If you want your children to do well in college, the answer may lie not in what you give them — but in what you withhold. A recent study found that as parental financial support increases, students’ GPAs often decrease.
University of California, Merced sociology professor Laura Hamilton, who conducted the study, says that when parents foot the entire bill for college — often including a generous monthly sum of spending money — it creates a sort of disincentive to finish school and get a job. Who would want to give up that cushy lifestyle, after all?
“Kids don’t have the desire to leave college, especially when it is fully financed, so they might dial down their efforts,” Hamilton says. “Their grades don’t usually go down to the level of failing out of school, but they do appreciably get worse.”
Hamilton, who actually lived in a dorm among college women to research for her book “Paying for the Party: How College Maintains Inequality,” says it’s tempting for co-eds to get wrapped up in the campus social scene — particularly when they aren’t busy with part-time jobs, and have plenty of cash from mom and dad.
“In high school, kids are busy doing extracurricular activities, and then they go to college and they have an insane amount of free time and an insane amount of money — some kids get $700 a month on top of tuition, books and living expenses,” Hamilton says.
This “excessive funding,” as Hamilton calls it, can entice students to spend wildly on entertainment. It’s not hard to find a good time in college towns, and kids who have the free time and the cash are prone to hitting bars or parties most nights of the week.
“Most kids can’t party that hard and show up at the library the next morning,” Hamilton says. “So if they do that, they inevitably start downgrading their career plans.”
Ron Lieber, New York Times personal finance columnist and author of “The Opposite of Spoiled: Raising Kids Who are Grounded, Generous, and Smart About Money,” says that even if you can easily afford to pay for college, your kids should make some financial contribution to their education. The sum doesn’t have to be large; perhaps you pick up the tab for tuition and they work a summer job to pay for books or beer money. If kids share in the responsibility of paying for college, Lieber says they’ll feel confidence and a sense of accomplishment that will set them up for success in the real world after graduation.
“It’s good for them to have skin in the game,” Lieber says. “Not only will they take school more seriously, but it feels good to provide for yourself, especially if you haven’t had to earn your keep much as a teenager.”
Kim Jenson, Chicago Complex Director for UBS Wealth Management, says that even for wealthy families, college tuition is a significant expense. She says you should talk to your kids about the cost of college and what it will take for your family to pay for it.
“Compare the cost of four years of college to them in relative terms,” Jenson says. “For example, our family has to work X years to earn that sum. Or, it is the same as X new cars in our driveway.”
Like Lieber, Jenson says students should have a financial stake in their own education. You can still pay for the majority of college expenses, as long as your child contributes some amount. That might be as simple as requiring kids to earn at least one scholarship or work over the summer to make enough money to cover their meal plan. Parents in affluent communities may feel pressure to let kids off the hook when it comes to college expenses, but Jenson says to resist the temptation.
“Yes, it may feel unfair to students when they see peers get a parental ‘free ride,’” she says. “Still, I believe the lessons learned and pride will give them the leg up in the long term.”
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