Double post

[cruisnfamily]

For example--investing $10K up front....the program has 18-22 years for that money to grow and be able to pay the fees at the time of enrollment.

Dividing it into payments of 5 years or 18 years--the entire amount does not have the entire 18-22 years to grow. If you could equally split the up front amount--there would be no way for the money to "grow" to the amount necessary to sustain the program and afford college. So they calculate a value....that allows the purchaser to make payments...while allowing the money the opportunity to grow at that same time.

I get it now, Thanks!

or your situation as stated---but I can't decide one month to pay an extra $50--or in another month to pay an extra $10. Once set up...I make stated payments or pay it off.

See, I can't afford the $200+ payments on a monthly basis either but we already have a chunk saved(and I wanted the 55mo amount). So, we'll give them that chunk and then pay them monthly the amount we've been saving monthly which is not $200+. This will pay us even further ahead and when we finally catch up with each other, we won't have many months to pay at $200+(I figured it out I think it will only be 13mos or so for us at that high rate) Once this is paid, we'll go back to saving on our own again in mutual funds, as we're continuing to do for DD12 and hopefully we'll accumulate enough for room and board.

Anyway, back to the OP's question...I think probably a couple of hundred a month would be the "correct" answer depending on your child's age. However, conventional wisdom is to fully fund retirement first as you can't borrow for retirement and you can borrow for college.

 

[chrissyk]

Wait, if the FL Prepaid plan is legally a 529 plan, can we still do another 529 plan on top of that? We would like to do the prepaid plan when we have kids, but only as an "insurance" plan for college. The bulk of our savings would likely be in a 529 plan administered by Vanguard (Ohio I think?). Is it OK to have 2 plans like that?

 

[Pin Wizard]

Probably several things to consider...ages, expenses, income, etc. I'd probably base it on a percentage as opposed to an amount.

 

[cruisnfamily]

Wait, if the FL Prepaid plan is legally a 529 plan, can we still do another 529 plan on top of that? We would like to do the prepaid plan when we have kids, but only as an "insurance" plan for college. The bulk of our savings would likely be in a 529 plan administered by Vanguard (Ohio I think?). Is it OK to have 2 plans like that?

I read and read on the website back when I was signing up and the one thing that sticks out in my memory is that these plans are NOT counted in your assets when calculating financial aid. I just went to their website and found this:

Q: How will the program affect the beneficiary's eligibility for financial aid?

A: Tuition prepayment plans are excluded from being reported as a family asset on the Free Application for Federal Student Aid, but Federal law requires that prepaid benefits be deducted from the calculated cost of attendance at the college or university.

I can't find anything about whether or not the consider this a 529 plan but they allow you to do the prepaid and and the "investment" plan which is a 529 so I'm guessing you could have the prepaid and have a 529 somewhere else as well.

 

[Skatermom23]

$125,000 not enough? Maybe if your kids go to Harvard or Yale.

To me, unless a person is going into a field where a $$$ school's name on the diploma will count for something, I never understood why anyone would go to a $$$ private school, when you can get as good an education at State U.

I'm paying for my kids to go to a state school. If they want to go to $$$ College, then they need to get grants, scholarships, or a great paying part time job to make up the differance in cost.

Couldn't have said it better.....

 

[aprilgail2]

Right now I am only putting 50 a week into my daughters college fund, but my brother is putting in 100 a week into a college fund he has for her sp thats 7800 a year, plus my mom kicks in some money every year, about 1000 or so for birthdays and holidays so close to 9 thousand a year is going in a fund for her so she should end up with about 150,000 by the time she goes to college if we can keep it up at this rate. My brother paid for a lot of his college on his own by working and going to school and he said he would never want her to have to deal with that kind of stress so he wants to make sure that the majority of her schooling is paid for....anything left over after she finishes school she can use for a car or something.....BUT...if she chooses NOT to go to school...all that money reverts back to me and my brother....she is no way going to turn 17 and instead of going to college at 17 be handed 150 thousand LOL!

