Varying college costs across kids in the same family

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psteinx
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Varying college costs across kids in the same family

Post by psteinx »

Given:

A family has the financial resources such that they can comfortably afford even pricey college options for their kids.

The kids are all normal, high achieving kids who have (or likely will have) many 4 year college options, including pricey ones and relatively inexpensive ones.

The family plans to pay for almost all college costs (i.e. for a kid who can get into a good, but pricey school, the family will pay for it*).

* Edit - Kid may foot some personal expenses or whatever themselves, and/or may otherwise have some small skin in the game in some fashion.
===

Should the family take any steps to reward a kid who chooses a cheaper option?

To make up an example (not a match for our situation, but to illustrate some of the possible ramifactions) -

Say eldest child attends Harvard at full list price (and family can afford this).
Second child has choice to attend Yale (at full list price), good in-state flagship (at 1/3 or less the cost), or, say, Vanderbilt with a big scholarship that makes it half the cost of Yale.

Should the family incentivize (share some of the benefit, say), if child 2 makes one of the cheaper choices?

What if the (perceived quality) gap between the pricey and the substantially cheaper option is narrower?

What if the savings are in part due to child 2 taking some semi-extraordinary measure (something job-like) to lower college costs (an athletic scholarship or ROTC or ???)

And child 3 is in the picture, for later?

===

Yes, our family does have multiple kids, and this is at least a potential issue for us, though the particulars I list above are not really ours - eldest child is not attending Harvard, for instance.

There's a lot of potential permutations and ramifications. It's probably hard to get exactly right, but I'm curious about others' thoughts and what, if anything, others have done in this kind of situation...
Last edited by psteinx on Wed Aug 22, 2018 1:38 pm, edited 1 time in total.
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Re: Varying college costs across kids in the same family

Post by Jack FFR1846 »

psteinx wrote: Wed Aug 22, 2018 1:01 pm Should the family take any steps to reward a kid who chooses a cheaper option?
No.

I explained in the grandparent thread, I have committed to my kids that I'll pay for their education through Bachelor's. Doesn't matter if it's community college, Harvard, scholarships or none, using summer money, 6 years to finish, changing majors. There will be no tallying by me and no evening up. I am not doing anything to make it "fair". If they don't like it and want to instead pay for it themselves, they certainly could do that. Neither thinks it's at all unfair and both are grateful that they have parents with the means to get them through college without $100k debt. I decide if they're taking Staffords to have skin in the game or not, and that's all the debt they'll have.
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DragonJoey3
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Re: Varying college costs across kids in the same family

Post by DragonJoey3 »

I'm from the younger crowd, so I have the perspective of a child who went through this as opposed to a parent going through it.

My parents tried to be fair to each of us. I pursued college and paid my own way through, as a reward for that they took the money they had saved for my college and bought me a car. My brother chose not to go to college and went into the trades, they bought him a car as well and gave him some cash.

I think the key for our family though was removing the sense of entitlement. My parents were clear that the money we received if any was a GIFT, not something we earned just by sharing some DNA with them. If my parents chose to give more to one child than another that was their choice. They always tried to be equal with us, but there is a danger of children feeling entitled to parents money that can crop up.

As a parent if you want to be fair across children and you are talking nearly unlimited resources for school, then I would wait until the last child has finished his education and pay out the difference between the most expensive education and the actual cost of the cheaper children to them as a one time benefit.

Ex.

Child 1: $60,000 for school
Child 2: $110,000 for school
Child 3: Elects not to go to college
Child 4: $40,000 for school

I would give child one $50,000, two gets nothing because he got the most benefit, child three gets $110,000 and child four gets $70,000.

That's if you want to be equitable, and have the resources for that. Just an opinion though.
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Re: Varying college costs across kids in the same family

Post by KlangFool »

DragonJoey3 wrote: Wed Aug 22, 2018 1:14 pm I'm from the younger crowd, so I have the perspective of a child who went through this as opposed to a parent going through it.

My parents tried to be fair to each of us. I pursued college and paid my own way through, as a reward for that they took the money they had saved for my college and bought me a car. My brother chose not to go to college and went into the trades, they bought him a car as well and gave him some cash.

I think the key for our family though was removing the sense of entitlement. My parents were clear that the money we received if any was a GIFT, not something we earned just by sharing some DNA with them. If my parents chose to give more to one child than another that was their choice. They always tried to be equal with us, but there is a danger of children feeling entitled to parents money that can crop up.

As a parent if you want to be fair across children and you are talking nearly unlimited resources for school, then I would wait until the last child has finished his education and pay out the difference between the most expensive education and the actual cost of the cheaper children to them as a one time benefit.

Ex.

Child 1: $60,000 for school
Child 2: $110,000 for school
Child 3: Elects not to go to college
Child 4: $40,000 for school

I would give child one $50,000, two gets nothing because he got the most benefit, child three gets $110,000 and child four gets $70,000.

That's if you want to be equitable, and have the resources for that. Just an opinion though.
DragonJoey3,

How is it fair when the kids do not know that their college education costs affect their future gifts?

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masteraleph
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Re: Varying college costs across kids in the same family

Post by masteraleph »

This really depends on your reasons for paying for college and the relationship you have with your kids.

If you're paying for college because you want them to go debt free into life, and you treat college as a learning process, then you should probably pay full ride regardless.

If you're trying to use college as an example of budgeting and making wise financial choices, then maybe you should incentivize the cheaper college.

