I started investing for college before my two kids were even born. They also inherited some money in trust from their grandfather. Fortunately we have ample money earmarked for their tuition. DS1 accepted a full tuition scholarship, he will graduate next year. DS2 will start college this fall, likely at a full price school. We will probably spend about $120k more for S2 than S1. My question is not about affordability, rather about fairness.
What do other parents do in this situation? Is it fair to spend so much more for one kid than the other, without balancing things out in some way? One idea is to give S1 his trust fund after graduation, but use some of S2âs fund to pay his tuition. Is this fair to S2? Any other ideas? Would love feedback from other parents whose kids had very different college costs.
Seems like this is the kind of thing that is best brought up while they are in high school, before they make their college application lists and compare colleges and costs. I.e. âthere is $X for your college; if you spend less than $X, the extra ____â.
Do you think they care? My kids have smallish trusts (~20K) from a deceased relative, and I am the trustee. D1 took merit money and we spent less on her education than we will on D2. D1 recently came into her trust. I donât intend to take D2âs trust money to pay for her additional education expenses, though. She will get her trust at the same age, similar amount to her sister. I donât think D1 cares at all that we will spend more on D2âs education (although it does rankle her that her divorced dad pays some for D2, and didnât pay any for her â but I donât think she sees that as a âfairnessâ issue, more of a âhe thinks she is the smarter kid and therefore it is worth funding a more expensive education for herâ thing). Other than that, I donât think my kids see any need for a âfairnessâ accounting.
Personally, I would have the same sum of money (or at least the same parameters) for both kids. So take out of the trust for S2 or tell S1 that he has money for grad school.
We donât do fairness accounting this way with our many kids. We paid WAY too much for our first oneâs college, but that was our choice, at that time. Had to put the lid on future college costs, so the others donât have the same carte blanche in college choices, though we have more available now for the youngest. Some cost more for high school, extra curriculars, medicals expenses, âŠlike a whole lot more. We also have helped some of them in getting started in a job more than others. My one son got a great paying job right out of college that paid for moving expenses, temporary housing and everything else one can think of, with terrific benefits. Another son is in theater and has been living hand to mouth
I assume some will marry, and have differently priced weddings, and some will have children, some will have more needs than others. Unless there is a huge request, need, later in life that tilts the inheritance balance greatly, I donât think we are keeping tabs, and I donât know right now what would make us start.
Some kids do care. I know a family where kids # 1 and 2 were pressured to attend moderately priced schools, while #3 went to a high priced school, full pay. The older 2 felt that it was unfair that the youngest was treated differently and not given the same limits that they wereââoh, heâs your little princeâ.
I know this is quite different from @Chardoâ âs situation and circumstances like full scholarships do make a difference. But it might be worthwhile to find out the kidsâ thoughts on fairness.
Gosh, your kids each got the same thing: a college education that was paid for and they do not have loans to haunt them the rest of their lives. Iâd keep their trusts equal. They have the choice to use it for grad school or for a house downpayment or whatever. Even though your costs were different, their experiences and where they came out financially from graduation are equal. If you take money from the kid that didnât get a scholarship and give it to the one who did, then they will be starting life on unequal footing. Your whole family is very lucky one kid got a scholarship, because it freed up funds that you spent on all of you. If you have a lot of extra money, enjoy your retirement! it will all be split between the kids in the end anywayâŠ
No trust involved in our family but both Ds get merit aid - One full tuition and we paid room and board, the other chose a half tuition school so she had to take out some loans (trying to make it somewhat equal). We have another heading to college in 5 years so who knows what weâll be able to afford then.
To me, the only complicating issue at this point is the trust. Both kids got a college education without any hardship for you, so yes, they were treated fairly. Weâll spend half as much on our second as the first because the second got a good sized, renewable local scholarship. Both were told come in under budget and thereâd be car money at graduation, but in no way is the second getting MORE car money because we spent less on college. Theyâll both get a college education and a decent set of wheels. Itâs not equal, but itâs fair. Things certainly do not have to balance out.
So, wrt to the trust, you have to decide what is fair. If you donât have the extra $120k to spend on the younger sonâs education, it is perfectly fair to pull money from his trust in order to give him the education he wants if the trust makes it affordable. If you could find the $120K but it would mean hardship, Iâd still argue that itâs fair to pull money from the youngerâs trust to pay for college while the older gets his as cash. Iâd have a harder time saying that I couldâve paid the tution, but just didnât want to. Without some sort of headâs up, that does not seem fair.
I would use some of the trust fund money to pay for your S2, and put your âcollege savingsâ back into your own retirement/kids future inheritance or make it available to them for post collegiate purposes such as graduate school/wedding costs/etc.
