Settle this- Who is right here regarding college money?

[TranquilMind]

it's the parents money - not the teen's. they parents are still parenting the teen - and that includes making sure the bulk of their college tuition/etc payments are made.

 

with that sort of "give me the money" attitude, I'd expect it to be blown by the student. the student needs to get a part time job/ and work between quarters/semesters. THAT will be a far greater lesson to them in handling money. because they will learn how their own actions bring in the money they want to spend.

All I can think of is the Prodigal son. He didn't do a great job of money management either. But the father still gave it to him and let him piss it away. Edited June 16, 2016 by TranquilMind

[TranquilMind]

All of this raises other questions in this discussion;what obligation does a child have in exchange for the money?

 

None? Good grades? How good?

 

Not to engage in alcohol or drugs?

 

Not to get involved with that undesirable character, whether friend, bt/gf who is sucking time and making grades suffer?

 

Not to have a job? To have a job?

 

What other obligations if any do you believe college age student has?

 

I think I will split this off.

Edited June 16, 2016 by TranquilMind

[SKL]

Well here's a question:  do you all have a set amount saved for each kid, or is it flexible depending on how things go?  I have two very different kids whose educational paths will be quite different.  I might end up spending more on one than the other.  But who knows - kids change things up in the middle (I did) and kids screw up and drop out or go join the military or find new funding opportunities.  If my kids can pay for their education without sucking out all of my savings, then I'm keeping some for my retirement.  :)

[DawnM]

Interesting that this is pretty much an issue of 100% agreement.

 

 

We should talk about this more often!

[Miss Peregrine]

I'd say the one who has the money is right.

[DawnM]

All of this raises other questions in this discussion;what obligation does a child have in exchange for the money?

 

None? Good grades? How good?

 

Not to engage in alcohol or drugs?

 

Not to get involved with that undesirable character, whether friend, bt/gf who is sucking time and making grades suffer?

 

Not to have a job? To have a job?

 

What other obligations if any do you believe college age student has?

 

 

This is always a question and to me is very dependent on the child.

 

Oldest has LDs and Asperger's.  I am thankful he is going to community college and getting a trade/tech program degree.  That will run us approx.  $7,200 for the 3 years he will be there.  It is 72 credits and each credit seems to be running around $100 ($79 for tuition and $21 for fees).  

 

The other two aren't college age yet and my guess is that they will want to start at a 4 year college.   But both of them are strong students and we will have stipulations.  So far, neither of them has given us any reason to be concerned that they won't do their best but we will monitor.

[amy g.]

We do not have a set amount set aside for each kid. We have a specific income stream (Long Term Incentives-company stock) earmarked for college expenses.

 

So next year our oldest gets the whole amount. Middle child will be at community college but those costs will come out of our household account.

 

In 2 years, oldest will be in graduate school, but most likely living at home. Middle daughter will be away at college. They will have to split it based on expenses, not right down the middle.

 

Our son is talking about going back to college. His company will pay tuition, fees and books but since his hours at work would be going down, we will probably pay his rent while he is in school. That may come out of stocks or I might take it from the household account depending on how much the girls' schools cost.

 

Then we have a large 7 year break before we start paying for the younger kids. The older ones had better be fully launched by that point.

[Lolly]

We have a set amount set aside for each dc. We pay out what is needed at the beginning of the semester. Dc pays all bills/expenses. They know how much $ they are allotted (which is based on their need) for the semester and must make it last. If something unexpected comes up, they let us know and we will move more if needed. Anything left at the end will be theirs. Dd23, I moved everything over to her savings at the beginning of her last year of school. Ds used very, very little of his. He decided to go to trade school instead. The state kicked in a program that paid all but $100 of his tuition the year he graduated from high school. I put in a monthly amount to his checking to cover food, fun, and clothing. We have not moved all of his college $ to his account. We will keep it set aside for a while, I have no idea how long, in case he decides he wants to go back and get a college degree. If not, he will have a really tidy little nest egg eventually. The decision of where to go to school, how long to take to finish, where to live, whether or not to travel overseas during school will all make a huge difference in how much $ they will have left to start off their "adult" lives.

