We have 2 kids (D17 and D20). We decided several years ago that we would fully pay for undergrad so the kids had no loans, but then any grad school decisions (& debt) were totally on them. We are basically full pay, and are incredibly fortunate to have a tuition benefit from the university where we both work that covers about $20,000 per year wherever the kids go, and about $38,000 if they attend the university where we work.
Knowing this arrangement, D17 applied to 12 schools, was accepted at her dream school with no need-based aid (any aid we would be eligible for is basically swamped by the employer tuition benefit) and is now a sophomore there. She turned down a couple of merit offers, including a $30,000 X 4 year award from a womenâs college. She was NMF, we took that $ for tuition but she keeps the proceeds of a small outside renewable academic merit scholarship. We donât cover any other expenses for her (travel, books, spending money, etc.) and she works multiple on-campus jobs. She plans to go to law school and both she and we assume our deal will hold, i.e., we will not contribute to law school tuition (although I realize that many schools will factor our assets into her aid package until she is 26).
Now that weâre getting into the process with D20, Iâm wondering if we can strike a different deal. Specifically, I would be interested in incentivizing her to pursue and accept merit offers that will reduce our contribution substantially. She has a different academic profile from D20 (less competitive), but could likely be in the merit zone at schools like Bryn Mawr, Mount Holyoke, Macalester, etc. if her tests scores bump up a bit. She is also much more interested in these and similar schools than D17 was.
Bottom line questions:
Can my husband and I make a new deal with her along the lines of, "you can keep 10% of any merit $$ for expenses and we will bank another 25% for grad school" or something like that? Or is it not fair to make that deal with D20 having not offered a similar deal to D17? Does it matter if I'm 99.9% sure that D17 would still have turned down merit at safety school for no merit at dream school if we had made a similar deal with her?
If we make the merit kick-back deal with D20, should we then renegotiate the grad-school tuition deal with D17?
Iâm regretting now that we didnât just say up front to both kids, âthere is $XXX,XXX available for undergrad + grad school, use it however you want. the rest is on you.â
We didnt (dont) have a fixed price per kid college rate.
Kid 1 went to her school below avg by cc stats
Kid 2 made her own ultra cheap choice bf reasons
Kid 3 seems to aim higher prob 20-45k/y
Kid 4 lucky if he goes to college at this rate.
Your decisions idk and idk your kids. I know my kids (2) of them dont even want us to pay for school. " I will figure it out you save the money for retirement. Love you" is often how it goes
I think thatâs fine, and I donât think you even really have to consider things like contracts or âdeals.â You do the best you see fit for your kids, and it appears your best is a lot, as your kids both seem to be great students with bright futures. Rest easy, and congrats on a job well done, @Itisatruth !
It sounds like your option 1 is not giving your D17 and D20 the same $XXX,XXX, but instead you keep some of the difference if D20 goes to a cheaper school. So is this a question of you needing to spend less on D20, or simply thinking that there isnât necessarily going to be an ROI on a more expensive college for her?
If the latter then I would tend towards offering D20 exactly the same total $XXX,XXX as youâve spent on D17, rather than some complicated sharing of benefits. But I would ask D17 if thatâs OK with her first. If D17 is convinced she made the right decision in choosing her dream school then she presumably wouldnât have a problem with this deal (which isnât changing for her), and it is still fair because you are giving both of them the same amount.
IMO introducing something more complicated just makes it harder to understand where the fairness is coming from. Of course if you do need to save money for yourselves, then you might still need to go in that direction.
FWIW we gave our twins the exact same budget in dollar terms. D18 got a full ride, S18 went to a higher ranked school (although chose the cheaper state flagship over OOS options to keep some money for grad school). Both are happy with the situation even though D18 will have an extra ~$100K for grad school (or a house downpayment if it comes to that).
You didnât make D17 accept merit offers, so I wouldnât require that of D20. D17 is working several jobs for spending $ and has to pay for her own grad school but D20 would get to keep merit $ to use for spending money *and * have money for grad school? I think you should either offer to help both with grad school or help neither. And letting one kid work several jobs for spending money while the other gets to use grant funding doesnât sound very fair either.
I recently told my daughter that starting now, forget about all things being equal re your brother. Very different kids with different goals. S will greatly benefit form a certain type of school, D less so . They understand going forward we will do what is best for each but they may equal different dollar amounts.
