Kids Shouldn't Get a Free Ride to College

Parents have plenty of high expectations for their children and the cost of college is certainly on the list. The tab for tuition now averages more than $22,000 a year for private schools and almost $6,000 for state schools — plus another $7,000 to $9,000 for room and board.

But even if you're wealthy enough to cover this commitment, making kids pay at least part of their way has benefits beyond the decreased drag on your nest egg.

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"Education is not a right," said Phyllis Silverman, a senior vice president at PNC Financial Services Group Inc., who counsels affluent clients. "Kids are going to appreciate their education more if they have to contribute."

"There's nothing wrong with a kid working a small part-time job while they're going to school," added Gary Buffone, a psychologist in Jacksonville, Fla., who specializes in family matters. "Kids that work part-time [in college] do better than kids who don't work at all or work full time."

Most parents evidently would agree that when it comes to college, a family that pays together, stays together. In a poll on the Web site, almost 60 percent say their child should carry at least some of the educational freight even if money isn't an issue.

"Responses are dependent to some degree on family history," said Joseph Hurley, founder of "If their own parents paid for their education, these parents are probably going to follow suit. If they paid their own, they're inclined to have kids pay."

Communication is key

Teenagers aren't especially savvy about finances. Understanding what it means to pay for college or take out a student loan is a new experience for them. Yet parents who have no trouble critiquing their kids' college plans often spend little time talking about the money that will be needed to pay for everything.

Be your child's first college teacher, financial advisers and education experts say. Don't wait until an acceptance letter comes to talk about what you want from your children — and what they want from you — over those four developing years.

"This ideally has to be part of the family culture," said Kevin Ellman, a financial adviser at Wealth Preservation Solutions in Ridgewood, N.J. "If you've been paying for every expense and change your tune when it comes to college, I don't know how effective it's going to be."

Valerie and Alberto de la Torre learned the importance of family communication when their son Adam came home to Jacksonville, Fla., in December after his freshman semester at Duke University in Durham, N.C.

The de la Torres hadn't asked Adam, a top student in high school, to contribute to his college expenses. "Education was a luxury we were willing to indulge," Valerie de la Torre said.

But Adam's first-term grade-point average was below his parents' expectations, so they told him that with a total college bill approaching $50,000, he'd have to maintain at least a 3.0 average this year with no grade lower than a C. Any grade lower, and he pays for the class.

"You want not to be too punitive," de la Torre said, "but you want to make the message very clear: If you just want to go to parties and basketball games, we don't have to pay for that."

The earlier families spell out these rules, the better, she added. "We were sort of vague and assuming, based on his past record. This year is the adjustment year. Next year, he's going to have a part-time job."

Funding options

Sharing college expenses doesn't have to break a kid's piggy bank. As with car buying, the published "sticker price" for college isn't always what you pay. Many schools offer money to applicants without financial need and colleges also sponsor work-study programs that can offset costs.

In fact, undergraduates at private colleges and universities pay about $13,000 a year on average for tuition, while students at state schools pay about $2,700, after grants and tax benefits are factored, according to the College Board, a nonprofit association of colleges and universities. Only about 5 percent of students attend colleges with yearly tuition topping $33,000.

In addition, families with a level of income or assets that disqualifies them for financial aid can tap several loan options.

For students, an unsubsidized, federally guaranteed Stafford loans carry a fixed 6.8 percent interest rate and flexible repayment terms upon graduation. Total borrowing is capped at $23,000, and interest accrues during the student's time in college.

Parents, meanwhile, can borrow the full cost of tuition, minus any financial aid, through the federal Parent Loan for Undergraduate Students, or PLUS program. Most of these fixed-rate loans charge 8.5 percent interest, but both public and private schools participating in the Federal Direct Student Loan program offer PLUS loans at a 7.9 percent rate.

Private loans are based on creditworthiness and can be arranged through banks and other financial institutions such as Sallie Mae, but government loans generally offer better terms. Ask schools about special arrangements with preferred lenders for lower payments or fee waivers.

"Fees and interest rates can be modified," said Sandy Baum, a College Board senior policy analyst. "It's not as simple as it should be, so it makes sense to get all the details and compare."

Requiring a child to repay tuition debt after graduation is another way to share costs and allows a student to focus on classes and campus life. Or you can raise a teenager like Amanda Kimlinger, a 17-year-old Jefferson City, Mo., high-school senior who this fall will join Brigham Young University's Class of 2011.

Tuition at BYU in Provo, Utah, next year will be $3,800 for Mormon Church members, and Kimlinger can figure on another $10,000 or so for room and board, books and personal expenses.

Kimlinger and her parents will split the bill 50-50, which she intends to handle with summer jobs and working part-time while in school.

"I don't want to rely on my parents for the rest of my life," she said. "I can at least pay for a part of my education."

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Copyright (c) 2006 MarketWatch, Inc.