 

[zurgswife]

4 kids not a penny saved....not worried about it...

 

[llij]

Thankfully, there are a lot of good state schools in Virginia and I hope that my children decide to go to one of them. I think they average about $12K a year now. My sister's stepdaughter is starting at a private university next month and it will cost about $35K a year. Yikes! My sister has six kids to put through college and boy do I feel for her.

We currently have 529 plans set up for our kids and I think we contribute a few hundred a month to each account.

I'm currently in graduate school at a private university and boy it isn't cheap! Thankfully, my grandmother left me money which will pay for my schooling so I am very lucky in that regard.

 

[justhat]

What exactly is the pre=paid plan some of you are mentioning? Is it a state by state thing? Can the money go towards any school?

 

[Lisa loves Pooh]

Wait, if the FL Prepaid plan is legally a 529 plan, can we still do another 529 plan on top of that? We would like to do the prepaid plan when we have kids, but only as an "insurance" plan for college. The bulk of our savings would likely be in a 529 plan administered by Vanguard (Ohio I think?). Is it OK to have 2 plans like that?

Yes--but it might count towards the total. You can buy the "pre-pay" (which is a 529 for IRS purposes..falls under the same umbrella) and you can also get a 529 investment account. Contributions to both might be added together for your annual max. But I'm not sure.

 

[Lisa loves Pooh]

Couldn't have said it better.....

As pointed out repeatedly--with respect to inflation--that number is not too far off.

 

[Lisa loves Pooh]

What exactly is the pre=paid plan some of you are mentioning? Is it a state by state thing? Can the money go towards any school?

When you sign your children up---you pay today's rates for 4 years of college for your child (at the time of sign up) and all their tuition (& dorm fees if you get that) will be paid at the time they enroll.

I was speaking with an investment advisor once--and these legally are 529 plans...but they are just called pre-paid plans.

Various states offer it for their residents. Some allow non-residents to purchase.

We live in Florida--it will pay their tuition at a public 4 year instate university--or the equivilant amount should they go to a private Florida 4-year university--or the equivilant amount to an out of state school that is on a list that they have (pretty big list). So you are not obligated to use it in Florida--however it will only pay what it would have cost you to go in Florida.

 

[disneysteve]

My brother paid for a lot of his college on his own by working and going to school and he said he would never want her to have to deal with that kind of stress

I feel the same way. When DD is in college, I want her focus to be college. I don't want her to have to be working to support herself when she should be studying or even just enjoying college life. Even if that means living on loans, like I did through grad school. There is no way I would have done as well in school if I had to work my way through. I worked my butt off to get the grades I got. Had I had a job to deal with through college, those grades just wouldn't have happened and I probably wouldn't have made it to grad school.

 

[Lil_Tink]

I am expected to pay my own way

 

[dzneelvr]

Great question! we are finishing up our last of 5 Illinois college visits with DS tomorrow and here are some figures for 2006 fall admission: undergraduate annual costs run between $16,000 for a public university to $35,000 for a private school in state. So depending on how long you have before any of your kids enroll--figure in % increases each year and you'll get a total amount to shoot for. Try to do the max in any college savings plan you can, especially those that have no restrictions on what you can spend it on. For a 4 year private, $125,000 won't cover all of it even now. We enrolled in some additional college bonds when DS and DD were born, thinking we'd be really covered, but, alas, the costs have risen astronomically and we wish we'd done twice as much way back then.

 

[NancyIL]

My oldest DD will be a senior at a private college this fall, and DD #2 will be a freshman - also at a private college. We saved as we could, and had about $20,000 saved for each of them by the time they graduated from high school. The oldest got an $8,000/year scholarship, so that helped a lot. Between the $5,000 per year from our savings, the money she earned summers, DH's company's tuition reimbursement plan (80% of tuition up to $5,000 per year with a C average), and our current income - the oldest will graduate with no loans. She wants to go to graduate school...so she will be on her own for that. DD #2 has a much smaller scholarship and will go to a more expensive college than DD #1, but she should still be able to graduate without either of us taking out loans. I haven't put any money in my DS's college accounts for several years. For one thing...his grades his first semester of high school were poor...so at that rate, he'll be lucky if the community college takes him!

