J.D. at Get Rich Slowly posted last week about the “Bank of Mom and Dad” and how we pay for education, with help from our parents and grandparents. The discussion that he started covered the problems that can arise down the road when adult children receive financial gifts like aid for college; in effect, they learn that they can ask for money and they will receive it, instead of learning how to take care of themselves (simplification, but you get the idea).
Obviously, not everyone who receives financial assistance from their parents will fall into this trap. But often accepting such gifts leads to trouble.
What?s the solution?
If your parents are wealthy, whatever your income (and whatever the level of assistance you receive), always live below your means. Don?t use financial gifts to fund your lifestyle. If you have considered giving your children economic outpatient care, ?teach them to fish? instead.
What seems to have worked well for me and my family, is that rather than making irregular withdrawals from the “Bank of Mom & Dad,” I get the Mom & Dad Scholarship - it’s a fixed amount for 8 semesters, doesn’t matter if I go to Austin Community College, The University of Texas, or Rensselaer Polytechnic Institute. That keeps things simple, so everyone knows what is expected of them and there is no ambiguity down the road. After The Scholarship, I am responsible for paying for everything else, grants, loans, scholarships, whatever I can get. (Disclaimer: This works for us, we are fortunate enough to be able to manage our money to make this happen, but that isn’t always the reality for other people, YMMV)
That aside, I think that a lot of discussion about paying for college these days is addressed to
- Parents saving up for their (young) children’s education
- Parents that have not saved enough for their (older) children’s education
- Former students saddled with tons and tons of debt
What about the students that have just entered or are in school already? Are we helplessly committed to whatever path we ignorantly chose or had chosen for us when we were clueless high school seniors? (As opposed to now, when we are clueless college students 
)
I like to think that I have taken control of my financial situation as a third-year undergraduate student, I am (fairly) well educated about how all of my loans work and what they mean, I am a ruthless Quicken user (How many college students do you know that can tell you their net worth?), and I have a financial plan for the next two years or so - basically till graduation. I can’t begin to count the number of times that being on top of my financial situation has saved me - it allows me to play a tight game with a pretty high degree of accuracy.
I would like to take the type of personal finance advice that is available on sites like GRS and The Simple Dollar, and translate that to something that is more meaningful to a group of people that are often overlooked or spoken down to when it comes to managing finances, students that are actually in college and are making important decisions now that can have far-reaching consequences.
Some of the topics I would like to cover on student finance include:
- Student Jobs
- Loans - How to Use Them to Your Advantage
- Transferring Schools?
- Managing Money for Students (day to day as well as longer term)
- Cheap Credit - Community College & Advanced Placement Credit
- Banking & Credit
You may not be able to graduate without debt, but I hope to offer a way to make that debt load a little bit lighter. In effect, you can be paying for college before you graduate - and if you can pay it off, more power to you!
Anything else you’d like to hear about? Let me know in the comments below.
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