What to do when you don’t have enough college savings for every kid

I put one kid through college. How do I tell his younger sister there won’t be as much money for her?

Beth takes on a tricky new money question—and offers expert advice on how to resolve it and how to talk it over in constructive ways.


The situation

“I thought I’d done everything right. My ex-husband and I set up 529 college saving accounts for both kids shortly after each of my kids was born. With that, three scholarships, and some other savings, we sent my older one to a great out-of-state school without much money stress on our end or a ton on loans on his. Now it’s his sister’s turn. After one divorce, a layoff, and surgery for my mother, I have about half of what I had six years ago when the first one enrolled. How do I explain this to my daughter when I see her getting stars in her eyes looking through college brochures?”

—Judy S., Denver

The solution

As any parent of multiple offspring knows all too well, fairness is a virtue that kids take seriously. If you had a dime for every time one of your kids protested that “it’s not fair” when his sister got sprinkles and he didn’t, got less homework, got to leave school early because she fell off the slide, you’d have plenty of cash to put both of them through college.

Parents from time immemorial have shot back with the same conversation-stopping adage: “Life isn’t always fair.” While you might be tempted to pull out this child-rearing chestnut in this case and leave it at that, I’m sorry to say that this is one fairness issue that you need to talk through. Here are six ways to keep that conversation civil, constructive, and supportive:

Identify with her feelings and share yours

First of all, empathize. If you sense that she feels cheated, angry, worried: Say so. Let her know that you, too, are unhappy that there’s less money for her education. At the same time, though, assure her that you will work extra hard to find money for her college education, through scholarships, grants, and federal loans. You’ll get this done, together. 

Avoid comparing numbers

It’s easy for a sibling to equate love with a dollar. (“My brother ranks $12k on the Parental Love Meter and I only rank $8k.”) That’s why it’s crucial to avoid saying precisely how much you laid out for big brother’s schooling and how much you have now. What’s relevant to share with your kid here is that you made equal provisions for each of your children, but circumstances beyond your control—that unfair element known as life—meant that you wound up with less banked for the second time around.

Draw the timeline

Where our money comes from and all the things that can make it go away are completely mysterious to our kids—even high school-aged ones. By the time your child is a junior, though, she should be able to understand a lot about household cash flow, so walk her through the timeline. That means all the events that affected her college savings—all those “circumstances beyond your control.” This might require that you explain the basics of compounding interest, the stock market, and investing in general—not bad lessons for a teen to learn anyway. One caveat in this particular case: Leave divorce out of it. You don’t want it to seem as if you’re blaming your kid’s other parent.

Set parameters

Parents sometimes stretch themselves dangerously thin to get their kids the best education possible, borrowing heavily in higher-interest Parent PLUS loans or siphoning off their own retirement savings. Both are to be avoided. Remember: Your kid can borrow for college; you can’t borrow for retirement. So don’t be afraid to make expense an issue. Almost 70% of families struck a college from their dream list because of cost, according to the latest “How America Pays for College” survey from lender Sallie Mae. So she won’t be alone.

Will your kid have to limit her search to in-state schools? Are private colleges out of reach? The only way to set parameters like these is find out what different schools might actually cost your family. This is a bit trickier than looking at sticker prices, which can be wildly misleading. (It’s been reported that some colleges even artificially inflate their tuitions to seem more selective. Say what!?)

  1. First step: Visit the FAFSA4caster, on the U.S. Department of Education website. You’ll walk away with a rough estimate of how much financial aid could be coming your way.
  2. Then, to get a more personalized sense of what you’re in for, use the net price calculators on the websites of all the colleges your kid wants to apply to. Using info from your family finances, these calculators deliver a much more specific cost estimate for each school. Cast a wide net, at least for now. You might be surprised to find that an “unaffordable” college would set you back less than you thought.

When you’ve completed these steps, you’ll have a clearer sense of how much each school will cost, how much you can borrow, what you stand to receive in grants, and how far your savings will stretch. Then you can talk knowledgably to your kid about price parameters. It’s also your chance to explain one financial fact to your kid: Higher tuition does not equal a better education.

Offer help on the back end

Okay, the bad news is that Kid No. 2 will most likely have to borrow more. No shame in that; The “good” news is that your lower savings and earnings—at least during your “base year” from January of your child’s junior year in high school through December 31 of her senior year—will qualify you for more financial aid. This could mean access to need-based grants such as the Pell, work-study, and subsidized federal student loans—the kind that does not accumulate any interest while your kid is in college. If your finances are on the upswing, you might offer to give your kid an assist with student loan repayment after graduation. But be careful not to overpromise, and only do so if you know you can set aside the money between now and six months after she gets her diploma—when she’ll have to start her monthly federal loan payments.

Fill out the FAFSA, pronto

Completing the Free Application for Federal Student Aid (FAFSA) is the only way to gain access to low-interest federal student loans, grants, and work-study. So get on it as soon as it’s available in the fall of your kid’s senior year of high school. To make it easier on yourself, take advantage of the IRS Data Retrieval Tool, which was recently restored after the feds took it down to make security fixes. It imports your tax data directly to your FAFSA form.

No, life isn’t fair. But you’ve done your best to level the playing field between your kids, and that’s all a parent can do. Assuring your kid that you’ve got her back will help both of you move forward toward this new phase in her life.

Check out more articles from the Hard Case series.

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