The cost of in-state is nothing to Fran. The only reason I see Fran giving a scholarship to his son is if there's one available and no other person to fill it. The more Fran produces, the more he makes. Why would you give your son a scholarship of you can potentially get a player to help create wins, which could increase your salary. I don't know his contract but I would think he might get a bonus for getting to the tourney or reaching a certain level.
Another reason for Fran to pay is because it's been posted that his son might want to play baseball. If he's on scholarship for basketball and he's distracted (or people think he's distracted) by baseball, that could be a problem. If Fran pays, then there's no expectations on his son and he can choose to do what's best for him.