We are full pay (though not quite wealthy) and look at it as providing the education they choose, not $xxx,xxx to both.
DS1 is at a private in the $65K range. He had less expensive options or could have applied to places that give lots of merit. He plans on a PhD in physics, but that will be funded by whatever grad school.
DS2 is thinking in-state public. He has recently mentioned being pre-med. We would pay for med school, but I suspect that is unlikely just based on his personality. An expensive undergrad plus med school might be pushing it on the cost, so we’ll have to think about costs if it comes to that. He’s still a HS freshman.
We don’t have any plans to “make up” the difference. They will go to whatever college is their choice out of the places they are admitted.
It’s definitely a family decision but I do enjoy the discussion and I do enjoy seeing how different families handle it.
Two kids a year apart in school. We told both kids we had x amount to spend on their undergraduate education. We also made it very clear that this amount was not something we just had sitting around and that we would be working hard for it during the time.
I have in state incentive so they were told that if they went to an in state university we would cover all costs.
We ran spread sheets so they could see total 4 year cost of attendance and told them if they went over our allotted costs it was on them.
Child 1 - chose OOS university with decent merit. He will be exceeding costs so he has loans.
Child 2 - started at OOS university with loans. The idea of loans gave her anxiety and she came home. Currently at an in state university, happily in a major that is not even offered at first university. All of her costs will be covered.
If we ever have the means we may gift him money to go toward his loans but we will also gift her the same amount. At that point it just a gift to both.
Two went to in state flagship university, one is at an elite private university, all will remember it as the best four years of there lives for different reasons.
I have friends (brother and sister) whose parents (the grandparents) pay for the educations of the children. Each family has 3 kids. I don’t think there are any restrictions and the grandchildren go to the schools they want to. Even the high schools cost different amounts. The oldest grandchild is 6 years older than the next group (twins and another cousin), so her private college cost a lot less. One twin and the cousin attend an expensive private school, other twin an OOS public that is not expensive. The next child down attends an inexpensive instate directional and I’m not sure where the last one landed.
They pick the colleges they want to go to, get in, and Gramps pays the bill. I don’t think there is any thought to them getting the rest in cash or a car or for a wedding. I think they are all just so grateful for the education no one thinks of the difference in costs.
“As others have said, its your money, not theirs, and if its earmarked for education, then use it for education, regardless of whether its an even-steven allocation.”
But why should the money be “earmarked” for education? It’s still cash and it’s only in a 529 because that was the most tax-efficient savings vehicle. Is that different from an inheritance in a trust fund? I find it interesting that some would put education in the same category as medical expenses - there’s a perfect example of an industry with zero incentives to control costs (or even to allow you to understand exactly what those costs will be) that forces lots of families into bankruptcy. Things are broken in the healthcare system. I’m tempted to say the same about college!
FWIW The twin with the cheaper college choice wants to go into a career with highly uncertain prospects (dance), so having enough money in the bank to pay rent and buy food for perhaps 3-4 years would be a huge benefit. The other is probably more willing/interested to go into a high paying job so shouldn’t need that. They are smart enough to weigh up their choices (and did so in selecting college lists), and definitely will have to do that in the future in choosing jobs, buying houses and cars, selecting spouses(!), etc.
I wasn’t trying to pick on Oregon specifically (there are certainly reasons why it might be the best of a limited set of choices, the money might not matter, etc.). But in general I think its important for a young adult to have some understanding of what else they might be able to do with an extra $100K+ in OOS fees (e.g. what it would mean in a retirement account or as a house downpayment). That amount of money is almost impossible for them to imagine because its so completely disconnected from earning $10 per hour babysitting etc.
I don’t really understand the “make up for it” approach. My much younger brother’s college and law school education presumably cost a lot more than mine, but who cares? Why would I have been given $$ to make up for that? One of my sons grad school cost more than the other’s - it would never occur to me to make some kind of accounting.
I agree with you @Twoin18 and you know my situation is similar to your dancer kid. When my son told me he is applying for a private college with pretty good dance program but not so great academics, I told him he’d better get scholarship because I wouldn’t pay. He asked why I wouldn’t support him, I told him I love him dearly and would support him, but wouldn’t pay Gucci price for a Walmart bag. Dance training programs cost about 15k/yearly, so I would pay that to support his passion and similar amount of UC or Cal State tuition for academics at a comparable college. So if he wants to go out of state or attends private school he needs to get scholarship to make up the difference to instate tuition. Regardless of ability to pay, I think kids need to learn the reality and value of money.
