2 kids starting Grad School. How to support equally

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msk
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2 kids starting Grad School. How to support equally

Post by msk »

Just looking for corroborating wisdom: I set aside $200k for my two youngest kids when they were still in grade school (mostly in SPY and BRK) to fund their future college days. Now, more than a decade later, they are getting their BSc's this Spring from the same university and both plan to start grad school this summer. The older boy took 4 years for his BSc, while the younger girl took 3 years. Hence same date graduation despite age difference. I paid for their undergrad days out of the education fund, very generously, equally p.a.; thus the older boy has consumed 4 years' worth of stipends/fees from the fund but the younger only 3. Thanks to SPY and BRK (am very grateful to Warren Buffett!), the original investment has ballooned a LOT and there are plenty of funds left to easily pay for grad studies as well. Now comes the quandary. The boy who took a year longer for his BSc has now gotten a full ride for his research-based MSc (Research Assistantship +Teaching Assistantship+lowered tuition fees). But overall he gets to live at a pauper-student lifestyle. The girl has chosen a coursework MSc on the other side of the world (Australia) with nil financial support as a foreign student (also much higher fees than for Australians). She needs around $40k for academic fees + $40k for living expenses to cover her 1.5 year program (USD not AUD). Both will probably take 1.5 years to complete. I was thinking of giving the boy also $40k as bonus living expenses over the 18 months. Their education fund has ample room and I am planning to hand the balance over to them (50/50) one day when they finally settle down (marriage or whatever takes place these days). Does this sound fair? Boy has already consumed an extra year from the fund, but he should not be overly penalised and receive nil for his MSc because he will be working as a TA/RA. Girl will be consuming all that $40k in tuition fees which she has "earned" by completing her BSc a year quicker. Both are financially responsible, very BH. Fair enough?
student
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Re: 2 kids starting Grad School. How to support equally

Post by student »

Sounds fair to me. You did not ask about tuition but I will give my two cents. In general, I think one should not pay for graduate school in a STEM area. One should only go to a graduate school in such an area when there is a TA/RA support. I do not know about the rules in Australia. In the US, it is common to give TA/RA support for foreign students.
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Dan-in-Virginia
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Re: 2 kids starting Grad School. How to support equally

Post by Dan-in-Virginia »

You could payout the remaining balance based on their overall consumption of the funds YOU provided. If one child consumed 60% of the parental pot, payout 40% of the remaining balance to them. If it were me, I would hold onto it for wedding expenses and gifts later on.
GoldenFinch
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Re: 2 kids starting Grad School. How to support equally

Post by GoldenFinch »

Sounds completely fair and very generous.
denovo
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Re: 2 kids starting Grad School. How to support equally

Post by denovo »

student wrote: Sat Feb 24, 2018 2:44 am Sounds fair to me. You did not ask about tuition but I will give my two cents. In general, I think one should not pay for graduate school in a STEM area. One should only go to a graduate school in such an area when there is a TA/RA support. I do not know about the rules in Australia. In the US, it is common to give TA/RA support for foreign students.

+1
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livesoft
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Re: 2 kids starting Grad School. How to support equally

Post by livesoft »

Why don't you ask them what they think is fair?
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Nutshell
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Re: 2 kids starting Grad School. How to support equally

Post by Nutshell »

Your strategy sounds fair. We also set aside college funds except we allocated equal amounts to each of our 2 children. The funds were invested the same - ESA, 529 and a cash account (non-tax sheltered). We shared the totals with them and explained that this is our contribution and no more. They could spend it as they wish provided it was education related. Once they graduate, we would give them any “leftover”. One chose an expensive out of state school, but the reality of blasting through his funds made him change course and return to an instate school after two years. The other accepted an instate college with a partial scholarship. She will have enough for grad school. Both kids have learned a valuable lesson in managing money.
fourwheelcycle
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Re: 2 kids starting Grad School. How to support equally

Post by fourwheelcycle »

Your plan sounds very fair and reasonable. My parents had five children and paid for all them to go to college, financed only by my father's income since our Mom stopped working once we were born (except for bearing and raising five kids!). Dad always told us college was on him and the rest was on us.

My wife came from a similar family, though only two siblings, and we always assumed we would pay for college only. One child ended up getting a full ride to grad school. The other considered a two year "retail only" grad school at one point, but then his career became established and we never had to confront our inclination not to pay for grad school.

As you plan to do with your leftover education fund, we have been giving our children money since they finished college, starting with help on their first cars. We have always kept the money gifts even. When one son needed help with his first mortgage we told the other son we would also help him with his first mortgage, but after several years passed we gave him an equal amount even though he was still renting.
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bostondan
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Re: 2 kids starting Grad School. How to support equally

Post by bostondan »

livesoft wrote: Sat Feb 24, 2018 4:23 am Why don't you ask them what they think is fair?
+1

My mother was always so worried about making sure everything was fair between me and my sister. We didn't really care and were grateful for everything they did to help us. This question can really only be answered by your own children. I'm sure there are children who would get upset if things weren't split exactly evenly, whereas there are many like me and my sister who were just happy to have generous parents.
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JBTX
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Re: 2 kids starting Grad School. How to support equally

Post by JBTX »

While it sounds fair and generous, I’m not sure it is exactly necessarily to get it equal.
joeblow
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Re: 2 kids starting Grad School. How to support equally

Post by joeblow »

A question of equality or equity.

What you proposed seems fair, and they should be appreciative of whatever you provide. Seems like they are accomplished kids so I assume they will be and will likely do fine with or without your help.

