College savings for kids?

[craigkerstiens]

How much are people putting away for their kids for college?

We've got a 529 plan setup, and I'm a little unsure of how much to put into it. I don't want to over-contribute because we'd end up getting hit with a penalty if not used (though we could roll it over to someone else).

It seems to me to get pretty close to the estimated cost for college though this is again plenty of guesswork given the huge variation of college tuition cost growth over past several years and then guessing for an expected return each year.

 

[crisi]

You can spend $50k plus a year on college today. If you can oversave with that as a goal, you have enough money not to worry about the penalty.

If you want them to have a budget, save to the budget - if that is a state school, save that amount. My husband is a small private top 100 liberal arts college grad and felt strongly that his kids should have the option for that experience, so that was what we saved for.

And the answer is nothing, we topped it off about three years ago. My son wants to go to trade school - we oversaved for him. But my daughter will likely use his for grad school.

 

[BLAZEY]

We save about $1000/ yr in an RESP for DD6, plus she gets 20% of whatever we put in added by the Gov't of Canada. University here is much less expensive and whatever she doesn't use we can rollover into our RRSP's if we have contribution room.

 

[craigkerstiens]

If you can oversave with that as a goal, you have enough money not to worry about the penalty.

I'd disagree a bit, assuming a 10% growth rate over the course of 15 years you'd have to set away 50k to allow for them to have that much for each year.

While yes that's a decent amount, you could possibly have it performing better in non-tax benefiting forms for education generating even more. This would make that cost of penalty not just the penalty but a big difference in the lost compound interest overtime. I agree it's still a case where one would be fine on either side, but still optimizing as feasibly as possible can result in a very large amount of difference.

 

[HeatherC]

Truly, in todays world of college costs, I think most people will not have to worry about over saving. It is not unusual to see Private College run 30-60k a year. A State University averages about 23-25k here in MA.

My advice is save as much as you can....you will most likely still be short.

 

[mjkacmom]

Truly, in todays world of college costs, I think most people will not have to worry about over saving. It is not unusual to see Private College run 30-60k a year. A State University averages about 23-25k here in MA.

My advice is save as much as you can....you will most likely still be short.

Same here in NJ for in state tuition. Dd18 applied to in state public schools, and some out of state privates. No matter how much merit money she received, it all averaged out to $25,000 a year. We have 529's set up for all five kids.

 

[Sleepy425]

We do $100/month per kid, plus any cash presents go in there. We can't have official 529s for our foster daughters until we adopt them, so for now we just put money into an extra savings account for them. In our state children adopted through foster care can get college paid for, souf the girls don't need their 529s we will switch them over to the boys.
Anyone know of a place with a calculator that will tell me how much my $100/month per kid could possibly turn in to?

 

[havaneselover]

I did prepaid in VA. My ex and I have covered 8 semesters in state for both kids. I'm now working on room and board (I'd guess I have one year covered right now).

 

[tvguy]

We saved $5,000 a year per child for college, and one Grandmother kicked in $2,000 a year each. Student and parent loans filled the gap. Both are done now, 1 private, 1 public university, total tab for both $250,000.

 

[crisi]

I'd disagree a bit, assuming a 10% growth rate over the course of 15 years you'd have to set away 50k to allow for them to have that much for each year.

While yes that's a decent amount, you could possibly have it performing better in non-tax benefiting forms for education generating even more. This would make that cost of penalty not just the penalty but a big difference in the lost compound interest overtime. I agree it's still a case where one would be fine on either side, but still optimizing as feasibly as possible can result in a very large amount of difference.

Let's rephrase it - if you manage to save $250k a child for undergraduate education, and your concern is optimal return, you are extraordinarily fortunate.

(And a financial advisor rather than advice from the Disboards might be in your best interests ).

 

[StitchBuddy]

We did the Texas Tomorrow Fund. Thinking our child could go anywhere she wanted, in- state. Well, surprise...she's going out-of-state. We told her that was fine as long as she made up the difference in scholarships. We have a 529 set up or housing and other related expenses. I think with her scholarship we should break close to even. If she didn't have some really good scholarships, even going in-state we would have been out of pocket another 20K, by my estimation. So, I think I would rather save too much, than not enough. They can always use it for graduate school.

 

[teller80]

I think there is a list out there of each state's 529 plans, some are better than others, if that helps.

Also, I was more concerned that my kids weren't going to be college material rather than if I oversaved

 

[crisi]

I think there is a list out there of each state's 529 plans, some are better than others, if that helps.