Personally, I look at college a little bit the same as I look at books (but a whole bunch more expensive)- college is a valuable thing with its own intrinsic worth, and as long as I can afford to pay for it, I'll pay for it. In the same way as if one kid buys lots of books and another buys fewer, I'm not going to give the kid who bought fewer a bonus at the end.

The one thing I would consider, though, is what you will do if one of your kids decides not to go to college. Say one of your kids decides they want to go into a physical trade and apprentices with a plumber- how will you help them out, so as to provide some sort of equivalence?
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Re: Varying college costs across kids in the same family

Post by KlangFool »

OP,

Another approach:

Each kid gets $X for the college education. They could spend it all or keep the rest. They have to decide whether it is worthwhile to pay extra for the Ivy league and/or out-of-state education.

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Afty
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Re: Varying college costs across kids in the same family

Post by Afty »

I have a friend who was in this situation (as the child, not the parent). He and his younger sister were both top students and were both accepted at HYPS schools. My friend chose instead to attend a lower-ranked university on full merit scholarship. His sister attended HYPS paid for by their parents. I've never sensed any hostility between them about this -- I sense more protectiveness from my friend toward his younger sibling.

I think this is one where it depends on the family dynamic and their attitude toward money. I'll also mention that both of them have great careers and are at the tops of their respective fields 15-20 years out from college.
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Re: Varying college costs across kids in the same family

Post by SmileyFace »

Personally I set no hard/fast rules which others here seem to do. Our general statement was we'd help them through college and let's discuss what hte options are.
I certainly didn't provide an "incentive" for any child to choose a cheaper option.
I certainly did discuss all their options with them and tried to help them make an informed decision.
What I did do was when Child #2 was trying to decide between a choice where she got a merit-scholarship (greatly reducing the cost and making it similar to State-U) and a choice where we would be footing $65K a year I said "Can you tell me how option #2 would be worth an extra $140,000? (over 4 years)." and then went on to explain that option #2 would wipe out her 529 plan - we would likely have nothing left to help her with a Master's degree while with option #1 we would have some money left in her 529 that could be used for part of a Master's degree. She chose option #1.
Last edited by SmileyFace on Wed Aug 22, 2018 1:37 pm, edited 1 time in total.
KlangFool
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Re: Varying college costs across kids in the same family

Post by KlangFool »

OP,

Are you rich enough to pay 300K to 400K for each kid's college education plus giving each one of them 200K when they graduated? This was what one of my family members did.

Or, depending on how much you pay for each kid's college education, you may have some money left for them?

Or, you could only pay for in-state college education, they have to come up with the difference?

The answer will be dependent on how rich you are.

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bligh
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Re: Varying college costs across kids in the same family

Post by bligh »

KlangFool wrote: Wed Aug 22, 2018 1:25 pm OP,

Another approach:

Each kid gets $X for the college education. They could spend it all or keep the rest. They have to decide whether it is worthwhile to pay extra for the Ivy league and/or out-of-state education.

KlangFool
This is the approach I am planning on using.

Think of it as each kid getting an equal $X Scholarship. If I give anything over and above that, it will be based on my financial situation at that time, and will be given equally to both kids.

In addition to this, I also have a separate "Launch" fund for my kids. This could be pulled on to subsidize their post graduate education, house downpayment, wedding, etc. Just to help them get set up. They will both receive this as a gift from me at graduation time. I think of it as a Bonus and a great Graduation present. :)
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psteinx
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Re: Varying college costs across kids in the same family

Post by psteinx »

While I frankly haven't put a great deal of thought into this, I'm not really thinking that we would be writing a 6 figure check, at age 22, to a kid who economized in college - that just feels way over the top and inconsistent with my values and perspective. That said, there are some choices that, yeah, may be pretty reasonable college choices and yes, >$100K (or conceivably >$200K) cheaper than other choices. I'm not really sure what, if anything, should be done about this.

Most likely guess, for us? Some mild nudging (parental guilt or whatever), if there is a really large disparity between small incremental quality gain versus really large cost increase. Possibly some small-ish reward if kid does economize (car, trip, etc.) Unlikely to be cash. There's a lot of unknowns, too - grad school? future life needs? etc. FWIW, I'm not super-inclined to provide substantial support for grad school (if it happens) - I think that can be on the kid, but I reserve the right to reconsider. :)

I guess we're just generally moving from a point where it was pretty easy to roughly match up material support for the kids, as they've been under our roof, to a point where there is more potential for variation, and trying to think things out ahead of time a little. And also, I was looking at some price data for kid 2's various choices, seeing a spread, and thinking I wouldn't mind so much if he chose a relatively cheaper one. :)
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Re: Varying college costs across kids in the same family

Post by psteinx »

Turning it around a little - have folks been the kids in this situation, how was it handled, and did you notice it or did it have any sibling or other relationship effects down the line?

I'm one of multiple siblings. One went in-state, two out of state. Parents paid basically everything except personal/living expenses. AFAIK, my parents didn't really try to "adjust" anything after the fact. There was also grad school involved for two of the sibs - one that was probably free + fellowship, one that was pricey - not sure what parents did there, haven't really thought about this issue in many years (and it wasn't a big issue at the time that I can recall), and none of this seems to have had any real effect on sib relationships.

