Children and education expensess

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mt
Posts: 150
Joined: Sun Dec 26, 2010 10:25 am

Children and education expensess

Post by mt »

Up until recently I had planned on giving my kids the same deal my father gave me. I would pay for college but they would be on their own for graduate or professional school. Thanks in large part to following the Boglehead philosophy, it appears that I am way ahead of where I need to be to afford retirement and am wondering if I should rethink this plan.

The reason I am considering rethinking this is that I have a daughter who has an acceptance letter to a private medical school. She is in a BS/MD program and was accepted to both college and medical school as a high school senior. The program is accelerated and she will spend two years in college (plus one summer session) and will enter medical school after two years of college as long as she maintains a 3.5 GPA. She did very well during the summer and fall semesters, so it seems likely she will meet the GPA requirement and matriculate into the med school. We have enough saved for the two years of college with enough left over for the first year of medical school. At roughly $72K per year for the med school, she would be looking at $216 in loan principal to start. With interest payments put off during school, the total principal would approach $250K. That is a prety daunting figure that I cann afford to assist with.

I should point out that I went through a BS/MD program at another school. My Dad paid for the two years of college, then I paid for the first year of med school. Sometime during the first year of med school, I calculated I would be looking at $100K in debt (late 1980s) so applied for and recieved a 3 year Army HPSP scholarship that covered the last three years of med school. My brother the same BS/MD program that I did, and Dad paid for his college as well (program had been changed to three years of college). My brother went through medical school on a 4 year Army HPSP scholarship.

I am considering giving my daughter some level of additional funding for the last three years of med school to lighten her debt load. Maybe $20k per year.

My worry is that in doing this, I will create a situation where I have given more financial support to one child relative to the other two. The second child is in high school and the third child is still in grade school. I will have enough saved to cover the cost of their college educations, but they may not incur the same level of total educational expense as their older sister.

The older sister will likely have higher earning potential compared with the other two.

How do Bogleheads feel about giving one child more financial support for educational expenses than than another? Would you try and equalize the financial support somehow, perhaps by funding their IRA for a few years? I have read The Millionaire Next Door, and am more comfortable giving support for educational expenses than for other financial needs. Perhaps we could make a plan to assist the younger children with the educational expenses for their own children to a greater degree than the oldest child.

I am curious what other Bobleheads think about this.
Last edited by mt on Fri Jan 03, 2014 7:00 pm, edited 3 times in total.
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youngindexer
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Re: Children and education expensess

Post by youngindexer »

I think you should treat your children equally. I have seen quite a few scenarios in which parents play at favorites and it sometimes causes serious rifts in relationships. If you support child A with med school I would offer similar finacial support to B and C in their endeavors.
Calm Man
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Re: Children and education expensess

Post by Calm Man »

I only wish I had 2 daughters for whom to pay for medical school and college. Although the one daughter may have higher educational costs, the other might need more help in the future. Everything does not have to be equal at all times. Just because your father paid for X and not Y, does not mean you have to do the same. There is nothing wrong with doing better for your daughter. My parents couldn't afford anything. I paid for everything and it was my pleasure. If you are a well paid person, why not just pay the full freight for your daughter? Why burden her with loans? I do also suggest you really reconsider this 6 year thing. She will get out very young but worse miss out on a lot of the college experience and you know how limiting the social situation is in medical school because of the workload. Good luck to you and her but please if you can afford it, delight in paying for her.
user5027
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Re: Children and education expensess

Post by user5027 »

I am sure you will be able to find some way to equal things out over their lifetimes.
stan1
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Re: Children and education expensess

Post by stan1 »

"Fair" is more important than "equal". In a perfect world perhaps your two other children would be admitted to a BS/MD program and everyone would be "equal". That scenario is unlikely, but perhaps your younger children will need assistance with graduate school; a home down payment; want to spend a year abroad; take up a profession that is more enjoyable than it is financially rewarding; or encounter a future health or family hardship that you can't possibly plan for. Over your lifetimes there will be many ways to evolve what "fairness" means based on your families needs. I'd keep the communication lines open with all three children so that they know your approach to financial support is "fairness" not "equal".
Warning: I am about 80% satisficer (accepting of good enough) and 20% maximizer
tj
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Re: Children and education expensess