Edited June 16, 2016 by Lolly

[HRAAB]

All of this raises other questions in this discussion;what obligation does a child have in exchange for the money?

 

None? Good grades? How good?

 

Not to engage in alcohol or drugs?

 

Not to get involved with that undesirable character, whether friend, bt/gf who is sucking time and making grades suffer?

 

Not to have a job? To have a job?

 

What other obligations if any do you believe college age student has?

 

I think I will split this off.

 

First off, all we're able to do is help out.  They rest is from scholarships, aid, and the student working.

 

For the money we've put aside we expect them to keep their grades up, which looks different for each kid.  Basically, we want to see that they're applying themselves to the best of their ability.  No partying.  Absolutely no alcohol or drugs.  If grades are suffering due to a relationship, we would talk with them and try to work it out.  If the bf were an undesirable person, that would be yet another conversation.  As to jobs, their first responsibility is to school.  I prefer they don't work during their first semester, at least, until they get a feel for college and the homework required.  My older two both had jobs the entire time they were in college, and I think they were pulled too thin.  My next dd didn't start working until her 2nd semester, and she's been able to maintain her GPA.  We do expect them to work during the summer; of course, finding jobs isn't always that easy.

 

Generally, we expect them to be responsible and work hard.  We wouldn't pull funding without a warning or two. 

[Tita Gidge]

All of this raises other questions in this discussion;what obligation does a child have in exchange for the money?

 

None? Good grades? How good?

 

Not to engage in alcohol or drugs?

 

Not to get involved with that undesirable character, whether friend, bt/gf who is sucking time and making grades suffer?

 

Not to have a job? To have a job?

 

What other obligations if any do you believe college age student has?

 

I think I will split this off.

 

My parents approached college as mandatory, not optional (for us). They narrowed down which majors they wanted us to choose from. We were expected to earn scholarships to put towards our own college costs. It was understood that they'd cover the difference, if any. College was viewed as a FAMILY INVESTMENT in which we all had a role to play. We're Asian and it feels typical of my (Asian) friends' experiences, too.

 

Grades were expected to be high, regardless of who was paying for school. This was carried over from K-12 LOL.

 

It was expected that we'd drink, but not to excess. Our social life was expected to not interfere with our studies.

 

We were to avoid undesirable people independent of who was paying for school.

 

They preferred we didn't have a job; our job was to be a successful student.

 

Obligations included family time, even if we attended school far from family.

[TranquilMind]

My parents approached college as mandatory, not optional (for us). They narrowed down which majors they wanted us to choose from. We were expected to earn scholarships to put towards our own college costs. It was understood that they'd cover the difference, if any. College was viewed as a FAMILY INVESTMENT in which we all had a role to play. We're Asian and it feels typical of my (Asian) friends' experiences, too.

 

Grades were expected to be high, regardless of who was paying for school. This was carried over from K-12 LOL.

 

It was expected that we'd drink, but not to excess. Our social life was expected to not interfere with our studies.

 

We were to avoid undesirable people independent of who was paying for school.

 

They preferred we didn't have a job; our job was to be a successful student.

 

Obligations included family time, even if we attended school far from family.

This is totally my perspective, though I am not Asian. It has

been argued that this perspective is inherently unreasonable, that a teen over 18 is a legal adult with no obligations to others, despite parental financial support, and that any failure to hand over all the money up front is overly controlling.

 

Yeah. That's nuts.

[Frances]

I think it would depend on the child. My parents didn't have very much money saved for me, but each year they gave me a lump sum at the beginning of the school year. Using it combined with scholarships, grants, loans, work study, and summer earning, I paid for everything. But as the first in my family to attend a four year school, I also completed all financial aid documents for myself and later did them for my younger sister. And I actually graduated from college with enough in savings to pay off more than half of my subsidized loans. Although since I went directly to grad school, I didn't pay them off until later.