My wife is also one of multiple siblings who were generally pretty well supported. I'm not sure about specifics of parental support for colleges/grad schools. There was some (relatively minor) resentment about varying wedding support, and also some post "launch" support type issues, but AFAIK, it didn't really permanently damage relationships - did leave perhaps a minor amount of lingering resentments...
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Re: Varying college costs across kids in the same family

Post by beyou »

I personally don't think kids at 17-18 years old are ready to make such decisions completely on their own.
They have no context. None for the value of the education nor the cash. All this would do is bring out their predispositions
(such as hoarding money or desire for prestige/name brands). Yes there are exceptions, the adult in a teen's body, but those are the exception.

I do use comparisons to influence some behavior (such as your off campus apartment is far more than your sibling, and you want a car as well !).
But in the end I do not feel I need any justification at all, it is my money and I can decide how or if I want to spend it, and on what.
I am very generous with my kids, and each had reasons I spent the extra $ on expensive private schools.
One seemed to really need to be surrounded by brilliant kids to be motivated and happy.
Being the honor student surrounded by avg students was not best for him, so I thought.
The other was a very hard worker who in my mind earned getting the best education he could attain, after working hard in HS.

This is some hindsight, one graduated with an Ivy degree and the other is well on his way to graduating from a top tech school.
Incredible what they accomplished, and how much they learned from peers, not just from classroom material/lectures.

That said, if a kid had no clue what he wants and not a hard worker, I may well have spent < 1/2 to send them to our in state.
Both my kids got into flagship in-state schools, even with some small merit, and I would love to have saved the cash, but each I felt would
be best served spending the $. But they were two independent decisions.
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Re: Varying college costs across kids in the same family

Post by KlangFool »

psteinx wrote: Wed Aug 22, 2018 1:48 pm
While I frankly haven't put a great deal of thought into this, I'm not really thinking that we would be writing a 6 figure check, at age 22, to a kid who economized in college - that just feels way over the top and inconsistent with my values and perspective.
psteinx,

That makes perfect sense when the parents are worth around 8 figures and the kids are stand to inherit about 7 figures each. The kids need the time and money to practice managing 6 figures.

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Re: Varying college costs across kids in the same family

Post by GoldStar »

In several threads on paying for college I've noticed parents feel the need to make things even.
If one child eats more in 18 years than the other do you pay the difference?
If you pay more for activities of one child versus the other do you pay the difference?
...just food for thought.
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Re: Varying college costs across kids in the same family

Post by KlangFool »

psteinx wrote: Wed Aug 22, 2018 2:00 pm Turning it around a little - have folks been the kids in this situation, how was it handled, and did you notice it or did it have any sibling or other relationship effects down the line?

I'm one of multiple siblings. One went in-state, two out of state. Parents paid basically everything except personal/living expenses. AFAIK, my parents didn't really try to "adjust" anything after the fact. There was also grad school involved for two of the sibs - one that was probably free + fellowship, one that was pricey - not sure what parents did there, haven't really thought about this issue in many years (and it wasn't a big issue at the time that I can recall), and none of this seems to have had any real effect on sib relationships.

My wife is also one of multiple siblings who were generally pretty well supported. I'm not sure about specifics of parental support for colleges/grad schools. There was some (relatively minor) resentment about varying wedding support, and also some post "launch" support type issues, but AFAIK, it didn't really permanently damage relationships - did leave perhaps a minor amount of lingering resentments...
psteinx,

I fully paid my kids' in-state education at about 30K per kid per year since my FI is fully funded. They each have about 20K to 30K worth of savings/investment that they saved up since they were born. They would have to come up with the difference if they choose a more expensive option. Philosophically, I am not willing to pay more even if I have the money. I just do not believe that the ROI is good enough.

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Re: Varying college costs across kids in the same family

Post by DragonJoey3 »

KlangFool wrote: Wed Aug 22, 2018 1:22 pm
DragonJoey3 wrote: Wed Aug 22, 2018 1:14 pm I'm from the younger crowd, so I have the perspective of a child who went through this as opposed to a parent going through it.

My parents tried to be fair to each of us. I pursued college and paid my own way through, as a reward for that they took the money they had saved for my college and bought me a car. My brother chose not to go to college and went into the trades, they bought him a car as well and gave him some cash.

I think the key for our family though was removing the sense of entitlement. My parents were clear that the money we received if any was a GIFT, not something we earned just by sharing some DNA with them. If my parents chose to give more to one child than another that was their choice. They always tried to be equal with us, but there is a danger of children feeling entitled to parents money that can crop up.

As a parent if you want to be fair across children and you are talking nearly unlimited resources for school, then I would wait until the last child has finished his education and pay out the difference between the most expensive education and the actual cost of the cheaper children to them as a one time benefit.

Ex.

Child 1: $60,000 for school
Child 2: $110,000 for school
Child 3: Elects not to go to college
Child 4: $40,000 for school

I would give child one $50,000, two gets nothing because he got the most benefit, child three gets $110,000 and child four gets $70,000.

That's if you want to be equitable, and have the resources for that. Just an opinion though.
DragonJoey3,

How is it fair when the kids do not know that their college education costs affect their future gifts?

KlangFool
I think the parents could be clear that the costs effect their future gifts. I personally prefer the method which you mentioned of just giving each child X.

Family relationships are messy and far from mathematical. In my own family I have experienced the jealousy of siblings who felt like I benefited more from my parents than they. And my parents have felt guilt for that jealousy existing at all.

