Disturbing financial statistics

[DMRick]

I had many friends in college whose parents basically cut them off when they started school. They were pretty much on their own. I just don't personally think that is the way to go. I want DD to be focused on school, not on having to work to feed herself. That's my job.

Steve, I'm curious, will she be working at all? The college our dauther went to suggested 12 hours a week. Said they found that kids that worked scheduled themselves better and got more and better school work done.
Our kids paid half their college expenses, and luckily the one that went to the most expensive school got great scholarships, which pretty much covered her half. She wanted spending money, and wanted to work, as well. Second went to school from home, and worked, and took out a loan for her half, and third went to a state school, (savings, and loan for his half, and worked while in school to cover the rest) so it was a lot less expensive, but he also worked (I remember the day he called and said he didn't think he'd by able to swing the new semesters tuition/books, since hours had been cut down to 4 a week. I told him I'd look at the local state school, so he could live at home with his mom and dad, and save money. His boss miraculously got him back up to 12 a week LOL!).

 

[disneysteve]

Steve, I'm curious, will she be working at all? The college our dauther went to suggested 12 hours a week. Said they found that kids that worked scheduled themselves better and got more and better school work done.

I think this is perfectly reasonable. The college environment is a perfect place for the student to get a bit more responsibility with a campus job, have some money to manage and learn to better budget both time and money. I've got no problem with that at all.

I was referring to my friends who were on their own for anything beyond educational expenses. If they wanted to buy a soda between classes, it came out of their own pocket. If a bunch of us wanted to go out for pizza one nite, they sometimes couldn't join us because they had no money. I'm not going to put DD in that kind of situation. And I don't want her to have to work 20 or 30 hours/week, or more, like some of my friends did during college. I realize that for some folks that was the only way to afford college and I respect that. I just don't think it creates the best environment for learning.

 

[crisi]

Really? I had no idea.

When I was in school, we paid a mandatory "health center fee" along with our tuition-- I think it was about $20 or so -- per semester. We could go to the free cold care clinic anytime, read through a list of symptoms, and choose over-the-counter meds "for free" (wasn't actually free, more like included with your tuition). If we saw the doctor, there was a charge like $2-5. Their main-stay, however, was birth control.

That was a good deal. I paid the medical fee but when I went to school (1985-1988, University of Minnesota - 1984-1985 University of Iowa), I went to PP for my birth control pills - much cheaper! Also used my parents insurance and the family doctor when I was at the UofM. I certainly don't recall access to as much as free asprin. (Course, nowadays you can't get cold medicine at Target easily for fear someone will turn it into crystal meth - I can't imagine a college handing it out!).


(As I recall, Iowa was better than the U for student health services).

BTW, resident expected cost, living at the UofM including tuition, fees, books, room and board, and $2000 worth of spending money is over $18,000.

 

[Belle5]

I think this is perfectly reasonable. The college environment is a perfect place for the student to get a bit more responsibility with a campus job, have some money to manage and learn to better budget both time and money. I've got no problem with that at all.

I was referring to my friends who were on their own for anything beyond educational expenses. If they wanted to buy a soda between classes, it came out of their own pocket. If a bunch of us wanted to go out for pizza one nite, they sometimes couldn't join us because they had no money. I'm not going to put DD in that kind of situation. And I don't want her to have to work 20 or 30 hours/week, or more, like some of my friends did during college. I realize that for some folks that was the only way to afford college and I respect that. I just don't think it creates the best environment for learning.

The solution we have found for our sons is that they work in the summers so they have extra money when the need arises. I, too , don't want them trying to juggle a job and their studies. Our 19 year old worked out of state last summer, came home and put the money in the bank. He was supposed to use it for books and other odd expenses but some scholarship money came in that covered his books for the year. He is a serious student and I honestly cannot see when he would have time to work during the school year with the hours he puts in studying. Our second son is a senior and is already applying for a similar summer job. We are really sold on this. By the way, because my oldest's books were covered--he has not touched his money so far. I do believe he will take a bit out for Christmas giving, though. I would like it if he had three summers of money banked for when he goes off to a state school to finish his degree.

 

[DisFlan]

I'm not going to put DD in that kind of situation. And I don't want her to have to work 20 or 30 hours/week, or more, like some of my friends did during college. I realize that for some folks that was the only way to afford college and I respect that. I just don't think it creates the best environment for learning.