As an example, D is a performing artist and asked âIf I choose to not got to school and just move to NY and audition, Youâll still give me the money in college savings, right?â Ah⊠no.
You do what you can. I think D17 will be thrilled if you can help a little with law school because you make a better deal with D20, even if it all isnât even. I donât think Iâd let the younger one keep the extra money, but would allow it for grad school.
I have two 2014âs. One went to a private $50k-60k per year (went up every year) and the other to an OOS public at about $20k per year. The private turned out to be much cheaper because of merit and other aid. Both went to the schools they wanted to attend. One has to work more and has more in loans. I did what I could. If I can help pay the loans I will, but Iâve made no promises.
I donât feel guilty that things werenât even close to even. They both got what they wanted and really what they needed.
I think itâs likely my S will go to an in-state public that will be a lot cheaper than my Dâs private LAC. If he does itâs because itâs the better fit for him (sizewise and major). Because the cost difference could be as much as 1/2 cheaper, we will likely âsweeten the potâ by buying a used car or funding a summer for him. But it will not be even b/c it wonât be a sacrifice for him to go the public university but rather the right fit.
All hypothetical b/c heâs just a Sophomore and he could change direction and go to a private school, but this is our current thinking.
This was our deal, too. In retrospect, maybe we should have considered something different. The kid who chose the state university (for fit) didnât benefit from this thrifty choice. And the other one â who knew even when she applied for undergrad that she would likely want an MBA down the line â didnât have the opportunity to make choices that could have helped defray the cost of her graduate program.
Why do you want to incentivize your D20? Have you come to the realization that you cannot afford two full pay private colleges experiences and still support your other financial commitments (i.e. retirement)? You no longer see that value in a full price education? You see a big quality difference between the school that D17 attends and one that D20 is likely but not a price difference? If you are thinking that D20 will be eligible for big merit from places like Macalester, there canât be that much of a gap in their profiles.
I general, I think it is ok to make modifications over time as information changes. If it is because of financial âhardshipâ, I think it is even ok to go back to D17 and making her put more of her own resources into her education (e.g. federal loans).
I think you need to ask D17 her opinion to avoid hard feelings down the road. Just explain the situation to her. My parents did that (I was oldest) when they ended up helping my sister much more than they helped me. I appreciated them taking my feelings into consideration. I think they offered to buy me a car for graduation since her tuition was so much more than mine. I declined, but I think it was a genuine offer and I appreciated it even though I thought it wasnât necessary.
My wifeâs parents handled it differently. All is fine now, but there were some hard feelings for a while about how she worked in family business for free in college and her siblings didnât work and did get spending money.
Due to differences with my kids and their activities, they have all been told many times that I am trying my hardest to be fair but that is different from equal. Iâll let you know in 20 years how that went.
You owe it to D #2 to give her equal opportunities. There is absolutely no reason she should be conned into a less desirable school because once you allowed D #1 that option she needs the same freedom of choice. It is not her fault she isnât the oldest.
I know of a family that paid for Stanford for one child while the other was nonflagship school caliber academically. There was no reason for them to pay for a private school just because they could afford it- she went to a best fit school like the older sib but a much cheaper public option. Likewise your second child deserves to go to her best fit school just as older sib did. Please do not make it a monetary decision unlike for the oldest. It would be totally different if family finances were different and you wanted to save money for the oldest as well.
How on earth does offering the second child more financial flexibility mean she is being âconned into a less desirable schoolâ? OP has not said they donât have the money to pay for D20, merely that the ROI might not justify it, but their current arrangement doesnât give D20 any reason to opt for a less expensive undergrad college and save money for grad school because the parents said they will only pay for undergrad.
If anything itâs the older daughter that would lose out because she didnât have the choice of a more expensive undergrad college vs a less expensive one with leftover money for grad school. Instead she just has the expensive (albeit dream) undergrad college. The only real question is whether D17 is fine with D20 now being offered more not less choice over how to spend her college budget/savings by allowing D20 to keep some money back for later if she wants to.
