Best Child Saving plan?

[MonkeyMama]

10 Things 529 Providers Won't Tell You

10 Things 529 Providers Won't Tell You - Spending - Rip-offs - SmartMoney.com

May be of some interest to those reading this thread.

[jpg7n16]

Wow I just disagree with sooo much written in that article. Definitely a "give the general a plan based on the specifics" if I've ever seen one.

And this statement made me LOL:

And though its performance has been all right – with returns around 5%, they’re handily beating the S&P 500 – Jordan’s grown weary of the fees he pays:
$15 per year, plus a 0.15% management fee.

This author clearly has it out for the 529 plan. There is so little logic involved in this article it makes me laugh.

For instance, compare #3 and #8. #3 "You'll lose a lot to fees!" Better watch out for that 0.15%, but #8 "Those State tax breaks? They aren't worth much" you'll only save 4.75%.

How is the 0.15% fee such a big deal if the 4.75% tax savings is miniscule? (4.75% is 31.7 times 0.15%)


Or #7 - Basically, "if your student gets a full ride, it's worthless"; if that's not a rare situation, I don't know what is. Let's give advice to the masses:

From: FinAid | Student Loans

Two-thirds (65.6%) of 4-year undergraduate students graduated with a Bachelor's degree and some debt in 2007-08, and the average student loan debt among graduating seniors was $23,186 (excluding PLUS Loans but including Stafford, Perkins, state, college and private loans).

So even with people saving for school, people are still coming up short - for most people, to the tune of $20k+ (that accounts for people who saved appropriately and paid off college in full) so it's very likely that your child will need more money saved away. Plus the penalty is only on earnings, and isn't as drastic as they make it out to be (see calcs above)



I think this sums it up well:

From: 10 Things 529 Providers Won't Tell You - Spending - Rip-offs - SmartMoney.com

9) There are better ways to save for college.

...

Even if you use a 529 plan, there are ways to diversify and add to the pot. ...Parents who use credit cards for most purchases can earn rewards cash for college expenses by signing up for Sallie Mae’s Upromise credit cards. Both offer rewards on groceries, while one also has rewards for gas and the other for dining. Of course, the amount you end up earning – on average $117 a year – might be only enough to cover the smaller expenses, like some books, fees or campus parking.

To me this reads: "Don't bother trying to get tax free withdrawals on your growth, use credit cards for the rewards of $117/year"


If you can't tell, I don't like this article one bit. I have issues with the majority of the other items too.