 

I remember being surprised when my future husband told me his parents made a payment directly to the college each month. But as I learned more about his money management skills, it made complete sense.

[AK_Mom4]

Whoa.... and I am normally a Hive Follower, but this time apparently I am a rebel......

 

When our kids were younger, we started investing money for their college funds.  Some of the money was theirs (from the state) and some was contributed by us.  DH managed the investments for them while they were minors.

 

When each kid has graduated from high school, we divided out their portion of the investment and rolled it into an account in their name.  DH helped them with understanding how the investment accounts work and walked them through the withdrawal process for taking out money to pay college bills.

 

 And it's all theirs to do what they want with it.  Oldest DS didn't need the money for college, so he still has it in his investment account.  Oldest DD has made cautious withdrawals - just enough to cover her needs each year and managed to stretch it out to cover her full four years with a tiny bit left over to buy a car.  DS20 used some to pay for his first year in college, but was able to pay all of this last year from his summer earnings and scholarships to stretch out his fund to cover a likely 5th year of college.  DD15's money is still building up in her account for a few more years.

 

Our older kids have all "owned" their college funding themselves.  If they had blown through the money recklessly, that would have meant it was gone.  Since we don't co-sign loans for them, they have responsibility for paying their college bills or dropping out and working until they could afford to go back (if they could).

 

I don't monitor their grades.  I don't pay for college.  I do celebrate their successes with them and commiserate when things go wrong, but money isn't involved.  We do have DS20 living at home rent-free since he is going to school here in town, but that's an arrangement we are glad to support as it makes financial sense for him and we benefit as well from having another adult in the house.

 

[mamiof5]

My 17 year old is spending the summer across the country. We just gave her a credit card. It is kind of nice that I can see when she buys fabric or has a latte from the receipts. I'm not sure I would have given her a lump sum for the summer, but I can see how doing so could be an important learning experience-a very expensive learning experience.

I actually see this as a WAY more valuable learning experience for your daughter. Credit cards as dangerous!!! As I am not sure all young adults realize (or understand) it's not free money and it has to be paid back. And with interest if they don't pay it back right away. This is a wonderful opportunity your dd to learn cc usage :)

[mamiof5]

Whoa.... and I am normally a Hive Follower, but this time apparently I am a rebel......

 

When our kids were younger, we started investing money for their college funds. Some of the money was theirs (from the state) and some was contributed by us. DH managed the investments for them while they were minors.

 

When each kid has graduated from high school, we divided out their portion of the investment and rolled it into an account in their name. DH helped them with understanding how the investment accounts work and walked them through the withdrawal process for taking out money to pay college bills.

 

And it's all theirs to do what they want with it. Oldest DS didn't need the money for college, so he still has it in his investment account. Oldest DD has made cautious withdrawals - just enough to cover her needs each year and managed to stretch it out to cover her full four years with a tiny bit left over to buy a car. DS20 used some to pay for his first year in college, but was able to pay all of this last year from his summer earnings and scholarships to stretch out his fund to cover a likely 5th year of college. DD15's money is still building up in her account for a few more years.

 

Our older kids have all "owned" their college funding themselves. If they had blown through the money recklessly, that would have meant it was gone. Since we don't co-sign loans for them, they have responsibility for paying their college bills or dropping out and working until they could afford to go back (if they could).

 

I don't monitor their grades. I don't pay for college. I do celebrate their successes with them and commiserate when things go wrong, but money isn't involved. We do have DS20 living at home rent-free since he is going to school here in town, but that's an arrangement we are glad to support as it makes financial sense for him and we benefit as well from having another adult in the house.

You should be very proud of all your children!!!! However, I don't think it's the norm. You guys are very lucky.