This is how we approached it with our son, too. He's always been a responsible kid, but we feel that college is an experience beyond just the classroom. Until recently he worked part time, but he's dropped that during his last two semesters to push toward graduation. We're gladly picking up the slack. (His dad and I were both pretty much on our own through school. We know the downside. My DH went through med school with help from the GI Bill while I worked. We scrounged every possible avenue to come up with tuition. He graduated Top Ten in his class, but we were almost always stressed over money.)

We pay our son's tuition, he has an emergency CC and we've always provided his vehicle. We also pay for his medical coverage. I'd like to think he'll do the same for his own kids someday.

DisFlan

 

[disneysteve]

He graduated Top Ten in his class, but we were almost always stressed over money

Exactly! I want her stressed over Biochem or Economics or whatever. I don't want her stressed about how she's going to afford books or food.

 

[can'twait]

Yeah, that's what I thought when I got my card. I'll pay it off when I graduate. Right. I ended up in a minimum wage job, then a part time minimum wage job on top of a full time not much better than minimum wage clerical job. Not what I went to college for. Then we got engaged and got sucked into paying for a big wedding. BIG mistake. Our families could not afford a wedding so we charged the whole thing, including our honeymoon to WDW. If I had known then what I know now, we would have eloped and saved for a house. Also, we both paid for college with grants, loans and our own cash. Hardly any help from family at all. I had a part time job, he worked full time and finished at night after his mom ran out of cash.

I was just responding to what my thoughts were since you asked that in the OP.

Any my thoughts are still mixed about whether having a credit card in college would have been good - make life much easier - or bad - more school debt for me.

If I'd had a line of credit in college I could have made minimum payments with the cash that I earned and charged the stuff that I paid for with the cash. And when I did get my first job my income more than quadrupled. And a thousand dollar charge today would have been about $200 back then. I could have paid that off with my first paycheck.

I worked for the credit bureau so I knew all about credit reports and what could ruin your credit. My job was to read credit reports - it was all manual in the olden days.

I doubt seriously that I would have run up credit to buy clothes, but it would have been nice to feel that I had a "safety net."

I guess my point is that I'm not totally opposed to students having access to a credit card. Anyone that is smart enough to go to college should be smart enough not to spend money they have no way of ever paying off.

I still don't understand buying things on credit that you don't have the money to pay for in the foreseeable future. Except for housing. Even when I was 23 I only financed my car for 8 months.

Not every student can be assured that they will get a great paying job at graduation - but some do know they are going to get a well paying job when they finish. So I guess what I am saying is that a little debt to tide you over until you get the big bucks might be okay on a one time basis from some students' perspective.

 

[dcfromva]

I'm not going to put DD in that kind of situation. And I don't want her to have to work 20 or 30 hours/week, or more, like some of my friends did during college. I realize that for some folks that was the only way to afford college and I respect that. I just don't think it creates the best environment for learning.

DisneySteve/DisFlan

ITA. We have told DS that going to school is his job. We are determined to do everything we can so that he doesn't have to worry about the $$.

Here is an interesting static. According to theState Public Interest Research Group (PIRG) Higher Education Project:

"Students are borrowing more than ever before to pay for higher education, as tuition levels continue to climb and grant aid fails to keep pace. Today, the average undergraduate borrower leaves school with nearly $20,000 worth of student loan debt.

Each year, millions of student borrowers struggle to continue with their education, make important investments, and even pay monthly bills for their living expenses. According to Department of Education data, nearly 40 percent of recent college graduates with student loan debt make monthly payments that are unmanageable, according to the student loan industry's own recommendations."

The College Board lists the average indebtedness at graduation by college.

-DC

 

[KarenAylwood]

We pay our son's tuition, he has an emergency CC and we've always provided his vehicle. We also pay for his medical coverage. I'd like to think he'll do the same for his own kids someday.

DisFlan

This is what my parents did for me. I'm now in graduate school (tuition waived, getting paid a stipend of more than enough to live on) and living with my boyfriend who is in medical school. He's taking out an incredible amount of loans and is always stressed about money. I couldn't even imagine if I was stressed and in huge amounts of debt as well.