"The love of money is the root of many evils." I think a parent who can instill a sense of gratitude will end up with a child that does well regardless of the amounts they gift and to whom, and for what.
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Re: Varying college costs across kids in the same family

Post by Swimmer »

GoldStar wrote: Wed Aug 22, 2018 2:20 pm In several threads on paying for college I've noticed parents feel the need to make things even.
If one child eats more in 18 years than the other do you pay the difference?
If you pay more for activities of one child versus the other do you pay the difference?
...just food for thought.

Many folks here read “Beyond the Grave.” Speaking for myself, I know I was influenced by it. Perhaps too much.
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Re: Varying college costs across kids in the same family

Post by bloom2708 »

Our 3 kids know that "costs matter".

We have saved up enough to pay for a good state school. If a kid has some left, that could be a house down payment or a gift to get them going.

If a kid picks a more expensive school and the money doesn't stretch, they know they will be on the hook for the difference. Loans.

Our oldest is in college and picked a reasonable state school and a degree with a high probability of gainful employment. Those are 2 good boxes checked. Now, she just has to execute. :wink: If she executes, we execute by paying. :o
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Re: Varying college costs across kids in the same family

Post by kaudrey »

I'd say no.

My parents paid for my sister to go to an Ivy League school. I went to a very good university, but it probably overall cost $50K less than my sister. I didn't get, nor would have ever expected, to get compensated monetarily for that difference. It would have never even crossed my mind.

In my view, we both received a college education at the school of our own choosing, without being in debt at the end. Seems fair to me....(and, very generous - thanks mom and dad!!!!!!)
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Re: Varying college costs across kids in the same family

Post by GoldStar »

Swimmer wrote: Wed Aug 22, 2018 2:32 pm
GoldStar wrote: Wed Aug 22, 2018 2:20 pm In several threads on paying for college I've noticed parents feel the need to make things even.
If one child eats more in 18 years than the other do you pay the difference?
If you pay more for activities of one child versus the other do you pay the difference?
...just food for thought.

Many folks here read “Beyond the Grave.” Speaking for myself, I know I was influenced by it. Perhaps too much.
I have it on the shelf! Haven't read it yet though - part of the backlog
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Re: Varying college costs across kids in the same family

Post by Bfwolf »

To me, the primary issue is not one of fairness but rather of incentives. If the cost of a good is $0, people will consume as much of it as they can. Who wouldn't want to go to a fancy private school if it cost them nothing? Now some kids may have a modicum of respect for their parents' money but many don't at this point in their lives.

The real difficulty lies in teaching 18 year olds how to properly value a large cost even if properly incentivized. This is tough to do and probably has to start before age 18.

I also think parents should step in and prevent kids from doing something foolish, even if the incentives are in the right place. Like paying 2x to attend an out of state or private school that is no better than the flagship in-state school.

I think there is a lot of power in the strategy mentioned by several people above of saying "I've got $X for your college education. Anything above that is your responsibility. Anything below that you'll get at graduation." You can set $X at higher than the most expensive college if you wish to let them go wherever they want and even take more than 4 years. Or you can set $X at the flagship state cost. That's all a matter of priorities and how much money a family has.
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Re: Varying college costs across kids in the same family

Post by HereToLearn »

psteinx wrote: Wed Aug 22, 2018 1:01 pm Given:

A family has the financial resources such that they can comfortably afford even pricey college options for their kids.

The kids are all normal, high achieving kids who have (or likely will have) many 4 year college options, including pricey ones and relatively inexpensive ones.

The family plans to pay for almost all college costs (i.e. for a kid who can get into a good, but pricey school, the family will pay for it*).

* Edit - Kid may foot some personal expenses or whatever themselves, and/or may otherwise have some small skin in the game in some fashion.
===

Should the family take any steps to reward a kid who chooses a cheaper option?

To make up an example (not a match for our situation, but to illustrate some of the possible ramifactions) -

Say eldest child attends Harvard at full list price (and family can afford this).
Second child has choice to attend Yale (at full list price), good in-state flagship (at 1/3 or less the cost), or, say, Vanderbilt with a big scholarship that makes it half the cost of Yale.

Should the family incentivize (share some of the benefit, say), if child 2 makes one of the cheaper choices?

What if the (perceived quality) gap between the pricey and the substantially cheaper option is narrower?

What if the savings are in part due to child 2 taking some semi-extraordinary measure (something job-like) to lower college costs (an athletic scholarship or ROTC or ???)

And child 3 is in the picture, for later?

===

Yes, our family does have multiple kids, and this is at least a potential issue for us, though the particulars I list above are not really ours - eldest child is not attending Harvard, for instance.

There's a lot of potential permutations and ramifications. It's probably hard to get exactly right, but I'm curious about others' thoughts and what, if anything, others have done in this kind of situation...
For the second child choosing between full pay at Yale and full-tuition scholarship at Vandy, could you promise this child that the unused funds are his to use for grad school?

I would argue that an athletic scholarship is akin to the full-tuition scholarship at Vandy, but I do see your point that recruited athletes have to dedicate a significant # of hours to their sport.
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Re: Varying college costs across kids in the same family

Post by pdx-ursa »

Our plan was to pay for each of our kid's undergraduate educations, except for incidentals such as books and pizza money. How it played out was interesting. Kid one was a shaky high school student but got into the state school and did well. Kid two was a superstar and got into a top liberal arts college, which was several times the price of the state school. Kid three was choosing between the state school and the top school and, despite the price, we told the kid to go to the liberal arts school because we had seen that you get what you pay for. Kid three decided to go to the state school, and is happy though we wonder if the same opportunities will be available.

