Who Pays for College?

I was recently asked to discuss on radio whether parents should ask their children to help pay for college. One financial-aid director has labeled this a "new phenomenon," and in some quarters it's considered to becontroversial. To me, it just makes good sense. In a column two years ago, I advised parents to "think of paying for college as a joint venture," and that even if you're financially able to pick up the whole tab, "kids should at least be expected to earn their spending money."

But in some families, kids say they are shocked when Mom and Dad can't or won't bear full freight for any school they want to attend. "My parents want me to stay in Virginia and go to a community college," one teenager lamented in an e-mail, "but I want to go to New York because I got accepted to a school in Manhattan."

Ashley's story

One publication that came across my desk tells the story of a young woman named Ashley who had set her sights on attending the University of Iowa. She received enough financial aid to cover tuition and fees, but came up short on room and board. Rather than have Ashley go into debt, her mother, a single parent, recommended that she attend a community college. Ashley did, with the intention of saving enough to transfer. But she was devastated when her friends headed off to UI.

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Disappointed now, Ashley may end up thanking Mom later. She won't be in the position of another young woman whose mother wrote to me: "My daughter majors in religious studies at a private college where tuition is quite high. I'm concerned about the amount of loans she'll have and her ability to repay them."

Talk the talk

Before kids apply to college, have a frank discussion with them about how much it will cost, what you're willing to pay and what their obligation will be. Even at the new fixed rate of 6.8% on student loans, it can make sense to borrow judiciously.

For example, in Ashley's case, because her tuition is covered and she won't be at UI for four years, a reasonable amount of Stafford loans could help supplement her savings. In the case of the young woman majoring in religious studies, however, it probably doesn't make sense to borrow heavily to attend a private school if her earnings potential is limited. But what 18-year-old would even think of that if you don't bring it up?

Cut the cost

Concerned that your kids will take on too much debt? There are plenty of creative ways for all of you to hold down college costs. More than a dozen states offer merit scholarships to in-state students with stellar high school records (Georgia's HOPE scholarship is probably the best known). One of my Kiplinger's colleagues is about to send his son off to Vanderbilt University on a naval ROTC scholarship.

It also pays to look for deals like the one offered by Albertson College of Idaho, a small liberal-arts school. Several years ago Albertson slashed its tuition by 30% to make private education accessible to state residents.

Students can graduate in three years by combining high school AP credits with extra courses. And I know of one young man who blew through $25,000 of college savings without graduating before settling into a full-time job -- and then got his employer to foot the tuition bill.

Then there's my son Peter's philosophy. Peter is a high school senior, and his top college choice is the University of Maryland -- where his tuition would be paid for because we invested in the state's prepaid-tuition plan. Says Peter, "I can't see going into debt to pay for college if I'm going to have to pay for graduate school." I can't argue with that.