My parents told me I was on my own once I graduated from undergrad, and I will finish my Chemistry Masters degree in February with a 3.85 GPA, and a credit score higher than most adults. I am incredibly grateful for what my parents have done for me, and will do the same (well, as much as I can) for my children. It has not made me any less-responsible, if anything I'm more responsible because I understand the gifts I've been given and am working hard not to let my parents down. I not only have a stipend to live on (given to me through TAing, grading and research lab work) but I work a part time job as much as I can for some extra money. I also have worked every summer that I could in order to save up $$. DBF also tutors on top of his med school classes in order to earn some extra $$.

We're just lucky that all the loans that DBF has will be paid off relatively quickly once he finishes his residency due to the high-paying job that he will end up with. The problem with undergrad loans is that they stick around for sooo long because an undergrad education doesn't give much earning power these days.

 

[DMRick]

I don't want anyone to think that my children's education suffered because they worked 12 hours a week. The first one off to college did that on the advice of the college, when we went for orientation, and for our family and kids, it was perfect, and it was continued with the others. They had their own spending money and didn't have to call home for money in order to take a date out, or go to the movies. And while we could have paid for their education in total, we appreciated the hard work they did to get scholarships, and in our opinion, took great pride in footing half their bill. They tell me now that that is how they'll do it with their own children. No one suffered, all had excellent grades, all at the top of their classes, and one graduated as an RN with a 4.0 (and the other's weren't far behind), and all have high paying, well liked jobs. They all think they worked harder, since they had their own money invested. Not that a child won't work hard with no money invested, but for my kids, that played a part. We also only covered them for four years. Our son thought it might take him 5, but once he realized we were only paying half for 4, he thought 4 years was a nice amount of time to graduate in LOL.

 

[rigs32]

So? The fact is that Temair previously probably would have spent that 25K elsewhere. I'm sure it took some significant lifestyle changes to accomplish that turn-around. It certainly wouldn't work to that degree for someone making a lot less, but then someone earning a lot less doesn't need a 10K EF and probably wouldn't/shouldn't be spending 5K on a Disney vacation.

My point, which admittedly was not that clear, was that Temair post sounded like "because I can do it, so can everyone else". I was trying to point out that not everyone has that ability. Some of us can only cut enough to find an extra $250, not $25k.

 

[tar heel]

Mrs. Pete -- What you described was exactly the set-up of student health care when I was at Chapel Hill in the late '70s, right down to the Cold Care Clinic, but it's not the case at N.C. State now. I was surprised when the charge showed up on his student account b/c I had assumed all health care was free unless the kid was hospitalized. I was further surprised when the insurance didn't pay b/c it was out-of-network. I guess the bill ($100+) technically wasn't declined by our insurance, but we have a separate deductible for out-of-network that we had met.

 

[gottaluvdis]

My Dad's philosophy on college for me and my sister was that we needed to concentrate on our studies instead of worrying about money. We were fortunate enough to have most everything covered by Dad for our 4 undergrad years. I was not allowed to work during Freshman year, but by 2nd semester Sophomore year I had a part-time job and I continued to work until I graduated. I also worked during the summers. After sophomore year, I moved into an apt. for the last 2 years of school and Dad funded tuition and housing only. I bought my own groceries, books, phone bill, spending money etc. along with my 3 roomates. I had a credit card by Senior year that had a pretty hefty balance on it by the time I graduated, but I paid it off pretty quickly once I started a job. My husband was raised similarly, only he went to grad school for his MBA and worked his way through without his parent's help during those 2 years. Our DD will be covered for tuition and room and board during her undergrad years. We will recommend that she hold a part-time job, depending on her grades. I went to school with plenty of people who were not fortunate enough to have school paid for, and I saw many drop out for lack of funds. Many of those folks never made it back to finish their degrees. We figure we owe our daughter what we had in order for her to get a good start in the world (we'll also keep our fingers crossed for scholarships!)

 

[DisFlan]

KarenAylwood - good luck to both you and your BF. Just be careful during the early period out of medical training. The delayed gratification of Wants & Gimmees can be pretty hard to bypass. Even a good initial income can be out-paced fairly easily. (You'll quickly become acquainted with the erosive power of taxes.)

My DH paid off a whopping 90% of his loans by working in a medically deprived area for 2 years. Then he went back for a 3 year residency in Internal Medicine - which at least paid something. Not much, but something. (Lord, we were gluttons for punishment!) That one was a little tougher. We had a baby and a functioning vehicle by then.