In your hypothetical, I doubt schools like Vanderbilt give merit scholarships that would be unavailable at Yale -- in fact, I believe neither school rewards merit, so aid is just based on need. Usually you have to drop down a couple notches in name recognition - though not necessarily quality -- to get merit money.

In our experience, both as students long ago and as parents, if I could afford to pay I wouldn't give a kid an incentive to attend a cheaper school unless it provided a comparable education. For instance, it's a lot cheaper for a school to have 300 kids in a class than it is 20, but for kids to learn difficult topics access to professors can help.
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Re: Varying college costs across kids in the same family

Post by HereToLearn »

pdx-ursa wrote: Wed Aug 22, 2018 5:15 pm Our plan was to pay for each of our kid's undergraduate educations, except for incidentals such as books and pizza money. How it played out was interesting. Kid one was a shaky high school student but got into the state school and did well. Kid two was a superstar and got into a top liberal arts college, which was several times the price of the state school. Kid three was choosing between the state school and the top school and, despite the price, we told the kid to go to the liberal arts school because we had seen that you get what you pay for. Kid three decided to go to the state school, and is happy though we wonder if the same opportunities will be available.

In your hypothetical, I doubt schools like Vanderbilt give merit scholarships that would be unavailable at Yale -- in fact, I believe neither school rewards merit, so aid is just based on need. Usually you have to drop down a couple notches in name recognition - though not necessarily quality -- to get merit money.

In our experience, both as students long ago and as parents, if I could afford to pay I wouldn't give a kid an incentive to attend a cheaper school unless it provided a comparable education. For instance, it's a lot cheaper for a school to have 300 kids in a class than it is 20, but for kids to learn difficult topics access to professors can help.
Vanderbilt awards perhaps 200 full tuition scholarships annually. All merit-based. If there is additional financial need, amounts can be awarded toward room & board. (Editing to add that they offer full tuition to 200, but fewer than 100 accept the offer. Similar yield at USC for their full tuition merit awards IIRC.)

Yale does not offer any merit awards but both schools offer very generous financial aid.

See the three scholarship programs on the sidebar here:https://www.vanderbilt.edu/scholarships/signature.php
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Re: Varying college costs across kids in the same family

Post by pdx-ursa »

If your kid has a full-tuition Vanderbilt offer, congratulations -- that's one of the best around. In fact, better than I knew existed. We let our kids decide, and only even offered guidance to the last one, but if a kid had that offer I'd use a little extortion. Vanderbilt often has the happiest students, and Yale seemed a little grim, at least during January 30 years ago. Good luck and congrats to you and the scholar.
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Re: Varying college costs across kids in the same family

Post by MathWizard »

We had a certain amount set aside for each child which would pay for the costs of an undergrad degree at the top in-state public university.

If they economized or got scholarships and wanted to go to grad school or other educational opportunity we would put whatever was saved towards that.

The younger on did save us 13K, but has not taken us up on the offer.
adam1712
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Re: Varying college costs across kids in the same family

Post by adam1712 »

psteinx wrote: Wed Aug 22, 2018 2:00 pm Turning it around a little - have folks been the kids in this situation, how was it handled, and did you notice it or did it have any sibling or other relationship effects down the line?
...
It's definitely complicated. My family ended up in a unique and difficult situation. My parents planned to pay for state school for each of us, but my youngest brother got significant financial aid at an expensive private school after my parents retired and had lower income. It wasn't very fair across my siblings but my parents communicated the situation as best as they could. There's no real hard feelings among the siblings but maybe a little dissatisfaction with how college financial aid works.
NotWhoYouThink
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Re: Varying college costs across kids in the same family

Post by NotWhoYouThink »

I am the third of 4 in birth order, and almost certainly was the cheapest to send to college. 40 years on, who cares? Not any of us, as far as I know.

We spent about the same on each of our 2 kids.

Birth order: ABCD
Cost to educate: DABC
Lifetime earnings: ACDB
Relevance to your family: little to none
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camillus
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Re: Varying college costs across kids in the same family

Post by camillus »

To illustrate why not to have a hard and fast rule:

You are child B.

Child A has always seemed brilliant and succeeded in everything they have done. Perfect grades in school. Full ride at prestigious university. Accepted a very high paying job after graduation.

You, child B, have struggled with education since you were a child. Your parents pay full freight at a regional school and you do OK. You get an OK job.

When you graduate, your parents write a $100,000 check for child A to "even things up." :happy
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Re: Varying college costs across kids in the same family

Post by mcamp18 »

I saved private school money for all three of my children. My first child went to a private university, my second and third went to state schools. All of the money was kept in a 529 plan for each of them. Any money left over in the 529 can go towards future education costs or their children down the road. Since my second and third children had substantial amounts of money left in their accounts my wife and I decided to transfer some of that money to pay for two years of dental school for my oldest child. Child 2 and 3 still have money left in their accounts to use down the road even after paying a year of dental school for child 1. To even things up for child 2 and 3 my wife and I paid the 20% down on child 2 and 3 first home purchase. Seemed fair to all involved.
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Re: Varying college costs across kids in the same family

Post by KlangFool »

camillus wrote: Wed Aug 22, 2018 7:24 pm To illustrate why not to have a hard and fast rule:

You are child B.

Child A has always seemed brilliant and succeeded in everything they have done. Perfect grades in school. Full ride at prestigious university. Accepted a very high paying job after graduation.