Another thing unrelated to the thread…I found my 529 accounts were not doing as well as my regular investment accounts (even after tax) so I stopped putting in money a couple of years ago. Anyone else having the same issue?
Wouldn’t this learning that resources/money is not unlimited be based on the kids’ upbringing over the previous decade or so? I.e. would a kid who has been informed over the previous decade of how costs affect choices have a different view of economic realities than one whose has been given whatever s/he wants with no apparent concern about cost?
@Twoin18 , you’ve made an arrangement that was fair/even for your kids and they have their pot of money. It sounds like you won’t force one to share with the sister even if one doesn’t have the need for the full pot right now. Both knew the budget and consequences when picking a college. If you can help the one at the more expensive school structure that debt, great, but she’ll have to pick a different school if you can’t. If you only had one child, would you have put twice as much in her 529? Maybe not. You might feel that what you put in was sufficient for any child to spend on college.
@SCMHAALUM We invest the funds in our 529 accounts in broad stock index funds instead of in age-graded funds. We found the age-graded funds to be more conservative than the choices we would make on our own. But, that initially was when we had a longer time horizon and now is because we have some low-risk investments available if the 529s take a hit. Not all 529 plans have the same investment options.
@twoinanddone We told them at a fairly early age that we’d pay for four years at Berkeley (in-state). That was the benchmark (and we were shocked at how much that required us to save every month for 15 years). When we started the 529s we knew we had 3 kids and planned so we could save that much for each (the younger one will get several extra years of growth on his money to cover rising prices).
The biggest shock has been getting our heads round quite how much the gap has widened between in-state and full pay OOS/private over that period, which has gone far beyond where it is feasible for them to bridge with painful but doable loans as we imagined might be an option 15 years ago. And how tapping primary home equity is a huge issue for CSS Profile schools (how exactly is one supposed to repay that after retirement?).
I’m interested in whether/how others have sought to explain the value of money to their kids? I’m not talking about whether resources have been limited or unlimited, but whether an 18 year old can and should get their head around what $100K actually means in everyday life. In our case they haven’t really thought about things like the size of a mortgage/rent/car payment or the cost of a car or house and how that compares to what you can earn doing different jobs, let alone how much you need to save for retirement. But I’m happy to explain all of our finances, budget, etc to them in as much detail as they’d like.
@ucbalumnus Yes I agree the learning should’ve occurred over the previous decade. It’s just hard for them to apply the concept to the magnitude of college tuition and how the values of education at different colleges are viewed among their peers.
Twoin- if your kids haven’t worked a job where they get a paycheck so they see FICA and all the other deductions in their glory- that’s the first step. Babysitting and lawn mowing are great, but nothing is as much of a shock to the system for a kid to multiply their hourly wage by the number of hours they worked and then see the actual paycheck every week. And to realize that their 35 year old colleague at the fast food joint or mall is making pretty much the same salary but also paying for gas, rent and food. Wow.
Step two- if your kids are used to going to the doctor, eye doctor, dentist, etc. and waiting for you in the car while you deal with the co-pay or the bill- stop doing that. Make your kid check out. The realization that even with insurance (I’m assuming you have) you are still on the hook for X dollars for every visit- that resonates.
Step three- show them your property tax bill, water bill, electric/gas, any other municipal fees to live where you live.
That’s enough of a shock to the system without you having to go into too much detail about who earns what and how long you’ve been earning it. But if a kid thinks that, “hey, mom makes 85K per year, dad makes 60K, how hard could it be to pay for college if they just stop blowing money on stuff” the realization that the “stuff” includes the things they never think about. Water- it comes out of the tap. Utilities- snap on the light, the light goes on.
My kids are out in the real world, launched in their careers-- and I’m glad we were transparent with them in HS. They see colleagues who don’t take the full match from their employer for their retirement (because they can’t seem to save a penny); colleagues who are desperately waiting for their tax refund to bail them out of their holiday overspending, etc. Knowing what an adult life costs is a gift you can give your kids. One of my kids does not own a car, has never owned a car. Rents a zipcar once a month for stocking up on groceries or hauling furniture or whatever and takes public transportation to work and everything else. I think the kid was scared straight by the cost of our auto insurance way back when!!! (and we qualified for all the safe driver discounts- but putting a teenager on the car was SO EXPENSIVE).