If the future payment of college expenses is ripe for negotiation, it is important to prepare an agreement with certain terms to limit imagination and state specifically what defines college expenses.When negotiating the distribution of assets and expenses among parents, college expenses are an element in the process. Because Texas is not among the states that can order parents to pay for college expenses, those college expenses might be a bargaining chip, especially when college years are far off and the party agreeing to pay has the benefit of additional time to prepare financially. If the future payment of college expenses is ripe for negotiation, it is important to prepare an agreement with certain terms to limit imagination and state specifically what defines college expenses.
Examples of terms to define when considering college expenses:
1. Public or Private?
When your children are still young and you have years to prepare to help pay for their college, the choice between public and private schools seems far off. Thinking into the future, we may consider the future tuition fees and variable economic conditions. The curriculum, values and culture of schools may also influence an agreement with options for colleges.
2. How Many Degrees?
Every generation tells the next to stay in school as long as they can. Some go the route of career students and continue collecting degrees for a decade and longer. Identifying college expenses in terms of degrees and number thereof may be appropriate. One option could be paying full expenses for the traditional four-year bachelor’s degree and contributing up to a certain fixed dollar amount to graduate school beyond college.
3. Time Limits?
If you are paying for full college expenses including tuition, housing, food and transportation it may be imperative to identify how long your child has to earn their degree. Some may limit the payment of college expenses to four or five years to limit liability for subsidizing a career student.
4. Living Expenses Defined?
Times change and so do the lifestyles of college students, if you allow them. Tuition is a fixed cost and to a certain extent so is housing. The dining, transportation and entertainment expenses are the ones that can really balloon if you do not set limits. In your college expenses agreement is transportation defined as a 3 Series BMW lease or is transportation a limited monthly Uber budget and a flight stipend?
5. Achievement Requirements?
Of course, we raise our children to be self-starters and achievers, but a little incentive often helps. Instead of bribing your children with extras if they achieve certain grades, consider giving them a budget and lifestyle conditioned upon maintaining a certain grade point average. In the real world, there are consequences and loss of lifestyle when you fail to perform.
Remember, when negotiating an agreement in contemplation of college expenses, make sure to define the terms of the agreement because the otherwise may be decided by someone else.