You, child B, have struggled with education since you were a child. Your parents pay full freight at a regional school and you do OK. You get an OK job.

When you graduate, your parents write a $100,000 check for child A to "even things up." :happy
camillus,

And, what is wrong with that?

A) The parent spent 100K on B. The parent did not spend 100K on A.

B) Both A and B did the best that they could. It just that they have a different ceiling in term of their capability.

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camillus
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Re: Varying college costs across kids in the same family

Post by camillus »

KlangFool wrote: Wed Aug 22, 2018 7:33 pmAnd, what is wrong with that?
I suppose, being a parent, you have to take into account certain intangibles. To be crass, say one of your children is just plain naturally smarter and more confident than the other. Being the less gifted child (ability & confidence), you are have been compared to your sibling all of your life.

It might not be "fair" to give a cash reward a naturally gifted child for inborn ability, especially given they are already on a more successful life trajectory.

Just an opinion here. I agree that it's good to reward a child for making choices that make their college experience more affordable (while still being effective). I'm not sure if it is wise and good to monetarily reward merit based scholarships and opportunities. They are their own rewards.
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Re: Varying college costs across kids in the same family

Post by JBTX »

Ultimately it really is about how the kids grow up and what values they absorb. If they grow up feeling entitled no matter what you do they will probably not perceive it as fair. If kids are self motivated and are motivated by their own sense of achievement, it probably won't make a difference to them. In our family our parents pitched in a lot. One had most of tuition paid through scholarships. The other not as much plus went to couple of years of private graduate school. There was never any score keeping among kids. However over the years parents chose to equalize things a bit by helping one with a down payment for house. But there was never any expectation of it.
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Re: Varying college costs across kids in the same family

Post by KlangFool »

camillus wrote: Wed Aug 22, 2018 7:47 pm
KlangFool wrote: Wed Aug 22, 2018 7:33 pmAnd, what is wrong with that?
I suppose, being a parent, you have to take into account certain intangibles. To be crass, say one of your children is just plain naturally smarter and more confident than the other. Being the less gifted child (ability & confidence), you are have been compared to your sibling all of your life.

It might not be "fair" to give a cash reward a naturally gifted child for inborn ability, especially given they are already on a more successful life trajectory.

Just an opinion here. I agree that it's good to reward a child for making choices that make their college experience more affordable (while still being effective). I'm not sure if it is wise and good to monetarily reward merit based scholarships and opportunities. They are their own rewards.
camillus,

<<It might not be "fair" to give a cash reward a naturally gifted child for inborn ability, especially given they are already on a more successful life trajectory.>>

1) Really? So, somebody could be born smart and do absolutely nothing to compete with other smart folks and be successful?

2) How is it fair for the parent to spend 100K on B and give nothing to A? That is another point of view.

<< To be crass, say one of your children is just plain naturally smarter and more confident than the other. >>

3) There are many very smart kids in our family. Some are top in the country. But, they have to compete with other smart kids to go somewhere in their life. In fact, by being very smart, there is automatically a high expectation being placed on you. You are being pressured on every step to excel. Meanwhile, the average kid never has this kind of problem.

I bet that you had heard the joke about B grade is an Asian F.

KlangFool
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Re: Varying college costs across kids in the same family

Post by rjbraun »

My parents pretty much covered 75% of all undergraduate costs (tuition as well as room, board, books, (fixed) spending money, etc.) and expected me to pay 25%, for which they were prepared to "loan" me the money. They were not wealthy but put a top priority on education and saved accordingly. As far as I know, my two siblings had similar terms.

If I attended the school my father taught at I would have received free tuition. When I asked if they would give me the cost savings between the private college I was planning to attend in another state and the one nearby, they said "no". They also said that I would be expected to pay one-quarter of the full cost, wherever I went.

I think my parents' approach was a good one, in my case. Of course, it's impossible to compare how my life might differ had I attended the school with free tuition, but I think I was better off going where I did. I also think it was important for me to have "skin in the game". Fwiw, I don't really recall having debt outstanding with my parents for any length of time (though I'm sure they tracked the loan and that I paid them back). I think I pretty much paid it off each year or, if not, certainly within a couple of years of graduation.
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Re: Varying college costs across kids in the same family

Post by desafinado »

My sibling and I both attended HYPSM type schools as full freight students. Then, my sibling went to grad school (law school) at another HYS school as a full freight student. We were told that the difference in cost is coming out "at the back end". I don't think they'll account for the returns that the law school tuition would've produced, so he probably got a better deal than I did, but it's hard to complain when you got a great education for free :beer
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Re: Varying college costs across kids in the same family

Post by Minty »

Bfwolf wrote: Wed Aug 22, 2018 2:44 pm To me, the primary issue is not one of fairness but rather of incentives. If the cost of a good is $0, people will consume as much of it as they can. Who wouldn't want to go to a fancy private school if it cost them nothing? Now some kids may have a modicum of respect for their parents' money but many don't at this point in their lives.
I agree with this. We wanted our kids to go to schools that were right for them, but not to go to a fancy private just because it was free (to them), beautiful, and had good food, if an excellent state school could give them what they wanted. So we told them that if they went to private schools, we might not be able to help them with graduate school. I think this was a good hard test, because it made them understand there was a tradeoff.
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Re: Varying college costs across kids in the same family

Post by HIinvestor »

We gave each kid funding so they could get their undergrad degree. S received a 50% tuition merit award plus a gift of spending money from a doting relative. D ended up at the same private U with NO merit (so we paid full freight). Ultimately both kids got the degrees they wanted from the same U.