My personal fairness doctrine is that your S1 earned that merit scholarship and chose to attend the school that offered it. He deserves to reap a reward for that relative to his brother. S2 did not have the achievement that your S1 did, or chose to attend a pricier school, so his inherited trust should fund some of that choice.
I believe that there is little good to come from having âfree moneyâ by inheritance, other than to fund education/self betterment. What better use could the trust fund go to than to pay for tuition?
i dont have an answer. iâve posed this question too on other boards. interested to see how you handle it all over the years.
My plan is to not openly talk about ALL of the finances to all the kids, as my two oldest who will be in college at the same time have such different outlooks/motivation/abilities/needs etc. Not that itâs âhush-hushâ â just that I wont be absolutely transparent with one kid about the other kid and college costs, because i dont think it will end up completely fair. Iâm not sure they will completely care as long as each kid doesnt feel slighted. SO SO wishing we had trust funds or 529s for the kids right now!
@redpoodles, except that the second child likely could have gotten a scholarship somewhere (you really donât need to be all that accomplished to get a big scholarship at some schools) and started out on an equal footing as well if he chose to. He chose not to.
Iâm uncomfortable saying that decisions donât have consequences and that there is no difference in costs between choosing something that costs $200K vs. $100K vs. free. I meaning, unless youâre rolling in dough, in which case you can do whatever you like.
We are fortunate to have been able to fund S1 and D1 out of 529s. However, S1 liked to spend everything he earned so when grad school came around, we made him spend down his 529 and take out loans for the whole masters program/living expenses. Best thing we ever did as he quickly learned the value of the dollar. D1 is a junior in college and will have some money left in her 529 when she graduates. However, she is also looking at PA grad school, but she is not the spender her brother is.
D2 is not the student her siblings are so her college choices will be at a lesser tier and less expensive for us. That will leave us with a LOT of money remaining in her 529, so we will transfer some to D1. While we have tried to save similar amounts for each child, the last few years in the stock market have given D2 a lot of money.
S1 turned to budgeting in the years he has been on his own and is much less impulsive about entertainment expenses. At Christmas, we paid off his loans as we felt it only fair since the 529s will cover most, if not all, of D1âs grad program.
Our first 2 kids went to private LACs, next 2 had full rides. Our whole family made significant sacrifices to pay for the older two (we donât have savings/inheritance, etc.) We promised our sons who took the full rides that if they keep their scholarships and graduate in four years, we will buy them each a (good, used) car. Oldest two have been cut out of our wills. We still have 3 younger kids to put through. Our goal is to get them all through with no debt. It doesnât have to be equal dollar amounts, but those who receive now will get less later.
I gave both of my kids a budget they had to stay under. One has a lot of scholarship money, and she resents my paying more for her sisterâs college, but itâs just how it worked out. Her school costs a lot more and she can only go there with the merit money and itâs not like Iâm going to tell that school to keep some of its money so that it will be equal with her sister.
Fair doesnât always mean equal. Youâve given your kids an education. If you need to use some of the trust money to do it, I think thatâs fair. If you pay OOP for S2, I still think thatâs fair to S1 because he got what he needed.
DS1 saved you a great deal of money, DS2 cost you a lot of money.
I would feel it is only fair to compensate the oldest in some way. Maybe a new car, or down payment on a house in the future. Then it is more balanced between both kids.
I have twins. My personal philosophy was this: We will fund you an undergraduate education of your choice (presuming, of course, that you work hard, which both of my kids did). One school cost slightly more than the other; however, there were travel costs associated with getting to the cheaper school, and so forth.
To me, I didnât see it as: âYou have $250K apiece; you spent $240K and you only spent $230K, so you get $10K back and you get $20K back.â I see it as: I promised / âowedâ you a college education, and thatâs what you got. The rest of the money is mine.
Now, one of my kids is an RA, and saved us $15K on room and board, which we then paid him. That feels fair to me, however, because nothing prevented the other kid from trying out to be an RA.
If you start adding up that one kid needed braces and the other kid needed glasses and this kid took piano lessons and this kid had tennis lessons, youâll drive yourself batty. I donât think you need to equalize the actual spend as long as they were conceptually equal.
OP, are your kids keeping score? If no, then I donât think you have to do a fairness financial accounting. You can just be satisfied knowing each kid got a college education. My brothers and I each required different amounts of money for college and didnât care what the other one got. My own kids may well have radically different college costs and they arenât keeping score. The kids just see that we will pay for their educations.
If they are keeping score, then Iâd say pay for college out of the trust fund and keep your savings.