ETA: now I'm really curious about this. Do you mind sharing how did you handle money teaching/responsibility? Did you start talking about it when they were young? Actually, I'm starting another topic on this...hope you can comment there... I'm really interested in reading about what you did

Edited June 16, 2016 by mamiof5

[TranquilMind]

AK mom, that is fantastic.

[La Condessa]

I figure that I'll do things like my parents did--each semester they sent the cost of tuition to my bank account. I handled everything from there. I would not deposit a full 4 years' amount at once, but if I don't think they could handle paying their own bills, they aren't ready to leave home, and I am not going to financially support their doing so. Of course, this is the theory of a person who's never parented teens, yet, as my kids are very young.

 

My parents gave the full cost of tuition to each college kid regardless of scholarship money received, and we paid for books, housing, food, etc., between excess from that money, savings, jobs, and a loan for one sister. My dh's family did the opposite, with his parents paying living expenses and the kids paying tuition. Which comes out about equal, since we both attended BYU (gotta love that subsidized education!), but I think my parents' way gave better money management experience.

[Jackie in AR]

We have three children in college right now. We pay as needed to the school or the child, depending on the expense. Dh and I would not consider the college expense money that we have saved to be money that dc could spend however they wish if they decide not to attend school. Each of our college students also has one of our credit cards to be used for certain expenses; they know what those expenses are, and we haven't had any problem with the cards being misused.

Edited June 16, 2016 by Jackie in AR

[sassenach]

It's the PARENTS' money, set aside for a specific purpose. The parents should maintain control. College money is too high stakes. However, on a smaller scale, jurisdiction over a monthly allowance is appropriate. If that goes well, you could stretch that into a quarterly, semester allowance, or even yearly allowance. Also, they should have autonomy over their student loans (which doesn't mean much here, because the whole loan went straight to the school, but I know some kids are able to pull funds under their discretion). But the whole pie? Heck no.

Edited June 16, 2016 by Sassenach

[Joyofsixreboot]

IMHO it's not their money. It is a gift I plan to give but I don't think it is theirs until I choose to give it. It's not about them handling it. I think they could learn those skills to budget much earlier with their own earnings.

[Guest2]

We call it a family scholarship. Grades need to be high. They know it is hard for us to pay for college, so we expect them to do their part. The scholarship can be revoked if need be. School meal plans are optional after freshman year, so we do give a lump sum for food each semester that he/soon she can spend on a meal plan or not. This is significant money that can be used for groceries(cheaper) spending money/ grabbing food on campus. He may not spend that money the way I would prefer, but he doesn't starve and is so appreciative of all food now. It I give him a few cans of soup that you don't add water to, he is in heaven.

[Bluegoat]

When one gets financial aid, the money is generally sent straight to the school.  Back in the olden days I was called in to sign the checks over to them (I assume they do that a different way now).  So, no not even banks just hand that money over to students.  Sometimes they would give me money above and beyond to cover other expenses, but definitely not the tuition money. 

 

Here they do.  Student loans go into the student's bank account, and the student pays the university from the loan, then whatever is left goes to other expenses.  I don't think it can go into the parental account, since the parent isn't the loan holder.

 

Usually there are two deposits, one for each semester. 

 

Plenty of kids did overspend at the beginning of each semester and had a lean existence for part of the year.

[teachermom2834]

Is it the student that thinks the money should be handed over in a lump sum? That doesn't sound like a common opinion from an adult.

[cjzimmer1]

My oldest will just be starting college in the fall so I don't have any been there done that experience but I don't expect problems with this one.  First all our kids know that college is their expense not ours.  Money has been generously given to them by various relatives and right from the beginning a small portion is allowed to buy something they want and the majority of any cash they receive goes in the bank for college.  My parents did the same with me.  I was saving for college before I even understood what college was.  They all have part time jobs (even the 7 and 9 year old) working in the family business.  They all understand how much effort/work they have to do to earn money.  They really understand the value of money from an early age.  Also I seldom buy them things they want just because.  If they see a toy they "can't live without", we talk about the cost of it.  Is there somewhere to buy it cheaper (online, sale, coupon etc)?  Do they have the money to buy it?  How many hours of work do they have to do to earn that much money? etc.  Most of the time they decide something is not really worth it after all. 

