Over the last 10 years, as we have seen increasing numbers of new patients enter our Confidence@College program, we have been shocked by the number of kids who take parental financial support for college expenses for granted. Tuition, room and board, meal tickets, books, new computer, dorm furnishings, toiletries, laundry, pizza, and beer . . . It all adds up to the second biggest investment parents will make in their lives. Most college-age kids we’ve met don’t really have a clue! Parents sure do, and the expense is one of the major sources of angst when their kid heads off to college . . . “will he make good on this huge investment?”
It’s easy for kids to be sheltered from the expensive reality of college when most parents see a college education or post-high school training as a necessity in today’s world and feel it is their responsibility to make it happen. In today’s economy, large numbers of parents actually can’t fulfill this responsibility; in fact, lack of finances is the number one reason for falling graduation rates in the U.S. Other more fortunate families take a “do whatever it takes approach”, including:
- Work an extra job
- Long-term savings plan
- 529 accounts
- Selling assets
- Home equity loans
- Grant or other aid from colleges
- Gov’t sponsored loans
- Hunt for scholarship opportunities
- Gift from family and grandparents
More often than not, these financial efforts exclude their child. At most, the parent has to nag him/her about completing an essay for a scholarship application. A significant number of the parents we work with have actually written part or all of college essays out of the frustration or the need to meet a deadline!
Some parents set the expectation that their child will sign a promissory note and commit to paying back all of the loan money if they fail to graduate. For most of the kids we see, this large negative consequence may strike some fear initially but is seen by most as something in the distant future that they’ll deal with if they have to. Trouble is, without some type of degree or certificate the likelihood of getting a decent paying job that will make it possible to repay this obligation is small. It should be no surprise that the highest rate of college loan defaults is in situations where the student fails to graduate. Every escalating college costs have pushed the student loan crisis into position to become our next big national financial disaster.
Many parents take a baby step in the right direction when they ask their child throw something into the pot. Maybe it is a chunk of their savings account built up from mowing lawns, babysitting, having a part-time job, or from birthday and graduation gifts. Kids often push back and negotiations often end in them having to cover the costs of their books or their monthly entertainment. In our experience, this is rarely coupled with the establishment of a monthly budget for expenditures and we’ve seen many kids spend their contributions for the year in one month buying pizza and drinks for everybody at midnight, buying a new Xbox, or frequently going out with new friends to party! Then, what are parents to do? Certainly most give an irate lecture, but it’s pretty unrealistic for them to say that they’re not going to give their child any more money for the rest of the semester.
In reality, helping kids meet the demands of financial responsibility that come with college is a serious and complex issue that requires targeted attention and ongoing support particularly for students with ADD/ADHD. We’ve found that one relatively simple, yet profound, step that parents can take is to set an expectation for the student to give the parents a set amount of money before the start of each college year. Payment of some amount by the child represents the purchase price of a “ticket of admission” to the parent’s checkbook or signature on a loan. The actual dollar amount of this down payment isn’t critical but it should be enough to stretch the student to some degree . . . something in the ballpark of $750-$1500 is about right. For most students this means getting (and keeping) a full-time job (or two part-time jobs), saving money rather than impulsively spending it on food, entertainment, etc. and making sacrifices. To save this amount of money and contribute it by a certain date requires some of the same life skills it takes to be successful at college.
When kids meet this expectation they feel the pride of accomplishment, feel more mature and take a more serious approach to college. This “skin in the game” often helps them choose the pain of self-discipline over the pain of regret when temptations arise to kick back rather than bear down.
It’s not a perfect solution but it moves things in the right direction. Some parents use the contribution as the starting point to establish a monthly budget for their child and develop a plan to redistribute the money back to the student in agreed amounts during the school year. Others simply take the money, quietly invest it and then return it (with dividends) to the student when they earn a diploma . . . it can be the down payment on a car or condo/home to jump start their future!
At Confidence@College we have lots of strategies to help protect parents’ investment! Our committed staff always has a “skin in the game” and goes the extra mile to insure success. Call us now to set up a Discovery Session and experience the confidence we can give you and your child.