Yesterday’s post discussed how Johnny and I paid for college. And today we’ll address our options for Baby Girl’s college costs. Johnny and I had to take out loans and get part-time jobs to pay our way through college, but we’re not sure we want the same for Baby Girl. On the flip side, Johnny and I learned a lot by having to work our way through school. So what do we do about Baby Girl’s college expenses? Let’s consider our options.
What We Could Do
We have three main options, which I’ve listed. And obviously, there’s variations of each of these options, but I’ve just listed them in their simplest form.
First, we could have her take out loans. We wouldn’t have to put much away in a 529 plan if we chose this option. We could help Baby Girl find the best loan options and then help her out with whatever her loans didn’t cover.
Second, we could foot the bill 100%. We would have to put a big chunk of money in a 529 plan, but hopefully it’d be doable spaced out over the course of 18 years. Baby Girl wouldn’t have to worry about finances while in college, and she could just focus on her schooling.
Third, we could foot some of the bill and have Baby Girl pay the rest herself. We would still put a big chunk of money in a 529 plan, but Baby Girl would have some financial responsibilities of her own as well.
What We Hope to Do
Footing our own college finances was tough. And starting off life after college with a -$20,000 net worth was even tougher. If possible, Johnny and I would like our kids to not have to start post-college life already in the red. But we’d also like them to learn financial responsibility.
Right now we’re tentatively considering something along these lines:
- We’ll pay for all of Baby Girl’s necessary college expenses if she maintains a certain GPA each semester. However, this rule will not kick in until sophomore year. In other words, we’ll cover all of her freshman year of college no matter what.
- Any expenses that aren’t necessary, she’ll have to cover on her own. If Baby Girl wants new clothes or tickets to a concert, she’ll have to get a job and pay for those things herself.
That’s what we’ve got so far. Hopefully we can save enough in a 529 plan to make that scenario a real option. There’s also one other option that a classmate of mine told me about our senior year of college. I’ll call my classmate David… David had taken out loans and worked his way through every year of college. Now that we were about to graduate, David had several thousand dollars of school debt. But as a graduation gift, his parents paid down all his debt. So he suffered through four years of working his butt off and then got a clean slate after graduation. How cool is that? I love that idea, but I’m still not sure whether I’d do it with my own kids.
What about you? How do you plan on putting your kids through college? Have any tips for Johnny and me as we make this decision?