 

Anyways like I said my kids aren't there yet but so far of the 5 who are old enough to understand money 4 of them are great savers and seldom spend anything.  They will drink water at restaurants and pack food from home when traveling rather than spend their own money to go out to eat with friends.  The 5th kid spends money like water.  We control her money tightly and hope she absorbs some more lessons, if not she will not have control of her college money.  The rest will as soon as they start.

[gardenmom5]

All of this raises other questions in this discussion;what obligation does a child have in exchange for the money?

 

None? Good grades? How good?

 

Not to engage in alcohol or drugs?

 

Not to get involved with that undesirable character, whether friend, bt/gf who is sucking time and making grades suffer?

 

Not to have a job? To have a job?

 

What other obligations if any do you believe college age student has?

 

I think I will split this off.

it can vary by child.  good grades can vary by major.

1ds was here yesterday stressing over his physics final. he's working hard, he cares about his grades, etc. but he need time to get his head together to really be ready for the demands of college, even though he'd been pursuing previous degree programs.

 

we helped as much as we were financially able.  dh's family's attitude towards education is: a bachelor's degree is basic education.

 

I expect  them to choose a marketable degree program - they've got to earn enough to pay their bills and provide for their families.

education comes first - social life is second. 2dd quit crew partly because of how much her teammates partied - hard.   that was her choice.  1dd majored in classics - and got mad at me whenever I'd ask what she was going to do with it.  she had health problems that kept her from attending grad school.  now - she's a computer nerd.  

 

all the kids have mostly chosen to stay away from 'bad influences'.  even my most challenging child (who 'dated' a toxic other for a time.) dropped friends as they got into drugs, because they didn't want to.  (my kids have heard my stories of my drug-dealing pot-growing brother.  they can't stand him - even though he's now 'clean'.)

 

This is totally my perspective, though I am not Asian. It has

been argued that this perspective is inherently unreasonable, that a teen over 18 is a legal adult with no obligations to others, despite parental financial support, and that any failure to hand over all the money up front is overly controlling.

 

Yeah. That's nuts.

 

and likewise, - parents of a teen over 18 are under no obligation to pay their bills . . . . when my kids complain about my rules, I tell them when they pay ALL their own bills they can do what they want.

 

I actually see this as a WAY more valuable learning experience for your daughter. Credit cards as dangerous!!! As I am not sure all young adults realize (or understand) it's not free money and it has to be paid back. And with interest if they don't pay it back right away. This is a wonderful opportunity your dd to learn cc usage :)

 

we got cc as 18yo freshman for the girls because they were on the other side of the country.  if something happened and they needed to fly home - they needed to have enough on a cc to buy a plane ticket.  they also bought their books online (cheaper.)  they were both hyper responsible, and we never had a problem.  ( wouldn't have given them four years worth of college tuition - besides the tax implications, they simply didn't have the fiscal savvy sophistication to handle it well. eta: which is a heck of a lot more than just "not recklessly spending")

 

challenging spendthrift child has finally learned that savings are worthwhile, is much more fiscally responsible and can have a cc.

as for the accountant - well, that's all I need to say on that subject.  he knows where the pennies go. even before he knew he wanted to do accounting. he simply didn't spend money.

Edited June 16, 2016 by gardenmom5

[foxbridgeacademy]

I have a family member who is arguing that if parents have money set aside for college, said parents should simply hand the lump sum over to the teenage Freshman college student to handle for the duration of college, stating that it would be an excellent way to hone and demonstrate money management skills.

 

Another family member states that this is not sensible, that parents pay tuition and living expenses on an as-needed basis, and never simply hand over the lump sum to the teen to handle.

 

So how do you do it? If you have money set aside would you give it to the teen up front to manage through college?

 

Or do you think that is crazy, and you would dole it out on a semester or a year basis?

