College Finances – Twins, Triplets, & Siblings

People have often asked me, "what's the cheapest way to get my kids through college?" My typical response is "have triplets." Generally that is followed by a quick laugh by everyone involved.

By the time I am talking with families, their "family planning" is long over with. So my response is at least half jesting. But there is a tremendous amount of truth to the comment as well.

College finances are typically more manageable the more students you have enrolled. The expected family contribution (EFC) is substantially affected by the number of students you have in school at the same time. In fact for the parent's portion of the EFC, it is split equally among the students enrolled in college. So if the parent's EFC is $ 20,000 with one child in college, it will be $ 10,000 for each child when there are two in college. Now this may not sound like that big of a help at first, but consider the following.

The Ellis family has two children, two years apart. The oldest will start college in 2010, and the second child will start in 2012. We'll assume for this example that each child will complete college in four years. For the first child, the Ellis' EFC is $ 15,000, and because they have done proper planning, the children will not have an EFC contribution to add to the parent's. So their total EFC is $ 15,000. Now suppose that the EFC remains constant throughout the two students' time in college. For the two years that both are in school at the same time, 2012-13 and 2013-14; their EFC will be spit between the two students. Each will have a $ 7,500 EFC. So for all six years, the combined EFC is $ 15,000 x 6 = $ 90,000. And because they also chose very generous colleges, that $ 90,000 is all they had to come up with out of their own pockets.

Now let's look at the McNeal family. The McNeals have two children who are twins. Both of them will be going to college in 2010. Again we'll assume each child will graduate in four years, and they also have a $ 15,000 EFC. In the McNeal's case since both students enter and leave college at the same time, they will only have to come up with the EFC for four years instead of six. So their cumulative EFC is $ 15,000 x 4 = $ 60,000. Now if they chose very generous schools as well and were only expected to pay the EFC, then their out of pocket costs would be $ 60,000 to get both their students through college.

Consider one more example … the Jones family has twins. Their EFC is $ 15,000. One child wants to go to an "expensive" private college (sticker price: $ 50,000 per year). The other twin really wants to stay around home and goes to the local community college (sticker price $ 5,000 per year). The EFC is still split equally between the twins, both at $ 7,500 each. For the one twin going to community college, their EFC doesn't even get down the the cost of the school and doesn't really give them much benefit. But for the student going to the "expensive" private college, they still receive the full benefit of the split EFC. The first student's cost will be $ 5,000 per year. And because the family chose a college with a generous financial track record, the second student's out of pocket cost will be $ 7,500. So the family's annual out of pocket costs will be only $ 12,500.

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