Singletary: College-bound teen needs Econ 101

With sufficient savings, one would think they wouldn’t have an issue. But they do and here’s why:

• The daughter did not want to attend an in-state school and applied to several top out-of-state schools. She also applied to international programs.

• The daughter was accepted into two of her top picks, one ranked nationally and an international school also highly regarded and where her boyfriend happens to be attending in his freshman year. “Though I do not see that as what is driving her decision entirely,” the father said.

• At the U.S. university, the daughter was accepted into an honors program and given a scholarship that will cover a significant portion of her tuition and expenses. In fact, she would have money left over from her college fund to help pay for her graduate studies. She did not get any money from the international university.

The discussion centers on this:

• The daughter wants to go to the international school. If she goes, she’ll end up with significant debt just for her undergraduate degree.

• The father doesn’t want to overextend beyond what he and his wife have saved. “I feel it is appropriate to commit to her success and fully support her undergraduate education at in-state costs,” he said. But the mom wants to do more.

“My spouse differs, taking a position that we should fund the best school possible, with no boundaries, which runs contrary to my current thoughts on responsibility, ownership and entitlement risks.”

Here’s what I think:

• I’m not completely persuaded that the daughter’s decision isn’t being influenced by the fact that her boyfriend is at her top choice.

• The decision of what college to attend should be made together as a family. I don’t believe parents should abdicate the college decision to a teenager who doesn’t have a penny to pay for his or her choice. The student gets a say but not the final word.

• This is a great test for a young adult on how to make sound financial decisions. All too often folks give into emotions when it comes to college choices. If both schools achieve the same end goal, which is a great education, why wouldn’t you opt for the one that is much more affordable and have money for graduate studies?

So here’s what I would do:

• I would put my foot down for the U.S. university. And it makes more financial sense to choose the school that is giving her a scholarship, thus freeing up money for her graduate studies.

• If my daughter refused to listen to me and opted for the international school, I would still give her what I’ve saved. She deserves it. But she would then be responsible for coming up with the difference for both her undergraduate and graduate degrees. I would not take on any parent loans. I would not co-sign on any student loans she may take out. I would not dig into my retirement savings.

In the end, if she wants to make a grown-up decision, she has to come up with the money and then live with the financial consequences of her choice.