Iâm more puzzled by why a family would pay for Stanford for one kid (with all the earning potential that brings) and not give more money to the âstate school caliberâ second kid from the savings made by going to a state school (assuming that offered less long term earning potential) if they have the money to do so. Otherwise that seems more like favoritism to me. If you were helping your kids with a downpayment on a house would you say âkid 1 is in Palo Alto so weâll give her $280K, but kid 2 is in Austin so weâll give him $100Kâ? Yet people are happy to do the same with their four years of college spending.
The parents could say to their kids âweâll give you $150k for a down paymentâ and in Austin that might be a stand alone house and in Palo Alto a tiny condo.
The money goes further in one place than another. Same with tuition money.
My parents were,really obsessed with equity. If they paid for lessons for one, theyâd pay for lessons for all. If one got new shoes, we all got new shoes. As an adult, I admire how hard they worked not to show favotitism, but in reality, we all needed different things and frankly, weâre far less invested in their fairness than they were.
So I would start by having an honest and open conversation with D2 about what you are considering and why and get her reaction to it. She may feel like she is getting a better deal. Who knows? And when you have a plan, make sure D1 hears it from you first. While your concern is around D2, itâs possible that D1 will feel slighted to not have had the opportunity to choose some $ in her pocket over her first choice school. (You are the only one measuring it in dollars.)
I think whatâs important is that they both feel like they are excited about their college experience - regardless of cost.
"The parents could say to their kids âweâll give you $150k for a down paymentâ and in Austin that might be a stand alone house and in Palo Alto a tiny condo.
The money goes further in one place than another. Same with tuition money."
My point exactly. Who would consider it fair to give each of their kids a 20% down payment for the same sized condo when one lives in Palo Alto (~$280K) and the other in Austin (~$100K)? And yet people do the equivalent with college all the time.
Our kids are a few years apart - so saying X dollars per kid would not have been fair. We told them (and we were lucky to be able to do it) that we would pay for a BA degree wherever their choice. I think if money had been an issue we could have said, weâll pay for the cost of the state university. But the same dollar amount would not have been fair.
Iâm really grateful to everyone for weighing in. Your discussion has added some important nuance to our decision-making process.
Thanks to @Twoin18 for clarifying my original point. We are not feeling like the R0I on the education will be less for D20. Itâs more that I am second-guessing our decision with D17 not to make the merit offers potentially more salient by allowing some carry forward of undergrad savings to grad school.
I also really appreciate that a fair solution here does necessarily mean equal as kidsâ choices, options, etc. are different.
Also should clarify that my reconsidering the deal for D20 is not based on changed financial circumstances, and that while of course there is a lot of retirement saving we are not doing because weâre paying college tuition, we donât feel our retirement security is threatened by the decision to fully fund undergrad.
@marvin100 â very much appreciate your kind, straightforward take on this âdilemmaâ which I realize is a terrifically wonderful set of problems to have all around.
Everyoneâs comments have also helped clarify some underlying differences in parenting philosophy between me and my husband. He feels that kids should just go after the schools they want, and choose from their options without regard to cost. I feel that itâs reasonable to set a fixed parental contribution/transfer for higher ed or other young adult expenses (that mostly covers even a high-priced private undergrad option) and let the kid optimize within that constraint. (Guess which one of us is the English professor and which the MBA?)
Your husbands approach, to me, is viewing college as an extension of high school - not having to make hard decisions regarding finances.
Your approach is giving your daughter some âskin in the game.â She will be learning to make the same type of decisions that will be expected of her once sheâs done with her undergraduate program. They donât just automatically know how to make such decisions, and arenât automatically good at it. Not only does a change in offers make money potentially available for grad school, but it also provides an incentive to look for more merit money. You already allowed your oldest daughter to use her outside scholarship toward her other expenses, so this isnât really a huge change. And ultimately equitable is not always equal.
âYour husbands approach, to me, is viewing college as an extension of high school - not having to make hard decisions regarding finances. Your approach is giving your daughter some âskin in the gameâ.â
We also drew a distinction between high school and college. We paid for different activities etc without comparing the relative costs in high school, but in college whichever of those activities they continue will be our kidsâ responsibilities to pay for. Similarly for clothing, vacations, etc (though if they choose to come with us then we will pay).
To @mathmomâs point about timing differences, we have accounted for this with our younger kid mainly because his 529 has more time to grow, but I agree that a benchmark like the price of an in-state college is a good one (thatâs how we decided our 529 contribution amount in the first place).
