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