Both are grateful. We have not really tried to “even things up,” nor do the kids expect it.

I am one of 7 kids. We all started undergrad at our instate flagship U. I transferred to OOS public U after freshman year. One brother transferred to Stanford after freshman year. 6 of us went to grad/professional school after college—all out of state. Several of us got nearly 100% merit+FAid and some got only loans. Dad paid off everyone’s loans. We are all grateful and never knew or compared amounts spent on anyone’s education—none of our business. Everyone is doing fine financially and professionally.
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Re: Varying college costs across kids in the same family

Post by naha66 »

DragonJoey3 wrote: Wed Aug 22, 2018 1:14 pm I'm from the younger crowd, so I have the perspective of a child who went through this as opposed to a parent going through it.

My parents tried to be fair to each of us. I pursued college and paid my own way through, as a reward for that they took the money they had saved for my college and bought me a car. My brother chose not to go to college and went into the trades, they bought him a car as well and gave him some cash.

I think the key for our family though was removing the sense of entitlement. My parents were clear that the money we received if any was a GIFT, not something we earned just by sharing some DNA with them. If my parents chose to give more to one child than another that was their choice. They always tried to be equal with us, but there is a danger of children feeling entitled to parents money that can crop up.

As a parent if you want to be fair across children and you are talking nearly unlimited resources for school, then I would wait until the last child has finished his education and pay out the difference between the most expensive education and the actual cost of the cheaper children to them as a one time benefit.

Ex.

Child 1: $60,000 for school
Child 2: $110,000 for school
Child 3: Elects not to go to college
Child 4: $40,000 for school

I would give child one $50,000, two gets nothing because he got the most benefit, child three gets $110,000 and child four gets $70,000.

That's if you want to be equitable, and have the resources for that. Just an opinion though.
Hey this wouldn't Joe and Kevin. LOL
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Re: Varying college costs across kids in the same family

Post by naha66 »

DragonJoey3 wrote: Wed Aug 22, 2018 2:29 pm
KlangFool wrote: Wed Aug 22, 2018 1:22 pm
DragonJoey3 wrote: Wed Aug 22, 2018 1:14 pm I'm from the younger crowd, so I have the perspective of a child who went through this as opposed to a parent going through it.

My parents tried to be fair to each of us. I pursued college and paid my own way through, as a reward for that they took the money they had saved for my college and bought me a car. My brother chose not to go to college and went into the trades, they bought him a car as well and gave him some cash.

I think the key for our family though was removing the sense of entitlement. My parents were clear that the money we received if any was a GIFT, not something we earned just by sharing some DNA with them. If my parents chose to give more to one child than another that was their choice. They always tried to be equal with us, but there is a danger of children feeling entitled to parents money that can crop up.

As a parent if you want to be fair across children and you are talking nearly unlimited resources for school, then I would wait until the last child has finished his education and pay out the difference between the most expensive education and the actual cost of the cheaper children to them as a one time benefit.

Ex.

Child 1: $60,000 for school
Child 2: $110,000 for school
Child 3: Elects not to go to college
Child 4: $40,000 for school

I would give child one $50,000, two gets nothing because he got the most benefit, child three gets $110,000 and child four gets $70,000.

That's if you want to be equitable, and have the resources for that. Just an opinion though.
DragonJoey3,

How is it fair when the kids do not know that their college education costs affect their future gifts?

KlangFool
I think the parents could be clear that the costs effect their future gifts. I personally prefer the method which you mentioned of just giving each child X.

Family relationships are messy and far from mathematical. In my own family I have experienced the jealousy of siblings who felt like I benefited more from my parents than they. And my parents have felt guilt for that jealousy existing at all.

"The love of money is the root of many evils." I think a parent who can instill a sense of gratitude will end up with a child that does well regardless of the amounts they gift and to whom, and for what.
Never mind after reading this it's not Joe and Kevin. LOL
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Re: Varying college costs across kids in the same family

Post by daveydoo »

I don't think there's a formula.

One kid needs braces, one kid excels at a sport or instrument that requires a financial outlay, etc., etc.

I agree with being as fair as possible with money, time, and attention among your kids...but there are practical limits. One of my kids eats twice what another eats; I don't pay the others the difference. :D

I think price of an education should be a factor -- I'm not saying that cost does not matter. I was willing to pay extra for my kids to go to their out-of-state reach/dream schools. If these schools were no better than the in-state option (the only "inexpensive" option out there for us), I probably would not have done it. But once we knew that they could do a lot better than our pretty undistinguished state school, we were committed. Potential issue: one kid competed for and got a very prestigious full-ride-plus-stipend scholarship to our in-state school (not a humble-brag -- it's part of the story) and became very preoccupied with cost differential -- cheaper-than-free vs. no help at the better options. Fortunately, the better options were a lot better and spouse and I were in a position to say "don't worry" without excessively impacting retirement, etc.

The kid matters, too, of course. Kid #1 called me second semester and asked if I thought course x would be "a waste of money." I told kid that this was a more, uh, granular level of involvement than I expected to have -- if they thought it was worthwhile, that's fine by me. Again, it depends on the kid but presumably you will know them pretty well. :D We've lucked out so far but you never know.

