First and foremost I want to relieve any guilt parents may be feeling by verifying for you that there is nothing in the Bible or the United States Constitution that says you have to pay for your child’s college tuition.  In planning with clients, it sometimes feels like they are putting paying for college ahead of their own retirement.  My wife and I are empty -nesters with 3 college graduates. From my experience of saving, incentivizing and spending on college, I don’t think there is much I would change.  So here are my top 10 suggestions:

1. Put some money away monthly the day your kids are born.  $100 a month into a growth stock mutual fund or a college 529 plan, can make a big difference over eighteen years.  Investing $100 a month, with a hypothetical average return of 8%, would be worth $48,535, at the end of 18 years.

2. Provide incentives.  I let my kids know in middle school that if they got a full ride to college I’d buy them a new car.  It should be obvious from that statement that I don’t recommend buying your child a new car on their 16th birthday. You can put smaller incentives in place for grades and other college-resume building items that might lead to scholarship money.

3. Have a college reality check.  I know some parents who have told their children, “Whatever college you get into, I’ll pay for it.”  In my opinion, which is also backed up by a number of studies, unless you get into one of the top ten elite universities in the country, your future income potential is driven much more by the student than the school.  Public universities charge a huge premium to out of state students.  If you live in Florida, your tuition will be more than five times as high to go to the University of South Carolina versus Florida State University.  In 2021 in-state tuition at FSU is $5,656 and out-of-state tuition at USC is $30,160.  With all due respect to both universities, in my opinion, there isn’t a $98,016 difference for that 4-year degree. 

4. Have a time budget.  It was clearly understood in my house that college was a 4-year endeavor.  According to the National Student Clearinghouse, a nonprofit verification and research organization, only 56% of students earned their degree within six years.1   Granted, it was mandatory to graduate in 4-years at the Naval Academy, but I was also taking 18-21 credit hours a semester (my sympathy for my kid’s anguish over a 15 credit hour semester wasn’t very high).  My wife graduated from a civilian school in 4 years as well.  I wanted it to be very clear.  Mom and Dad aren’t paying for you to extend your social life and avoid the real world.  You can take longer than 4 years, but our financial contribution ends there. 

5. Have a total tuition budget.  If you haven’t heard of the Benjamin Franklin method of making a decision, it’s when you list the pros and cons of each option you have on paper, then compare them.  This is a great exercise to help your up and coming college student visualize their options.  My oldest daughter was a classic example.  There was an out-of-state private college, an in-state public university and an in-state private college.  On a spreadsheet or paper, list each school at the top and along the side list all the factors you are comparing.  The first should be the tuition, room & board, and other expenses.  I then reduced those by the scholarships she received from the schools, independent sources and Florida Bright Futures (our state’s contribution for good students staying in-state).  I also netted out money we had set aside in 529 plans, Uniform Trust to Minor Accounts (UTMAs) and State Pre-paid plans.  Lastly, my wife and I had sent our children to a private high school, so we said we would continue with this expense for their 4-years.  Subtracting all of these contributions to tuition resulted in the bottom-line net expense for each college option.  The result was that in the case of the in-state public university, her expense would be $0.  The out-of-state private college offered the most scholarship money, but it was going to cost her $2,500 a semester.  There were a lot of other factors, including; class size, city versus rural, extra-curricular opportunities, total student enrollment, etc.), but the net cost to my kids suddenly became an issue they would have to wrestle with.  They now had to question whether the value of the private university or out-of-state college was worth paying for.  They were going to have skin in the game.

6. Have a school year budget.  Setting up a bank account with ATM access at the college and depositing a nominal amount each semester is a great way to teach budgeting.  It can be a few hundred dollars, but it provides your son or daughter with the opportunity to make decisions on going out for pizza, getting their daily coffee, or a school spirit tee shirt.   If the money runs out quickly then their options become limited and a behavioral change takes place the next semester.   

7. The college car discussion.  I remember when my daughter was a senior in high school and came back from an out-of-state college visit.  She was excited to tell me all the details.  She had memorized a lot of statistics while on her visit and during our conversation she slipped this comment in:

“Dad, 96% of the students have a car at XYZ College.”

I thought about it for a second and replied, “Great, then you won’t have a problem getting around.”

I’m pretty sure that was the response she was looking for.

Our personal conviction was that our kids would be better served without a car their first few years in college.  I’m proud to say that my oldest daughter decided to go to the private out-of-state college, worked and paid for the uncovered portion, then transferred to an in-state public university after two years.  By graduation she had no student debt, purchased a nice, used car in cash, fully funded a ROTH IRA and still had money in the bank.  My second daughter will finish in 3-1/2 years and the money she is saving by finishing early will help pay for her Master’s degree.

8. School books. One of the most outrageous expenses of a college education is the cost of books. College textbook prices are 812 percent higher than they were a little more than three decades ago, according to a think tank called the American Enterprise Institute.  Over the past decade, there has been a battle back and forth between textbook publishers and the consumer.   The first competitor was the off-campus used bookstore.  Colleges countered with buy-backs and used book sales of their own, but then upped the ante with professors getting paid to publish new editions, with only minor changes, and then requiring the new versions.  A new on-line industry has emerged, selling new and used books, as well as renting them.  Publishers have tried to counter this by packaging books with bundled software or on-line codes which will only work once, and making certain editions university specific to reduce competition.  Unfortunately the adverse effect has been for students to forgo the books altogether, relying on making copies of certain sections from other student’s books or just taking notes in class. 

The most cost effective method I have found to procure textbooks is to rent them on-line.  It removes the hassle of buying and selling new or used books and typically costs less than the net of those transactions as well.  Most on-line businesses provide free labels for shipping the books back at the end of the semester.  

9. To work or not to work while in college?  My views on this question have evolved over the past few years.  While my children were in high school I was of the opinion that they should limit working to the summer and use their free-time during the school year for sports, extracurricular activities, and social interaction with friends. 

While I still maintain that view for high school, my views on working during college have changed.  Both of my daughters have worked during college and it has been a positive experience for them.  It has allowed them to stay debt-free, given them some extra spending money, and also provided invaluable experience in working with others.   

10. Don’t leave money on the table.  Scholarships given by colleges are the most common type and are typically automatic, based upon grades, SAT/ACT scores, athletics, music or other extracurricular activities.   There are also national scholarships from large corporations, which you can research on the internet, but the best places to search first are local scholarships sponsored by, your church or religious denomination, Rotary Club, Kiwanis, American Legion, your employer, and local businesses.  One of the best ways to fund college, which I participated in, is through a military service academy or ROTC program. Both of the processes are very time consuming and you need to be looking into it no later than Spring of your student’s Junior year in high school.5  Yes, there is a five year military commitment after graduation, but I also looked at it as guaranteed job placement.  In addition, after five years you can choose to continue a military career or you can apply for a job with real world experience, discipline and management skills that all employers covet.  Through the Service Academies or ROTC, tuition, room and board, and books are 100% paid for and you receive pay while you’re going to school.  Not all colleges have an ROTC program.   Of those that do, many only have one branch of the service offered.  If your son or daughter is interested, my suggestion is to first investigate what branch of the service would be the best fit.  Next pursue the Service Academy associated with that branch and conduct an internet search to see what colleges have ROTC programs for that branch of the service.