College Planning Strategy: A Creative (and Effective) Option

Here’s a cool way one couple–we’ll call them Tim and Shelly–helped teach their children about responsibility AND made sure that none of their children were (in Tim’s words) the partier pumping the keg, hollering, “This one’s on my dad!”

First, some background:

Although Tim was an architect, you can imagine that the budget was stretched thin in a family of seven and saving for college was a difficult task. Somehow they managed. They actually put away enough for college for all five of their children on a $110,000 salary. They also owned fine retirement funds and had a nice house. Debt? No. Surprisingly, not even a mortgage.

I was honored they were my clients.

Tim and Shelly worried aloud about their responsibility to their children. They wanted all of them to attend college, but couldn’t afford any of the lifetime college student stories you hear about (think Van Wilder). So, together, we hatched a plan. They decided to help their child find scholarships and jobs to pay for the first year of college. When each child entered their legal working years (well before college), they helped each one find jobs and save nearly every penny for school.

How did they get a 15 year old to work hard toward college?

From the beginning, Tim and Shelly were clear: “You will pay for the first year of college yourself and we’ll reimburse the cost each year, based on some conditions.”


What Were the Conditions?


In an effort to discourage screwing around in college and have their children graduate in a reasonable timeframe,  they decided to reimburse each A or B with the inflated sum needed the next semester, including that percentage of the cost of room and board.

If college was $7,000 the first semester, junior had to pay that bill. If they received all A’s and B’s, Tim and Shelly reimbursed them 100% of the full cost that they could use the next semester to pay the bill.

While I’m not sure this method works for all children, Tim and Shelly found a way to help their children learn about the working world and responsibility while also paying for college.

When each child applied for college, three of them hadn’t saved enough for the private school they wished to attend. Tim and Shelly filled out the FAFSA form and showed their children how to apply for scholarships. Not one child had to take on student loans. I attribute this to the fact that the rules were clear and Tim and Shelly both helped guide their children.

How did it turn out? All five children graduated with straight A’s and B’s (except one child, who had one C in what Tim described was an incredibly brutal class). When they graduated, Tim and Shelly reimbursed their final semester, which gave each one a nice start for either the working world or for graduate school.

This isn’t the only creative strategy I’ve encountered. With a small amount of money, you could help lower your cost of college by using a quirky real estate-based approach.


The Takeaway


Prepping junior for college isn’t about sticking money into a fund. Sure, that’s important, but this is an easy time to teach your child lessons that she won’t forget. Spend some time deciding how you’ll teach your child the value of school and help them become responsible members of society.

Other college planning stories:

Find Your Perfect College

What Are the FAFSA and EFC?

Maximizing Your Expected Family Contribution

Okay, team…what are some creative college savings strategies you’ve seen? Let’s talk scholarships and fun in the comments.

Photo: CollegeDegrees360

Related Posts Plugin for WordPress, Blogger...


  1. says

    That’s a cool incentive program, though I still have no idea whether I would want to compensate my children for their grades. I never was paid for grades yet still got all As and Bs. I don’t even have kids at this point so I haven’t thought about saving for their college – I’m still focused on paying down my own college debt!
    DC @ Young Adult Money recently posted..5 Ways to Save Money on Your Energy BillMy Profile

    • Average Joe says

      It wouldn’t work with my kids. It’s just one of the most creative solutions I’ve seen to college planning. If I can fill your head with many, many creative ways to get this done, DC, you’ll be ready when the time comes!

    • Average Joe says

      Wow! I do like the fact that each child graduated and received as a gift their last semester’s reimbursement. Imagine starting out with $25k. Of course, at 22, I would have blown through that pretty quickly. Drinks on me!

  2. says

    Sounds pretty effective! I don’t know if I would tie the reimbursement exactly to grades as I believe putting pressure on grades discourages challenging yourself with difficult course or major selection. But I think it’s a great idea to limit the number of paid-for years to four and to require some measure of performance or at least effort.

    • Average Joe says

      That’s exactly the issue Tim and Shelly ran into, Emily. They wanted to tie it to something, so in the end they really “settled” on grades (for lack of another area). Luckily, they’d done a good enough job parenting that their children still took tough classes and didn’t game the system.

  3. says

    What a clever idea. Over here in the UK it’s hard enough to motivate kids to finish high school, never mind pay for their own first year of college! I think what Tim & Shelly did is great because they’ve fulfilled their own desire to pay for their kids education, whilst at the same time instilling a good work ethic and respect for money.
    Money Bulldog recently posted..5 Ways To Save Money On Home InsuranceMy Profile

    • Average Joe says

      It’s equally hard here, Adam. That’s why it’s so cool that they hatched this plan while the kids were young. Some proactive thinking helped them teach some really cool lessons.

    • Average Joe says

      I’m happy you’re all in agreement that this isn’t the best solution…but I’m hoping for a better tie from someone. What should they have tied it to? I’m not hearing that the idea of reimbursing tuition is a bad one, though.

