CSavings

[quanghieu]

Those that have college savings accounts for their children - How did you decide how much to fund it? My wife and have a target of having one semester of in-state tuition every two years so that by the time they are 16 they will have 4 years of tuition saved if they choose to go to an in-state school.

[phantom]

I have a hard time accepting that buying my child a college education is going to be the best way I can give her a good start down whatever career path she may choose. So, I've been putting very little money into a 529 for her. Instead, my husband and I are maxing out our retirement savings and planning to have our house paid off well before she finishes high school. If it appears that college is the best path at that time, we should be able to cash flow a healthy level of assistance, but we'll also have the flexibility to help in other ways.

She does have some money in her 529 right now because that's where I put the majority of the monetary gifts she's received. (She's 2 and has several thousand dollars.) I figure there's a good chance she'll find some sort of qualified educational expenses to spend that money on some day, even if it isn't college. But, it's more of a lazy place to stash investments than something we're contributing to with a purpose.

[Fishindude77]

I never had any savings earmarked for my children's college education, we just saved as we normally did, used some from savings and cash flowed the rest.

I'm not crazy about the 529 plans, as I'm not convinced college is going to be the best route to a good job / career in coming years, particularly for a male child. One of our kids went to college and one didn't, both are doing fine.

Save what you can, but don't jeopardize your own security or retirement to do it. If push comes to shove, kids can still pay for their own college education by taking out loans, working, etc.

[phantom]

I'm not crazy about the 529 plans, as I'm not convinced college is going to be the best route to a good job / career in coming years, particularly for a male child. One of our kids went to college and one didn't, both are doing fine.

It makes me happy to hear someone else say this. Sometimes I worry that I'm just being stingy and making excuses not to save for my daughter's future. But, I really want to challenge my daughter to think about her goals and how best to accomplish them, not just prepare to support her down the most obvious path.

[disneysteve]

I'm a 529 supporter. I don't recall exactly when we started DD's account. It wasn't at birth because we just weren't in a position to do it at that time but she was pretty young, under 10 for sure.

How did we decide how much to put it? We based on on our available disposable income after making sure that other financial needs were taken care of. And the amount has changed a few times over the years.

We managed to accumulate about $60,000 by the time she started college in 2014. Even after she entered college, we continued to contribute $300/month to the account since 60K wouldn't cover 4 years of tuition.

She is soon to enter her senior year. There will be about $2,500 left in the account. I'll take that out and close the account in August and we will continue to set aside $300/month until she is done next May and we pay off the PLUS loan we took out last year.

[Drake3287]

I've covered this here before but what I did with our 3 kids was fairly easy. After each one was born my wife and I put aside $75.00 per paycheck, per kid towards college. I made more then my wife so I eventually upped my amount to $100. per kid, per paycheck.

When my kids went to college here in California I had more then enough cash to pay for everything. We also kept up with this dollar amount of savings until the last one graduated.

Not only was I one of the few I know that had all the cash for college needs, when the last one graduated my wife and I instantly had a $500. a month pay increase from not having to pay for college any more.

Between spacing out kids a few years and getting normal pay increases, it was pretty painless. Sort of like planning for retirement, it pays to start early.

[disneysteve]

Not only was I one of the few I know that had all the cash for college needs

This is so true. Even if you only save part of the amount needed for college it will put you and your kids so far ahead of their peers. I don't think my daughter has any friends whose parents saved any significant amount for their education. My daughter didn't take out her first loan until junior year while all of her friends were borrowing from day one. The fact that we were able to fully pay for the first 2 years from her 529 (and part of the 3rd year) is something she really recognizes and appreciates, especially after seeing how all of her friends are struggling to pay tuition. Her best friend almost didn't come back last year because she wasn't sure she'd be able to get enough money in time.

[Thrif-t]

We have 3 kids and when we started out we did what we could each month and increased as we could.

They all had savings accounts from the time they were born that I transferred into their 529's. All the shower money, birthday money, Christmas money I put in a savings account then finally opened 529s when our oldest was 10.

We live in Ohio and get a tax break on our state taxes so the Ohio 529 plan was advantageous for us.

[snafu]

My dad opened a savings account for our son, his 1st grandson on day one! He encouraged all extended family to give gifts of cash to start an education fund. DH and I added monthly contributions that reflected government benefits.
From that point every gifting occasion included a contributions to the education fund from dad, relatives and us as well as a modest, tangible gift. When the sum was sufficient to open a Mutual Fund, we boosted our contribution to meet the minimum requirement for automatic withdrawals.

When DS #2 arrived, we repeated the process [much to my surprise]. Our guys never got as many tangible gifts as their friends and cousins but it was never an issue. From school age they got allowances and were able to choose age appropriate chores to earn cash. The house rule was 'pay yourself 1st,' so they contributed to their own education fund and sort of understood the principle.

Long story short, the magic of compounding and reinvesting dividends allowed both to have sufficient funds to pay for 4 years, university costs, living at home.
DS #2 chose to take two transferable years at community college which is far cheaper. I was pretty upset when he chose to take a 'gap year' and worked his way through a lot of countries. He did return and finished his degree. He chose to borrow tuition and work part time to finish a masters.

[Like2Plan]

We saved money in various investments such as savings bonds and direct purchase stocks until they invented the 529 plans. Then, we focused all our savings on 529 plans.

One of the 529 plans we invested in was our state's prepaid tuition plan--which really worked out for us because DS attended an in state college. It's been a while (DS has been out of college for over 5 years now), but IIRC the plan paid about twice as much as we invested over a 9 year time horizon--from first investment to college graduation.

We also invested in age based evolving 529 plans to cover room and board. We didn't see a huge return on this because this was a shorter time horizon (we focused on the prepaid tuition plan first). Our investments were mostly bonds--for which we were thankful because we spanned a big market crash during the investment time frame--but, at the time the returns felt underwhelming.

We also received a 5% discount on the 529 investments in the form of a state tax break.

We were able to cover 100% of his college expenses without any impact to our normal budget or activities.

And, the pre-529 investments? It turned out that changes in the kiddie tax laws over the years did not favor using the money that we saved outside of 529s for college expenses. (So, DS had a windfall towards a DP on a house. )

I think the advice to save as much as you can for college without sacrificing your retirement goals is sound. Even if you can't save 100%, saving something will result in fewer loans.

[Snave]

We have quite a bit in for our kids at this point. They are 8 and 11 and technically we have enough in based on a 6-7% rate of return that we do not need to place anymore in to the account. If the market doesn't do much, we will use other accounts we have to offset the cost. We started when they were born and made it a priority AFTER our retirement needs were met each month.

[Gailete]

Due to my circumstances, I never had much to set aside for tuition, not if I wanted to buy groceries. But the one thing I did was open a Twentieth Century gift trust for them each to come due about the time that they would be finishing 4 years of college if they went. I didn't want them ending up like me. No money for even one set of decent interview clothes, no money towards an apartment, etc. I left college with $60 in my pocket. By the time those funds came due, both the boys had over $1000 to spend as they needed it. Neither had gone for a 4 year college, but for them it was a blessing to have that money at that point in time. I couldn't do it all, but I knew if I tried I could help avoid one bad bump I ran into after college. I never felt embarrassed by what I did.

My husband had a free ride from his parents. They put three kids through college on a trucker's salary. They worked in the summer but weren't allowed during the school year. The other kid wasn't college material to put it nicely and he joined the Navy. If he had been college material, he too would have had his way paid but then he is my age so that was a lot of years ago when college was a whole lot cheaper.