can't or won't bear full freight for any school they want to attend. "My parents want me to stay in Virginia and go to a community college," one teenager lamented in an e-mail. "But I want to go to New York because I got accepted to a school in Manhattan."
One publication that came across my desk tells the story of a young woman named Ashley who had set her sights on attending the University of Iowa. She received enough financial aid to cover tuition and fees, but came up short on room and board.
Rather than have Ashley go into debt, her mother, a single parent, recommended that she attend a community college. Ashley did, with the intention of working and saving enough to transfer. But she was still devastated when her friends headed off to UI.
Disappointed now, Ashley may end up thanking Mom later. She won't be in the position of another young woman whose mother wrote to me: "My daughter majors in religious studies at a private college where tuition is quite high. I'm concerned about the amount of loans she'll have and her ability to repay them."
Before kids apply to college, have a frank discussion with them about how much it will cost, what you're willing to pay and what their obligation will be. (Take at look at the institutions that rank among Kiplinger's 100 best values in public and private schools.) Even at the new fixed rate of 6.8% on student loans, it can make sense to borrow judiciously.
For example, in Ashley's case, because her tuition is covered and she won't be at UI for four years, a reasonable amount of Stafford student loans could help supplement her savings.
Next week: How to cut the cost of college
Janet Bodnar is deputy editor of Kiplinger's Personal Finance magazine and the author of Raising Money Smart Kids (Kaplan, $17.95). Send your questions and comments to moneypower@kiplinger.com.