 

Or anything in between? Help!

I love and trust my kids, they're smart and very mature, especially DS who is a better "saver" then I have ever been and I still wouldn't hand over a lump sum.  First, he doesn't need that responsibility. What if he lost it somehow? He would always feel guilty and like $hit for having done something so irresponsible in an otherwise stellar youth.  We'd also have to still pay because my kid messing up one time (even that big) isn't going to keep them from going to College.  Second, they have enough on their "plate" that adding to it seems unnecessary.  I could see giving lump sum every semester and letting them dole it out as needed. 

[Arcadia]

Public schools aren't free where I am from and the teachers will collect monthly amount in cash from the students. We paid double the amount in May and November because June and December are school holidays.

We took public busses to school and often paid for lunch at school cafeterias in cash. No culture of lunch bags.

 

Out of all my relatives, only an uncle and a cousin would have problems with overspending. The rests of us are scrooges and likely to pay just before due to accrue bank interest on certificates of deposits. We had our own bank account at 12 including an ATM/debit card without parents needing to co-sign.

 

I went to college in early 90s and knew many who were given four years worth of tuition by parents. Some earned scholarships which are theirs to keep. All had no problems with the money. A few took interest free bank loans while keeping that money in long term certificates of deposits. They paid the loan once they finished their last term so no interest on the bank loan.

 

This is really so kid dependent. Here there is also an issue of financial aid. Back home as long as you could get into college, paying for it is a non-issue as education is heavily subsidized. Getting into the school within the colleges you want is the hard part as it is a direct admit process. Changing of schools would be highly unlikely.

[4arrows]

It would definitely depend on the trustworthiness of the child regarding money, but I lean in the direction of doling out the money on an as-needed basis.

[Crimson Wife]

Mine was set up as a trust in my name that my parents paid tuition and room & board from on a term basis. I would call them at the beginning of the term with my textbook total. Once I turned 21 partway through my junior year, the trust dissolved and turned into a regular account that I managed. From that point until it was exhausted, I paid my bills myself.

 

My family had placed 3 years' worth of funding into the trust and I graduated in 3 1/3. The last term I paid for myself with a combo of scholarships, and earnings from summer & PT jobs.

[TranquilMind]

Mine was set up as a trust in my name that my parents paid tuition and room & board from on a term basis. I would call them at the beginning of the term with my textbook total. Once I turned 21 partway through my junior year, the trust dissolved and turned into a regular account that I managed. From that point until it was exhausted, I paid my bills myself.

 

My family had placed 3 years' worth of funding into the trust and I graduated in 3 1/3. The last term I paid for myself with a combo of scholarships, and earnings from summer & PT jobs.

 

Now that is an interesting idea.

 

[Crimson Wife]

My family could've funded 4+ years for each of us kids (this was back in the '90's when college wasn't remotely as expensive), but they deliberately chose to fund 3 years in order to provide incentive to graduate quickly.

 

I used AP credits and taking a heavier course load to graduate as quickly as I could. Major requirements and classes with pre-reqs scheduled only during certain terms prevented me from doing it in 3 years even. 

 

My brothers chose to take out small amounts of student loans to cover the full 4th year in order to do things like a junior year abroad (the one who was an International Relations major) or an audio engineering program that required 4 full years to complete.

 

For my own kids, full funding of even 3 years is not going to be financially feasible unless they attend one of the UC's or Cal States within commuting distance. The amount that covered 3 years at Stanford for me will only cover a little bit more than 1 year at current prices. :scared:

[J&JMom]

Pay as needed with the caveat that the money becomes free to do with as my husband and I wish if they flunk out.  We have 4 years tuition prepaid plans for each of our boys. If they chose not to go to school or don't take it serious while there (in other words, academic suspension), then husband and I are traveling the world on their college dime. 

[DesertBlossom]

All of this raises other questions in this discussion;what obligation does a child have in exchange for the money?

 

None? Good grades? How good?