Also, I was more concerned that my kids weren't going to be college material rather than if I oversaved

I have one that isn't, and its turning out well. His sister will likely use the 529 for grad school and if she doesn't, we can pay the penalty, its still cheaper than loans! (We've saved enough in HER 529 that if she goes to a really pricey school, we'd have to put $15k a year towards it outside of college savings, which we can do, her brother has a similar amount in his 529).

He wants to be a pipefitter. A year of school at $6k, starts an apprenticeship at $30k a year with the rest of school paid for, gets a 10% raise each year until he's a journeyman when his salary doubles, and five years out of high school he'll be making $80k with a pension and awesome benefits. Plus, his grades went up when we said "you don't have to go to college, it isn't for everyone." I'm far more excited about that than I'd be if he wanted to go to a private four year school for theatre.

If my biggest problem in life is paying the penalties on a 529 because I oversaved (and it isn't), I think I'd lie in bed at night without a worry in the world.

 

[teller80]

I have one that isn't, and its turning out well. His sister will likely use the 529 for grad school and if she doesn't, we can pay the penalty, its still cheaper than loans! (We've saved enough in HER 529 that if she goes to a really pricey school, we'd have to put $15k a year towards it outside of college savings, which we can do, her brother has a similar amount in his 529).

He wants to be a pipefitter. A year of school at $6k, starts an apprenticeship at $30k a year with the rest of school paid for, gets a 10% raise each year until he's a journeyman when his salary doubles, and five years out of high school he'll be making $80k with a pension and awesome benefits. Plus, his grades went up when we said "you don't have to go to college, it isn't for everyone." I'm far more excited about that than I'd be if he wanted to go to a private four year school for theatre.

If my biggest problem in life is paying the penalties on a 529 because I oversaved (and it isn't), I think I'd lie in bed at night without a worry in the world.

I wonder if you can use the 529 money for grandkids, not that you're there yet lol. It's not about the penalty (I don't even know what it is). It about a wonderful gift for both your children (it would take a huge burden off their shoulders, or they could save for THEIR grandkids college) and for your grandchildren.

And I think a pipefitter is a great career, I think trades will always be in demand. I'm glad you supported him, many parents would have been 'disappointed', ugh.

 

[HM]

We started with $200 a month for each child (what we could afford) when they were in middle school. (Lost a bunch of it in the 2008 downturn....and finally got back to just our contibutions in 2011). Our kids are now in college and we still contribute, $300 a month for each child. We've paid for some semesters from the 529, and a few semesters from our savings. DH keeps track of what we have in the account so I don't know that status, but I can tell you it's not enough to cover everything for the whole time.

 

[crisi]

I wonder if you can use the 529 money for grandkids, not that you're there yet lol. It's not about the penalty (I don't even know what it is). It about a wonderful gift for both your children (it would take a huge burden off their shoulders, or they could save for THEIR grandkids college) and for your grandchildren.

And I think a pipefitter is a great career, I think trades will always be in demand. I'm glad you supported him, many parents would have been 'disappointed', ugh.

I can. Or I could go to school in my retirement years. Or we can pay the penalty, which is only on the gains, and go to Europe for a year.

 

[Mrs. Ciz]

I did prepaid in VA. My ex and I have covered 8 semesters in state for both kids. I'm now working on room and board (I'd guess I have one year covered right now).

We did the same thing for our 2 kids - Va Prepaid. We saved most of this year's tax return to go to room and board for this coming school year. If we add in what we've been paying monthly for DS's VPEP, we should be pretty close to having room and board covered.

DS did apply to a couple of out of state and private schools. We told him we would cover all the cost at an in state school, but he would have to take out some loans or get scholarships if he chose an out of state or private school. He chose to attend University of Virginia. We are really lucky to have some top notch public universities in our state.

 

[havaneselover]

We did the same thing for our 2 kids - Va Prepaid. We saved most of this year's tax return to go to room and board for this coming school year. If we add in what we've been paying monthly for DS's VPEP, we should be pretty close to having room and board covered.

DS did apply to a couple of out of state and private schools. We told him we would cover all the cost at an in state school, but he would have to take out some loans or get scholarships if he chose an out of state or private school. He chose to attend University of Virginia. We are really lucky to have some top notch public universities in our state.

Yes we are! I went to UVa and dd may have a decent shot at getting in but if not UVA there are so many other good options. I've scrimped and saved for this and if they go private / out of state they will need to cover the difference.

 

[csmommy]

My 2 cents.

If you save for college & apply for financial aide, it gets held against you.

You cannot take a loan out for retirement.

My suggestion is to fund your retirement.

 

[crisi]

My 2 cents.

If you save for college & apply for financial aide, it gets held against you.

You cannot take a loan out for retirement.

My suggestion is to fund your retirement.

My suggestion is to do both.