Post by tj »

My worry is that in doing this, I will create a situation where I have given more financial support to one child relative to the other two. The second child is in high school and the third child is still in grade school. I will have enough saved to cover the cost of their college educations, but they may not incur the same level of total educational expense as their older sister.
My sister went to law school for a year before she decided it wasn't for her, my parents paid for that. For undergrad, my sister also went to a private university in the Bay Area, whereas I went to a state school a few hours from homel. I have no idea how much her education cost (nor mine, for that matter), It doesn't really matter. I didn't go to graduate school, but my parents helped me with a down payment, appliances and furniture for my condo. My sister owns no real estate, but if she did, I can't say that I'd feel any resentment that she got "more help".

i think that you'll find that it will balance out over your life on it's own. Chances are a doctor with no debt won't need as much support going forward as the others might.
Bidwell
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Location: Jupiter, Fl

Re: Children and education expensess

Post by Bidwell »

youngindexer wrote:I think you should treat your children equally. I have seen quite a few scenarios in which parents play at favorites and it sometimes causes serious rifts in relationships. If you support child A with med school I would offer similar finacial support to B and C in their endeavors.

100% agree. For your and their lifetimes it will be issue.
MathWizard
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Joined: Tue Jul 26, 2011 1:35 pm

Re: Children and education expensess

Post by MathWizard »

You never know what the future will bring.

I would follow through on your plan and let your eldest take out the
loans on her own. (As you say, she should be able to pay back the money
with the income she will have, even if you did not subsidize.)

Make sure that you can get the others through college at least with the same
deal as the first. The worst scenario would be that you help child A
through medical school and then can't help children B and C.

Later you can gift each of the kids some money when you need to for
estate planning, and your eldest can decide to use that for loan repayment.
MathWizard
Posts: 6561
Joined: Tue Jul 26, 2011 1:35 pm

Re: Children and education expensess

Post by MathWizard »

You never know what the future will bring.

I would follow through on your plan and let your eldest take out the
loans on her own. (As you say, she should be able to pay back the money
with the income she will have, even if you did not subsidize.)

Make sure that you can get the others through college at least with the same
deal as the first. The worst scenario would be that you help child A
through medical school and then can't help children B and C.

Later you can gift each of the kids some money when you need to for
estate planning, and your eldest can decide to use that for loan repayment.
Topic Author
mt
Posts: 150
Joined: Sun Dec 26, 2010 10:25 am

Re: Children and education expensess

Post by mt »

Thank you for all the thoughtful replies so far.

I made a few edits for spelling errors in the original post.
Traveler
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Re: Children and education expensess

Post by Traveler »

Since her program is different than a standard 4-year BS degree, why not pay her first four years and let her earn scholarships or take out loans for the last two years? Then pay the first four years of higher education for the other two children (whether that's a 4-year BS degree, an accelerated 3-year BS degree plus one year of graduate school, etc).
Laura
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Joined: Mon Feb 19, 2007 6:40 pm

Re: Children and education expensess

Post by Laura »

I also don't think that equal and fair are always the same. You could pay for 4 years of college for all of your children rather than just focusing on a degree. That way you can be fair to them all.

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.
Professor Emeritus
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Re: Children and education expensess

Post by Professor Emeritus »

Traveler wrote:Since her program is different than a standard 4-year BS degree, why not pay her first four years and let her earn scholarships or take out loans for the last two years? Then pay the first four years of higher education for the other two children (whether that's a 4-year BS degree, an accelerated 3-year BS degree plus one year of graduate school, etc).
I suppose I find the penny pinching "equality" depressing.

Yes we supported Daughter #2 through law school and the Bar exam No tution- She was on scholarship
Now she is free to be an award winning public interest lawyer. She represents impoverished battered women.

Daughter #1 had a full ride through a PhD in Molecular biology. She may end up a corporate executive in pharmaceuticals.

Different children, Different fields, different cost structures. Different careers.
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