Save every cent you can right from the start. It's the easiest time to do it. Don't get trapped by trying to keep up with other docs (and their spouses). If you find a house you like, go find a different but similar one that's cheaper. If you get a new car, downgrade to a cheaper model than the one you wanted. Invest the difference wisely. Trust me, in 25 years (when you're living in the house you really wanted), you'll be very glad you did this in the early days.

DisFlan

 

[DisFlan]

We have told DS that going to school is his job.

Yup. That's also exactly what my DH told our son.

DisFlan

 

[DMRick]

All I can say is, you guys all had really good kids that spent their spare time studying. I can say without a doubt, that if mine didn't have the part time jobs, wayyy too much time would have been spent enjoying themselves their first times away from home LOL. The jobs did just what the college suggested they would do...teach our kids to organize their time, because I can tell you, that all that spare time would not have been spent with the books LOL! I still feel that my kids were lucky (and I know they feel that way), that we covered half their college bills (even if we didn't give them spending money). There are a lot of kids out there that parents aren't able to help at all. We considered it a pleasure, not an obligation. 3 kids in college at once..well it was interesting. And of course that's where they were every night..at their desks studying, uh huh.

 

[DisFlan]

DMRick - 3 kids in college at once! Wow. My Mickey Ears are off to you!

DisFlan

 

[MrsPete]

An unexpected cost would be one that we didn't know about in advance, otherwise we would budget for it.

Yeah, I know the meaning of the word unexpected.

However, I can honestly say that I didn't encounter unexpected expenses during my college years. I knew when I needed to have my money together for tuition /books. I knew that I'd need haircuts, toiletry items, laundry soap. Maybe I didn't know exactly what I'd need in a given month, but I knew that I'd need "household type items". I think being forced to live within your means (whether that means mom/dad's allowance or your own paycheck) is a good thing to learn in college; being able to fall back on a credit card teaches an entirely different lesson -- it teaches that if you need new tennis shoes, you can pay them off over the course of a couple months. I'd argue that new tennis shoes aren't an unexpected expense -- you know that they're going to wear out every so often, and they should fall under the clothing section of one's budget.

Admittedly, I was lucky never to be in a wreck or some similar catastrophe during my college years; however, if I had been, I could've called my parents. I did have my wisdom teeth pulled during college, but that wasn't an unexpected problem; they hurt, I went to the dentist, and he recommended that I get them pulled during my next school break -- it wasn't a pressing need, so I had ample time to let my parents know about it.

As I said earlier, my routine medical expenses were covered through tuition. I understand it's different now. Perhaps the right answer would be a pre-paid VISA card in the amount of $100 that's to be held and used only for medical emergencies. That woudln't allow the student to fall into the trap of revolving credit.

Obviously, I do not advocate charging anymore than what one can pay off (monthly), but I really don't see the difference between having a line a credit that you pay off on a monthly basis vrs having a checking account that you draw from directly. If they don't learn how to use credit wisely in college (ie: pay off the balance on a monthly basis), then when will they?

I see a difference. If you draw money from a credit card, you have to have the money in the account; you can't do the revolving credit card thing. I'd have no problem with my daughters having their own credit card in college; however, I wouldn't give them one "for emergencies" -- when parents do that, many things seem to turn into emergencies. If it's their own money, they think about it a little more. What I'm against is the "mom and dad will bail you out of everything with this little piece of plastic" idea.

 

[MrsPete]

I was referring to my friends who were on their own for anything beyond educational expenses. If they wanted to buy a soda between classes, it came out of their own pocket. If a bunch of us wanted to go out for pizza one nite, they sometimes couldn't join us because they had no money. I'm not going to put DD in that kind of situation.

How much would you consider "enough" for a college student? I think it's a mistake to give a child of any age (including college age) enough money that they don't have to budget. Regardless of how much you have, sometimes you have to say, "Sorry, I just don't have enough."

I think a college student should have enough (whether it's coming from mom/dad or whether it's from a job) that they can pay for small treats, but they'd have to save for large treats.

 

[tar heel]

I can honestly say I didn't encounter unexpected expenses in college either. Sometimes I ran low on $, but that was b/c I had eaten out or gone to the mall!

As far as the medical expenses go, the college health services still treat them without asking for any $ from the student, just as they did when I was in school. The difference is that a bill is sent to the student's account. At our house, that means I write a check to the university a couple months later, meaning this was not a financial emergency at all for my son.