This is a little like the "skin in the game" question. If you can't tell whether your kids have skin in the game when you're packing them off to college (seriously?), then I don't think you've been paying attention.
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Re: Varying college costs across kids in the same family

Post by MikeG62 »

psteinx wrote: Wed Aug 22, 2018 1:01 pm
There's a lot of potential permutations and ramifications. It's probably hard to get exactly right, but I'm curious about others' thoughts and what, if anything, others have done in this kind of situation...
OP, here is our situation. One daughter went to more expensive private university and the other went to state university. We saved the same amount for both daughters. For one, we spent her entire 529 and for the other there is a very significant amount left in her 529. Our plan is to leave the amounts in the 529 and repurpose for our future grandchildren. We do not intend to give more to the children of our daughter who went to the state school - even though it is because of her that there are excess funds in the 529.

As an aside, my parents did save some money in a UTMA account for both daughters (intended for college). We used the full UTMA for the daughter who went to the private university as the costs exceeded the amount saved in the 529. For the second daughter who went to the state university, we turned over the full value in the UTMA to her upon graduation. Explained to her why there were funds left in the UTMA (went to a less expensive college). She was a very happy camper the day we turned over the account to her.
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chisey
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Re: Varying college costs across kids in the same family

Post by chisey »

Our first is on the way and we're not sure whether we will have a second child or not, but we know how we're handling college costs. We will fund the full cost of attendance for an undergraduate degree from an in-state institution, however much that may be at the time. If our child chooses to go to a more expensive school, he will still get that same dollar amount of support and will either need scholarships or loans to make up the difference. The choice will be his and we won't pressure him either way, but we'll help him weigh the cost/benefit if he's debating among options of varying cost.

By the time he starts college I think there's a pretty good chance of an entirely different funding model for higher ed, so this may all be moot.
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Re: Varying college costs across kids in the same family

Post by TomatoTomahto »

chisey wrote: Thu Aug 23, 2018 7:20 am Our first is on the way and we're not sure whether we will have a second child or not, but we know how we're handling college costs. We will fund the full cost of attendance for an undergraduate degree from an in-state institution, however much that may be at the time. If our child chooses to go to a more expensive school, he will still get that same dollar amount of support and will either need scholarships or loans to make up the difference. The choice will be his and we won't pressure him either way, but we'll help him weigh the cost/benefit if he's debating among options of varying cost.

By the time he starts college I think there's a pretty good chance of an entirely different funding model for higher ed, so this may all be moot.
Yes, there might be a new funding model by then, and by the time he prepares for college, if he’s lucky enough to be accepted at a top tier school, you might find that your well thought out plan goes out the window. Man plans and god laughs.
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Re: Varying college costs across kids in the same family

Post by Maya1234 »

We are in this situation and we had no desire to incentivize our kids to spend less than exactly what they wanted for the school that they wanted. For us, who are fortunate enough to have plenty, education was the number one thing we wanted to spend money on, after our retirement. We economized and lived below our means for almost all of their childhoods for this purpose and saved and saved in the 529. One kid went to an elite private and the other had no desire for that given her major ( nursing) and spent less at a state school.
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Re: Varying college costs across kids in the same family

Post by fishmonger »

My kids are 8 and 7 so I'm a long ways from having to make these decisions. But I think it really depends on the kid.

I'm shocked at the number of posters saying "offer to pay for college or to give them cash." I don't think kids are mature enough to make that decision at 17, 18 years old. I wouldn't want my kid to be short sighted and take the cash to cost them millions of dollars in increased earnings while having a college degree. Don't misunderstand me, college is not for everyone
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GoldStar
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Re: Varying college costs across kids in the same family

Post by GoldStar »

Here's another analogy for those that feel they want to "make things fair".
In my state, when you add young drivers to your car insurance policy your rate goes up. (I'm sure this part is true in all states).
Surprisingly, because of "risk factors", it goes up far more for boys versus girls. (Not sure if this is true in all states).
If I have a "boy" in the house I am paying far more to insure him when he is driving than the "girl" in the house; given same age, etc.
Should I give some extra cash to the girl since I'm spending far less to insure her?
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Re: Varying college costs across kids in the same family

Post by stoptothink »

GoldStar wrote: Thu Aug 23, 2018 8:56 am Here's another analogy for those that feel they want to "make things fair".
In my state, when you add young drivers to your car insurance policy your rate goes up. (I'm sure this part is true in all states).
Surprisingly, because of "risk factors", it goes up far more for boys versus girls. (Not sure if this is true in all states).
If I have a "boy" in the house I am paying far more to insure him when he is driving than the "girl" in the house; given same age, etc.
Should I give some extra cash to the girl since I'm spending far less to insure her?
An analogy, but not a particularly relevant one. In the case of the car insurance, you have no choice; boys are more expensive to insure than girls. Period, you have no control over that. With universities, everybody has a multitude of options, with costs that can vary dramatically.
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Re: Varying college costs across kids in the same family

Post by mayday23 »

GoldStar wrote: Thu Aug 23, 2018 8:56 am Here's another analogy for those that feel they want to "make things fair".
In my state, when you add young drivers to your car insurance policy your rate goes up. (I'm sure this part is true in all states).
Surprisingly, because of "risk factors", it goes up far more for boys versus girls. (Not sure if this is true in all states).
If I have a "boy" in the house I am paying far more to insure him when he is driving than the "girl" in the house; given same age, etc.
Should I give some extra cash to the girl since I'm spending far less to insure her?
It's a matter of where you draw the line for significant. If the 3 of you go out to eat and child A gets a value meal, you slipping him/her the $2 savings?
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