I don't think I would ask them myself. It's your money, do what you think is right.
DrGoogle2017
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Re: 2 kids starting Grad School. How to support equally

Post by DrGoogle2017 »

Sounds fair, but honestly I didn’t spend equal money on my kids. I don’t think they care. They are happy to graduate debt free.
sport
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Re: 2 kids starting Grad School. How to support equally

Post by sport »

IMO, parents should help their children according to their ability and the children's needs. It does not have to be equal. We paid for our daughter's wedding and we paid for the adoption expenses for our grandchild. Our unmarried son has not received anything comparable, because he has not had the need. We paid enough toward both of their degrees that they graduated without any debt. We hope to be able to provide future assistance as needed. It does not have to be equal to be fair.
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CyclingDuo
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Re: 2 kids starting Grad School. How to support equally

Post by CyclingDuo »

msk wrote: Sat Feb 24, 2018 2:07 am Just looking for corroborating wisdom: I set aside $200k for my two youngest kids when they were still in grade school (mostly in SPY and BRK) to fund their future college days. Now, more than a decade later, they are getting their BSc's this Spring from the same university and both plan to start grad school this summer. The older boy took 4 years for his BSc, while the younger girl took 3 years. Hence same date graduation despite age difference. I paid for their undergrad days out of the education fund, very generously, equally p.a.; thus the older boy has consumed 4 years' worth of stipends/fees from the fund but the younger only 3. Thanks to SPY and BRK (am very grateful to Warren Buffett!), the original investment has ballooned a LOT and there are plenty of funds left to easily pay for grad studies as well. Now comes the quandary. The boy who took a year longer for his BSc has now gotten a full ride for his research-based MSc (Research Assistantship +Teaching Assistantship+lowered tuition fees). But overall he gets to live at a pauper-student lifestyle. The girl has chosen a coursework MSc on the other side of the world (Australia) with nil financial support as a foreign student (also much higher fees than for Australians). She needs around $40k for academic fees + $40k for living expenses to cover her 1.5 year program (USD not AUD). Both will probably take 1.5 years to complete. I was thinking of giving the boy also $40k as bonus living expenses over the 18 months. Their education fund has ample room and I am planning to hand the balance over to them (50/50) one day when they finally settle down (marriage or whatever takes place these days). Does this sound fair? Boy has already consumed an extra year from the fund, but he should not be overly penalised and receive nil for his MSc because he will be working as a TA/RA. Girl will be consuming all that $40k in tuition fees which she has "earned" by completing her BSc a year quicker. Both are financially responsible, very BH. Fair enough?
Working currently as a professor, I applaud your efforts as parents for saving and paying for their educations. It was our number one financial goal when we had our children. I began my working career back in 1985 with the equivalent of $42K in student loan debt (in today's dollars). That debt was accrued from 1979-1985 at a time when interest rates were double digit and mid-teens. It took me 10 years of aggressively paying it off to wipe it out. We didn't want our kids saddled with student loan debt to start their working careers.

Sounds like your educational fund is one pot, as opposed to education accounts in each of their names. I wouldn't worry about that as the original intent was to pay for their educations first and foremost. We would suggest not trying to dole it out in equal amounts to two situations that are not equal. Just finance what needs to be financed, and then divide the pot equally once they both graduate. At least that's what we would do.

We set up separate education funds for each of our children (UTMA's and 529's for both). We did contribute even amounts in the beginning. Even then, it is difficult to make the costs of each educational experience identical - not to mention the market returns were different for the two of them since there is a two year age gap.

Our two kids both received their undergraduate degrees debt free (one included studying a year abroad). The oldest has one more year of graduate school (will graduate debt free from that as well), the youngest is coming up on completing her first year of employment this June. We already turned over the remaining balances in each of their UTMA's when they hit 21 to start their investing careers off (each account had $50K remaining after paying for college). Goal was to finance their educations, not try to have any sort of cost equality. We'll worry about equality in our will to make sure our estate is divided equally between the two of them.

It will all work out. I can guarantee you that your son, even though he's on a full ride, will be texting/messaging/calling for extra cash every now and then throughout his graduate school. :mrgreen:
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
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Clever_Username
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Re: 2 kids starting Grad School. How to support equally

Post by Clever_Username »

I would like to echo this:
livesoft wrote: Sat Feb 24, 2018 4:23 am Why don't you ask them what they think is fair?
My parents helped my younger sister and I equally for our undergraduate educations. In graduate school, I had a fellowship one year and TAship most of the rest, with some occasional research money. When my sister was debating going to graduate school, I suggested to my parents that they consider helping her more than they helped me: I was able to, between on-campus work and off-campus work, get the graduate school education and experience I wanted. It isn't clear to me that she would be able to do so. Part of this might be STEM vs non-STEM.

She has yet to actually go to graduate school, so it might be a moot point in my family's case. But if she did and received even substantially more direct assistance than I got, I'd have no problem with it. I would even consider chipping in some myself for that matter.
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Malinois000
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Re: 2 kids starting Grad School. How to support equally

Post by Malinois000 »

Sounds fair. I have two kids that both attended Grad School of which we paid all their expenses as well. My daughter had an athletic scholarship for undergrad and a partial academic scholarship for Law School. My son attended private schools for both undergrad and grad school without scholarship. We were able to provide our daughter funds after she graduated since we did not spend as much as expected for her education. We provided our son with a smaller amount after his grad school work since we paid considerably for his eduction. Both kids graduated with zero debt and are doing well.

Sounds like your kids are doing well. Congrats!
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