Failing to plan is planning to fail – Benjamin Franklin
We started to think about setting a college tuition budget when our sons started talking during their junior year of high school about applying to super-expensive Ivy League universities. But we can’t claim that this was our idea, we did hear about it from someone else with almost college-aged kids.
We are delighted to say that our twin sons graduated from college last year, debt-free. We like to think it is because we set a college tuition budget for each of them.
Happily, Diana and I were able to give them most of what they needed, and they found ways to augment their incomes to make up the difference.
Giving them the opportunity to go away to college has been our plan since shortly after their births (Diana had to live at home for college and wanted a different experience for our kids). Thankfully, we were able to start saving for them early and allowed the savings to grow. Unfortunately, the Great Recession decimated that effort, so we took what was left and redoubled our efforts to get the needed funds.
Why we set a college tuition budget
Before the kids hit high school, a friend told us that they had set a college budget for their kids and it helped them look at their choice with a different eye. That seemed like a great idea to us, so we gave each kid a budget when they were beginning to look at possible schools to attend.
Specifically, my plan was to give them the funds needed to attend a 4-year In-State California University. If they decided to go someplace more expensive, they would have to take on debt to cover the difference. I felt this plan would set them up for success.
Our approach also forced them to consider the relative value of their college education. Was a $60,000/year education worth more than a $30,000/year education? Was it worth coming out of college with more than $100,000 of debt? Once they owned these decisions, the college discussions at our house really changed.
Changing the kids’ view
As hoped, the In-State stipulation had a large impact on the colleges they applied to. They both won scholarships from Out-of-State institutions to bring the cost at or under that of In-State schools. I motivated them further by saying they could keep the difference if they spent less than their budget.
Even as they attended their schools, they won additional scholarships and internships to provide more fun money. Those awards gave them further confidence and esteem, which could not have been bought.
Setting a budget and having them manage their finances gave them a level of ownership I hoped would occur. They are now emerging from college with confidence and momentum from that ownership, IMHO.
I know my plan won’t work for many families, but I do feel forming a plan involving ownership for the cost of college and a clear path to success is a tremendous gift worth pursuing.
How are you planning to manage the cost of college?