gmt's Net Worth for February 2019

Assets Value Change ($) Change (%)
Cash $9,643,871 $30,634 0.32%
Stocks $0 - -
Bonds $0 - -
Annuities $0 - -
Retirement $998,350 $111,288 12.55%
Home $2,137,500 - -
Other Real Estate $332,500 - -
Cars $570,000 - -
Personal Property $0 - -
Other $5,274,428 - -
$18,956,649 $141,922 0.75%
Debts Value Change ($) Change (%)
Home Mortgage(s) $0 - -
Other Mortgage(s) $0 - -
Student Loans $0 - -
Credit Cards $0 - -
Car Loans $0 - -
Other $0 - -
Total Debts $0 - -
Net Worth $18,956,649 $141,922 0.75%
*All values shown in USD ($)
I’ve got twins about to go off to college. It’s on my mind more and more these days.

Unfortunately, they are hellbent on going out-of-state for college and, while they are excellent, hardworking kids with high grades and decent test scores, those marks and scores are not enough to qualify them for merit-based scholarships to out-of-state institutions (i.e., those that interest them) and there are no other meaningful opportunities for scholarships available to them (e.g., they won’t qualify for need-based scholarships and they don’t play a sport well enough to qualify for any assistance).

Despite this, since they’re such good, loving, hardworking kids I’ve given them the choice: you can go out-of-state anywhere you want to go and I’ll pay for your undergraduate education, even though I may not agree with the choice, or you can go in-state and I’ll pay for undergrad along with graduate school anywhere you want to go in any program you select (e.g., private, public, 2-year, 4-year, whatever). It was my view the choice was going to be easy—stay in-state, have Dad pay for everything, and get a graduate degree so you're set for life without any pressure or student loans, right?

Regrettably, it does not appear to be as clear-cut to them as it is to me. They seem to have significant extra-familial and social-pressure to go out-of-state, all from people who will not have to bear any of the expense (of course). And, they are typical wide-eyed teenagers who’ve worked hard in school and see this as their chance to breakout and launch an exciting life in a new place. In fact, when asked about why they want to go out-of-state or to a particular school they really have no good or convincing reason (i.e., most of the schools they are looking at are not materially different from their in-state options and they do not have definitive career goals). But, since I’ve made the commitment to let them choose their own path, I’m sticking with it (although I’ve openly shared my views on their potential choices and even questioned whether giving them such a choice at this age was a good idea). A deal, is a deal.

Now, why does this matter so much? Well, an in-state education will cost anywhere from $80,000 to $125,000 each (depending upon the school) for a high-quality 4-year undergraduate degree, which includes everything from A-to-Z and a decent quality of life, along with their own vehicle. The least expensive out-of-state degree they’re looking at will run about $170,000 each, and the most expensive undergraduate program is more than $300,000 each. They understand that leaving our state means giving up their personal vehicles (which I’ll sell for about $20,000 each) and that their quality of life may not be as “luxurious” (although, in truth, I’m not going to punish them or truly limit their college experience just because they make one choice or the other).

The good news is that I’ve got about $80,000 for each of them saved in 529 Plans (i.e., about $160,000 total) from when they were born. This money is not reflected in my assets because I’ve never considered it “mine.”

The bad news is that, depending upon where they go to school, the money saved may barely cover the first-year of a four-year degree (note that I’ve told them I’m only paying for four years, so they best graduate on time). Indeed, assuming they both went to the most expensive schools, undergrad for two of them could easily cost more than $600,000 total for their undergraduate degrees. Insanity, amiright?

That said, it currently appears as though at least one of them may select a more moderately-priced out-of-state institution costing about $170,000. The other is seriously contemplating more expensive options around $300,000. Even then, however, we’re talking about $470,000 total for their undergraduate education and around $300,000 in unfunded education expense (i.e., the difference between the total cost and what I’ve put aside in 529 Plans). Although this is (thankfully) a small-fraction of my current net worth, it kills me to waste money unnecessarily on an out-of-state degree and see them make, in my view, relatively poor choices.

I accept, of course, my role in allowing them to make the choice in the first place (i.e., I could obviously have told them they’re going to stay in-state, like it or not), but that would have led to resentment and, frankly, life is short, I can afford it, and I enjoy a very happy relationship with my kids. Yeah, I said it — I’m essentially "buying peace." What’s more, at some stage you have to let your kids make mistakes—even mistakes with your money—and there’s no ambiguity in how I feel relative to their decisions or the fact they will be completely or largely on their own for graduate school if they go down the out-of-state path for their undergraduate studies.

To be clear, I’m an advocate of higher education—particularly public schools—but I’m not remotely convinced the additional cost of an out-of-state degree is close to worth the additional expense, particularly if the school costs twice as much and is roughly on par with in-state options. The fact is, even though I went to a prestigious out-of-state public school (after establishing in-state residency over the summer, which is no longer possible in most states), nobody really cares where I went to undergrad and it did not open doors for me the way one might expect. My success ultimately came from hard work, delayed gratification, and a little luck.

Anyway, their actual choices have not yet been made, but I'll know in a few months. My advice to those with children, however, is to set aside generous amounts of money in 529 Plans as early as possible. I wish I'd set aside twice as much.

Anyone else facing this dilemma now or in the future? Any constructive criticism or advice?


2/1/2019 8:18:46 PM plasticsurgeryrox
Thank you for sharing your thoughts and insights (I've thought about your other comments earlier as well and appreciate your sharing them). Like you, I think I've achieved my success from hard work and delayed gratification. I think I struggle with many of the same issues as you. My parents helped me some with school but they came from modest means and I had to take out loans and work for everything. My children have grown up in a different environment from me. How much to provide for them vs letting them struggle??? I do believe that there may be a greater drive to succeed when you are forced to work harder just to survive. I think about the proverb "shirtsleeves to shirtsleeves in three generations" and how its basically a universal proverb in many cultures. It is a definitely a challenge and struggle to figure out the right balance with kids. Best wishes to you (and me) on figuring it all out!
2/2/2019 11:31:26 AM gmt
You've got company in the wilderness. Having money actually makes some things more complicated, but it beats the alternative. [grin] In fact, I've come to appreciate that having money mostly means having choices. Choices make some things unnecessarily complicated. It's far easier to figure out what to order at an In-N-Out Burger vs. The Cheesecake Factory. As for the current struggle with my young-adults, there's a lot of wisdom in Cat Stevens' song Father & Son, which is about the struggle of guiding your children and letting go. I've always taught them: "Take your time, think a lot. Think of everything you've got." I know they'll be okay.