 

Not to engage in alcohol or drugs?

 

Not to get involved with that undesirable character, whether friend, bt/gf who is sucking time and making grades suffer?

 

Not to have a job? To have a job?

 

What other obligations if any do you believe college age student has?

 

I think I will split this off.

In my family, if a college student's grades were too low, my parents wouldn't pay the next semester's classes. If they brought their grades up after paying for the next semester themselves, my parents would pay them back. I think I had one sibling who failed enough classes one semester to get in trouble with my parents. Edited June 17, 2016 by DesertBlossom

[Tita Gidge]

This is totally my perspective, though I am not Asian. It has

been argued that this perspective is inherently unreasonable, that a teen over 18 is a legal adult with no obligations to others, despite parental financial support, and that any failure to hand over all the money up front is overly controlling.

 

Yeah. That's nuts.

 

I'm okay that people think it's unreasonable LOL.

 

Like you, I think that's nuts. I think that thinking is rooted in good intentions, but does no favors for a lot of teens.

 

The concept of "no obligations" doesn't do society many favors, IMO. But I did just watch a Teen Mom 2 marathon so my thinking may be skewed right now.

[KungFuPanda]

Dd is leaving for college soon. She'll be managing her money for books and incidentals, but tuition and board comes from our accounts each month through a payment plan.

 

Dd is frugal and a natural saver, but there's just no good reason to transfer that money to her accounts. Her spending habits are established. A chunk of cash won't change them. That would be an expensive and foolish gamble on a kid who is still learning to spend responsibly.

[Crimson Wife]

Well here's a question:  do you all have a set amount saved for each kid, or is it flexible depending on how things go? 

 

I would try to be fair and give equal amounts, but that doesn't apply to my special needs child. She may need to attend a specialized school due to her disabilities and so she's in her own separate category.

 

[Corraleno]

Tuition is excluded from the gift tax. Aside from tuition you can give up to $14,000 tax free.  And that's EACH parent, so a student with 2 parents could get up to $28,000 annually tax free.  If there are grandparents, they could also each give $14,000 annually also.

 

Thanks, Poppy. Is it tuition only that is excluded from the gift tax?

 

 

Yes, only tuition paid directly to the institution is exempt from gift tax. Medical expenses paid directly to the provider or institution, or to the insurance provider, are also exempt from gift tax.

 

However, even if you exceed the 14K per year exclusion, you do not have to pay tax on the excess until you've maxed out your lifetime gift exclusion, which currently stands at roughly 5.5 million per person. Gifts up to 14K/yr do not have to be reported to the IRS, but if you go over that you have to file a gift tax return and the excess gets "charged" against your lifetime exclusion. This is the same amount that is exempt from estate tax, so the idea is that you can use that exclusion to make gifts during your lifetime or to leave the money after your death; if the total exceeds 5.5 million, then gift or estate tax kicks in on the amount above 5.5 million. 

[TranquilMind]

Thank you for the information, Corraleno.

[regentrude]

Pay as needed.

I didnot get a change to read all replies and did not catch whether this was mentioned:

it is important to  keep the assets in the parent's name so they are not considered as heavily by the FAFS and EFC calculators as student assets would be. Parental assets are considered with 6%; student assets with 25%. Putting the college fund in the student's name does not make sense financially.

 

Edited June 17, 2016 by regentrude

[skimerinkydo]

Oldest is in her second semester at college. So far we pay by the semester- We pay tuition, books, rent, a minimal amount for food and transportation to and from school. Anything additional is up to her, including phone. Our children know that when we have more than one child in college we may be paying for less. (In the next year we could potentially have three in college).

 

Tuition - We pay directly to the school.

 

Rent - She has a direct online account to pay her rent to the apartment so we gave her a lump sum to pay the rent minus the amount of scholarship that was covering the rent. The rent is due at the beginning of the semester. She didn't pay the rent on time and so she will pay the $50 late fee herself.

