Pay Tuition, Ruin Grades
Most parents wish to pay as much as they can for their children to go to college. Given the ever-increasing cost of tuition and expenses, this is an understandable goal. But recent research suggests that parents fully paying for a child's education can actually be harmful to the child's progress in college.
A study published in the American Sociological Review says that greater amounts of parental funding are correlated with lower average grade point averages.
Author Laura Hamilton of the University of California, Merced, found that for students coming from wealthy families (earning over $90,000 per year), data predicts a grade point average of 3.15 if their parents do not contribute money for tuition. GPA drops to 3.0 if the parents pony up $16,000. With $40,000 of mom and dad’s money, that GPA drops to 2.95.
There's plenty of anecdotal evidence to suggest that children who have to fund part of their college educations perform better. I can speak from personal experience. My grades rose dramatically, much more than indicated in the study, once my parents limited the amount they paid toward my education. I worked 20 hours per week to make up the difference.
The researchers offer some explanations for this. Students who don’t have to work to attend their classes have less skin in the game. People tend to value the stuff that they work for themselves.
If a teenager works hard to buy a new car, he is much more likely to use the best gas and change the oil regularly. If he does the same for his education, he won’t find difficulty getting to an 8:30 a.m. class on the other side of campus.
A student who doesn’t have a part-time job has more time to study – and more time to party. Getting involved in the university party scene has a negative influence on grades.
The study notes that the correlation of worse grades and parental support is more pronounced for wealthier families since GPA has a smaller effect on those students’ hiring prospects.
Does this mean you should cut off your kids? Hardly. Parents funding children's college education greatly increases the likelihood that they actually attend classes and complete school. This is much more important than the small negative effect financial support has on grades.
Tuition gets more expensive every year, at a rate that outstrips inflation. Where can a student find $30,000 a year? If the student has to work so much, he might drop out and face a less bright future. The unemployment rate for Americans with four-year degrees is only 3.9%. For those with some college, 6.9% are unemployed. Even though nearly half of employed graduates are in jobs that don’t require a degree, a diploma leads to greater lifetime earnings.
The study also found that grants, scholarships, work-study and student employment don't have negative effects on grades.
These programs usually have strings attached, such as minimum GPA requirements. Encouraging your child to look into these programs before taking loans or unconditional grants from the family could help fund a good education without fostering bad study habits.
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Nathan Gehring, CFP, is an associate planner at Keats Connelly, the largest cross-border wealth management firm in North America. It specializes in helping Canadians and Americans realize their dream of a cross-border lifestyle. He is based in Boynton Beach, Fla.
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