  4. says

    This looks awesome! I wish my parents would’ve done something like this for me. Like you said, it would not work for every child. I think key to having something like this work is teaching your kids the value of hard work and striving to reach a goal. Saving the money is only half the battle of preparing the kids for college. If done right, it’ll also help them later in life.
    John S @ Frugal Rules recently posted..How to Take the Emotion Out of InvestingMy Profile

  5. says

    That’s a great idea. I am terrified at the thought of what college could cost when my kids are old enough. Hopefully I can save enough to make a significant impact and not leave them with mountains of debt. That is the kind of stuff that keeps me up at night!

  6. says

    I think their approach and the way they helped each one of their children was very smart. I like that they taught them how to use specific resources to find money and that they had to achieve certain grades to benefit.

    By showing them specific strategies they were also teaching them skills that they could use if and when their children ever wanted to seek funding to start a business.

    As well it is very important for children to start working at 12 or 13. It teaches them so much, but in this case I can see it working out even better because their parents were so closely involved in helping them find a job and setting expectations on how everything, including their grades, would work to their benefit.

    I know when I was in college that many of the students were there on a free ride and spent most of their days in the Pub drinking and playing Euchre. Their parents were paying for everything and they didn’t value or appreciate it at all.
    Tackling Our Debt recently posted..How Do You Define Success?My Profile

  7. says

    Hat off to your clients! It is great to see parents guiding their kids to advancement by maintaining a sense of accountability not within the parents but within the kids themselves! Being one of four in my family a free educational ride was not an option and we were all told very early in life that we would need to earn it. And we are all more responsible now because of that… we take ownership of our choices, and our direction… with a bit of guidance!
    Julie recently posted..Insert Fun Here….My Profile

    • Average Joe says

      The good news is that you don’t have to pay a penalty. You can use the money yourself for education or gift it to him to use with your grandchildren.

  8. says

    That’s a really interesting idea. I can definitely see its merits. That said, there were so few As at my school, it wouldn’t have worked out very well for most people! I have been in classes with a 52% average before.
    I think part of what makes these systems work is the values instilled growing up. In the house I grew up in, effort was more important than grade. My Mom was constantly giving me grief for my marks in high school, when they were still As, because she knew I wasn’t trying. Whenever I was truly struggling with anything, lower marks were perfectly acceptable because my parents could see that I was really working at it.
    Basically, knowing and understanding the incentives and expectations at an early age makes all the difference in the effectiveness, I think.
    Anne @ Unique Gifter recently posted..Malibu Mail – Random Acts of KindnessMy Profile

    • Average Joe says

      That’s another great point, Anne. If they’d gone to a school similar to yours, this would have never worked in its existing format.

  9. says

    Interesting approach, and it’s enlightening to learn about different ways people handle this. My kids are younger, so it’s hard to say if this would work with them. Regardless, I do think it’s important for kids to learn the value of the money that’s paying for college. It’s not free, and was very hard to make and harder to save, for parents. Kids need to get an appreciation of this early on.
    Tie the Money Knot recently posted..Credit and Relationships, Plus Money and Dating RoundupMy Profile

  10. says

    With five kids these folks did an excellent job with finding a creative solution to the exorbitant costs of higher education.

    My little squirt also will be responsible for the bulk of her tuition initially because I want her to value it properly. And if she is serious and does well, I have no problems offering further incentives to help encourage her along.

    Ooor, I could just throw her through the gauntlet: offer a lump sum and tell her to come back to me once she’s figured out how to successfully triple that amount (or more) through wise investing decisions, and then I gleefully will attempt to match it.

    Oh, the fun I shall have. cackle.
    Jennifer Lynn @ Broke-Ass Mommy recently posted..Time to establish financial and savings goals for 2013.My Profile

  11. says

    Depending on the child’s aspirations a career as a military officer would result in going to college for FREE!

    I was able to attend college for absolutely free. Additionally I received an allowance, some of the best training our country has to offer, and upon graduation was given a guaranteed job for the next 4 years. Not bad if you don’t mind public service.

  12. says

    This sort of thing never occured to us on this side of the pond until about 15 years ago. Since then tuition fees have soared so much that many parents are just not prepared – think £9,000 ($15,000) a year for tuition alone. And there really aren’t the part-time bar jobs to go round so most students have to take loans from a Student Loan Company and graduate with £50k ($80k) of debt. And we don’t have the alumni habit of contributing back to your old college so bursaries, if there are any, are actually paid for by today’s students. Not nice.
    John@MoneyPrinciple recently posted..Credit Scores – Knowledge Is PowerMy Profile

  13. says

    That is a REALLY cool idea. Being such savers and obviously very inventive how did your relationship work with them? Money management?

    I haven’t started really saving for my 2 year old but hopefully that will change this year.
    Evan recently posted..Starting an Investment ClubMy Profile

    • Average Joe says

      I had a great relationship with them and was proud of the fact I helped them come up with this strategy. If you’re asking about the business of our relationship, they paid me a fee to be their advisor and then I managed a portion of their portfolio for an additional percentage (not all of my clients had me manage their funds, but all paid an advisory fee). That way they looked for objective advice from me that wasn’t based on asset management.


Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge