College Fund Question

[Chesire]

I really hope this isn't to off topic, but I knew this was the best place to ask!

My husband and I started a savings account for our son's college fund. However, a savings account just doesn't seem the best way to go. He is only 9 months old, so we have some time. We have $25 set aside in our budget per month for his account. We also signed up for Upromise, but we aren't big internet spenders and our grocery store doesn't have cards.

Whats a good way to save for college? Thank You!

 

[NancyIL]

Look into a 529 Savings Plan and/or a Coverdell Education Savings Account (formerly called "Education IRA"). http://www.collegeboard.com/article/0,3868,6-29-0-8849,00.html

 

[eeyoreiscool]

Some states also offer prepaid tuition plans. You generally will pay for these up front and when you child goes to college, the tuition rates and possibly some fees and housing are paid for.

 

[budbeerlady]

For our state it is tax defered similar to a 401K. But the real cool part was if we signed up DD before she was 5, for the first year of contributions they matched my 3 they gave 1. This was up to $200 on thier part. So I put in $600 the first year and they put in $200. Its a good jump start. Our plan in MI lets me do a direct deposit every pay check to her account so it really ads up as I am doing $30 each pay check. I have DDs in the option that only earns interest at 5.5%, that way I wont loose the money. I have some extra birthday money that she has gottan in the stock market managed allocation option. It is doing okay lately but I felt safer after watching my 401k dive with the interest option. Look into your state plans and I know some other states do let you participate in thier plans also. Good Luck!

 

[disneysteve]

I agree with looking into a 529 plan account. First, find out if your state plan is tax deductible. If so, that is probably your best option. If not, check some online sources or go to you local library and find the issue of Money magazine the past year where they rated each state plan and pick from their recommendations. We live in NJ but our in-state plans are not deductible so I opened DD's account with the NY state plan which has consistently earned a top rating.

 

[dmensing]

A good resource for learning about 529 and Coverdell plans is the following website:

www.savingforcollege.com

If you choose a 529 plan that is not associated with Upromise, don't worry about it. You can always request a check from Upromise that you can input into your 529 plan yourself.

HTH,
Dan.

 

[poohj80]

Thanks for all the info! We have been talking about starting a 529 lately with our first child on the way and these links have really helped educate us!

 

[gottaluvdis]

Our financial planner advised us to think of one of our stock market accounts as DD's "college fund" rather than contributing to a specifically targeted college fund because that fund is a little more aggresive with the dividends in the long run.

 

[Chesire]

Thank You SO Much!!!

A 529 plan looks like it will be perfect for us!
Thank you for all of your help

 

[can'twait]

If you have Upromise, link it to a 529 plan right from their site. I have mine linked to two accounts with the NYSaves plan. Yes, Steve, it's tax deductible for me - yippee! It's SO easy. I think you can open the accounts online. They dump your Upromise account balance (as long as it's over $25) right into your 529 account automatically, on a quarterly basis. This is much better than letting your Upromise balance sit in cyberspace. You can also send NYSaves checks to add your own contribution, or set up automatic transfers from your bank account. We have earned over $700 from Upromise since 2001 and have put some of our own $ into the accounts. Both my kids have over $1300 in their 529 plans. It's not a fortune but we have time on our side. You are aware that you don't have to use your credit cards online to get the rewards from Upromise, right? If you go to Bed Bath & Beyond in person and use your registered credit card, you will earn the rewards. Most of the $ we have earned came from Mobil, grocery stores and from using our Citibank Upromise credit card. If you use your Upromise credit card at Bed Bath & Beyond, you will get rewards from BB&B AND from Citibank. You get rewards from Citibank for all purchases you make, not just at Upromise stores. We have drastically reduced our credit card spending, but if we do use it at least we get something back and it's earning $ in the 529 plan.

 

[bdb7607]

We too have the Upromise card and just opened up Vanguard 529 plans for our kids, sure is easy and glad to have that money working, instead of just sitting there!