Unequal account balances for college

**sweeps** · 10-08-2007, 09:31 AM

The balances could easily even out if stocks take a tumble. I would leave them alone or increase contributions equally if you want to do that.

It's really a non-issue, IMHO, because you don't know what the needs of each child will be when they are ready for college. I think a tougher decision to make is what if one child wants to go to a really expensive private school, and the other wants to go to community college. Does child #2 "give up" all of his funds to his sibling, just because he chose a cheaper route to education?

**Scanner** · 10-08-2007, 01:54 PM

That's true - so many factors - what colleges (if) they will attend, if one gets scholarships or not (do you penalize the one who studies by not giving his share of financial aid from Dad and Mom?)

I guess I'll just keep contributing equally.

**moneybags** · 10-10-2007, 04:32 AM

Does child #2 "give up" all of his funds to his sibling, just because he chose a cheaper route to education?

Well, if it is money that I put into the account he does. If it is his own, earned money, than no he doesn't.

**sweeps** · 10-10-2007, 05:56 AM

Originally posted by moneybags View Post

Well, if it is money that I put into the account he does. If it is his own, earned money, than no he doesn't.

So in essence you're punishing the child who is probably making a smart financial decision and saving you money?

**Scanner** · 10-10-2007, 06:28 AM

Sweeps,

You are hitting points on why it's so hard to adjudicate kids college funds.

I have often wondered if it wouldn't just be better to say, "You both get an education at State U" and pick it for them.

Luckily "college" seems to be loosely defined - if one of them wants to become an auto mechanic (like rocket scientists nowadays), i could probably use the funds for trade school certifications and buying tools for them, which they all seem to need their own tools. Same thing if one of them becomes a carpenter.

The youngest one looks like a budding artist at this point.

**Broken Arrow** · 10-10-2007, 06:44 AM

Any way you cut it, I think you're doing great Scanner, thinking about your children's college needs now.

**sweeps** · 10-10-2007, 06:54 AM

I agree with BA. Keep up the good work.

This is a hard decision. One thing I want to avoid is the "Use it or lose it" concept you see in government and big business budgeting. The more a department spends this year, the more they get next year. It's a disincentive to find ways to save money. I want to provide an incentive for my children to make education as least costly as possible (e.g. finding the best school for the money, getting scholarships, finishing in 4 years instead of 5, etc.) If the student is successful at that, they should be rewarded with, perhaps, money toward a new home.

On the other hand (and perhaps this is what moneybags was getting at), I don't want the incentive to be so good that my children jeopardize their education (for example, skipping college altogether or going to a junky school when a more expensive one is appropriate for their career aspirations).

**Scanner** · 10-10-2007, 07:44 AM

Yes, I have thought that; let's say our older one gets a partial scholarship - well, as you know my plan was:

1/3rd savings
1/3rd current income when attending college
1/3rd child

Well, if they get a scholarship, to me, that means they can defer out the 1/3rd cost and not have to work during the school year, or even the summer, if he really nails a good scholarship.

If he gets an all expense paid trip to college (possible), well then yes, I think some of that earmarked money has to be imparted to him somehow, maybe a masters degree or doctorate. Or a house. . .I'd probably hold onto the money until age 28 and then just pass it down with tax consequences, that's all.

That's the complicated question, right now, the way it's going, it looks as if by the time by older son is 18, he'll probably have something like $25,000 in his account. The younger one may have like $35,000.

I don't know - too many variables I guess . . .and thanks for the compliment. I feel a little guilty we aren't further ahead with the college savings.

**jodi** · 10-10-2007, 05:09 PM

Sounds like you are doing well! Remember too that with the way college costs have been rising, you might very well need more money for your younger child than for your older child, even if they go to comparable schools.

**TBH** · 10-15-2007, 02:07 PM

Scanner,
My plan is pretty similar to yours, except I only have one kid. My plan is to have enough saved to pay for 50%, let him pay for 25%, and fund 25% out of current income.

Another option is to say, each of you gets $35K (and maybe adjust it for inflation for the younger ones). If you go to a cheaper school, you'll have to fund less of it yourself. If you want to go to NYU, that's fine, but let's make sure you understand how all those loans will effect your life.

That way, a smart kid who gets scholarships or a kid who goes to a cheaper school will get rewarded.

And if you're deciding on a dollar amount that they each get, then you don't have to worry too much about the accounts being even now. When the time comes, you can make up the difference by paying slightly more out of pocket for whichever kid whose account is behind.

**TBH** · 10-15-2007, 02:10 PM

PS. This college expense estimator from All Financial Matters gives you an estimate of the lump sum you'd need to invest now to meet your goal.

Unequal account balances for college