 

Food- There is no cafeteria. The first semester we paid her directly every month as we weren't sure what  good amount would be. This semester we gave her a lump sum to manage for the semester

 

She must have a grade of C's or better in all her classes. For any class that she gets below a C she will have to pay us tuition for that class.

 

We will not pay for University for a child with poor grades or who does not have any career/future plans. We have a younger child who did not have good grades in high school and we are not offering that child an away from home University experience. We have told that child we are willing to pay  for community college or trade school while living at home after a career/future plan is made. If that child shows good grades and career direction later we will consider University if it is needed.

[terrikuns]

In the pre-529 days, my college was in an UTMA account, so it was legally mine once I turned 18. My dad was the trustee, and we kept his name on the accounts also, but I wrote the checks for tuition, room, board, etc. and a check to myself for a mutually-agreed upon spending allowance. It worked fine, and thanks to a booming stock market, I actually had a little left over at the end of 4 years that I used for grad school. We didn't qualify for any financial aid, so that wasn't an issue, and it actually benefitted my parents tax-wise since the capital gains were paid at my lower tax rate compared to theirs.

Yes, I realize how amazingly fortunate I was. We're saving for our kids with 529 funds, so obviously will need to maintain control for tax reasons.

[FaithManor]

We pay on a semester basis as needed.

[Seasider]

Our students must craft and submit a budget before we release any of our savings to them. Responsibility and transparency are rewarded.

 

We don't release more than a semester at a time. That said, our kids have earned a lot of their own college funding through scholarships and hard work, so they do have a portion of funds over which they have full autonomy.

[happymom4]

Firstly, the money I save for my child to go to college is just that, MY money.  It doesn't belong to the kid so no, they don't get to demand I give them MY money so they can show how "responsible" they are.  How about his, if they wanted to show me "responsible" maybe they should have gotten a part time job in high school or over the summer and put money aside for college too.  Even now they could find ways to make some spending money with on campus work study or the like if they are truly wanting to show how well they can handle money.

 

Secondly, the mere fact that they are asking for a lump sum is telling me they have something or somethings they are wanting to buy now and want the cash for that, not to show their excellent money management skills.  "No sweetie, I'm not going to give you tens to hundreds of thousands of dollars for you to blow on whatever you feel you want, be "responsible" with your own money."

[JanetC]

Handing the kid a wad of money has all sorts of possible tax and financial aid implications (especially if it's not just plain cash money, but something like appreciated stock or locked into a restricted account like a 529 or IRA). If I actuallly had enough cash in the bank to hand my kid four years of college expenses, I would also have enough cash in the bank for an hour of time with a CPA to tell me the best way to do it.

 

My kid is getting her money over four years, and I'm getting the tax credits for paying her educational expenses. Some families it makes sense for the kid to get the money and be IRS independent (different from being FAFSA independent), because them getting their own standard deduction and the educational tax credits works out best for everyone involved.

 

Logically, if you put a kid in a "sink or swim" situation, some will sink and some will swim. It may "hone" financial skills, or it may lead them to making very poor decisions if they are not mentored on how to handle this responsibility.

[TranquilMind]

Handing the kid a wad of money has all sorts of possible tax and financial aid implications (especially if it's not just plain cash money, but something like appreciated stock or locked into a restricted account like a 529 or IRA). If I actuallly had enough cash in the bank to hand my kid four years of college expenses, I would also have enough cash in the bank for an hour of time with a CPA to tell me the best way to do it.

 

My kid is getting her money over four years, and I'm getting the tax credits for paying her educational expenses. Some families it makes sense for the kid to get the money and be IRS independent (different from being FAFSA independent), because them getting their own standard deduction and the educational tax credits works out best for everyone involved.

 

Logically, if you put a kid in a "sink or swim" situation, some will sink and some will swim. It may "hone" financial skills, or it may lead them to making very poor decisions if they are not mentored on how to handle this responsibility.

Thanks for the input. I appreciate it and have relayed everything to relevant parties.