 

[Disney Doll]

Well,certainly everyone makes decisions about finances base don their own personal financial history, needs, etc. And I agree that going hundreds of thousands of $$ into debt is probably not the wisest course of action. However, college is more than a place where kids that age go to get an education. They go to learn about life, independence etc. I have watched my niece & 2 nephews go through their college years, and the change in them is amazing!!! They have matured and developed as adults amazingly. Those years are very formative, IMHO, and I applaud their parents for being wise enough to allow their children to choose the college where they felt most comfortable, regardless of the end cost. My DSIL has always said "Different kids have different needs". Some do well in a large, more "anonymous" setting, some do better in a smaller, less anonymous setting. Neither is good or bad, they are different.

I can't help but wonder if my niece and nephews would have turned out as well as they have so far, all with 3.95 or higher GPAs, if they had not been able to choose a college with felt "right" to them on all levels besides finances?

 

[Lynn CC]

We started saving before DS was born. He's going into his Freshman year of College this year.
You can never save enough, we thought we were all set until he entered his high school years and prices kept going up and up.
We managed to save enough so he won't have to take out any loans for his undergraduate years(and first graduate year), but that's only because he got a $20,000 Scholarship that is renewable each year as long as he keeps a 3.0 GPA....if he doesn't, well, I'd rather think positively! His college is 35K a year and that goes up each year as well.
Just save as much as you can Coverdells are good for saving for college educations.
Good Luck and Enjoy them, they grow up so fast.

 

[disneysteve]

Well,certainly everyone makes decisions about finances base don their own personal financial history, needs, etc. And I agree that going hundreds of thousands of $$ into debt is probably not the wisest course of action. However, college is more than a place where kids that age go to get an education. They go to learn about life, independence etc. I have watched my niece & 2 nephews go through their college years, and the change in them is amazing!!! They have matured and developed as adults amazingly. Those years are very formative, IMHO, and I applaud their parents for being wise enough to allow their children to choose the college where they felt most comfortable, regardless of the end cost. My DSIL has always said "Different kids have different needs". Some do well in a large, more "anonymous" setting, some do better in a smaller, less anonymous setting. Neither is good or bad, they are different.

I can't help but wonder if my niece and nephews would have turned out as well as they have so far, all with 3.95 or higher GPAs, if they had not been able to choose a college with felt "right" to them on all levels besides finances?

EXCELLENT POST!!!

 

[Tanuki]

I'll share with you what I did - I made a spreadsheet.

Go to any website that tells you average costs for a year of college and estimates what you will ultimately need taking account inflation. I Assume you are putting your child's college account in a fund that has no taxes on the money that you make. That sets your savings goal and you put that prominently at the top of the sheet.

You make a row for each year with your kid's age.

The first column is the starting amount for that year.

The second is the rate of return for the year on whatever you have the money invested in.

You multiply those and put the result in the third column.

Then you put the annual total of your monthly contributions in the next column and add those to the third column.

Then you carry the total down to the next year.

You put the years that have already happened in black and the future years in another color (I use gray). You can fill in the estimated rate of return and the annual contributions you estimate making in advance so you have a plan in place.

If you set your spreadsheet up correctly you can see the projected total you expect when your child reaches 18 then you can see if you are saving enough as you go along.

If your estimated rate of return isn't high enough for any given year this helps you to see how much you need to make as an additional contribution.

This really helped us because my daughter was born in 2001. We started her fund when she was six weeks old with a lump sum from the grandparents. It was invested in a 529. Which, thanks to Sept 11, lost 15% the first year. (It has since recovered). But we had to put in an addidional lump sum to compensate for that bas first year or she would have lost the power of compound interest for the entire time.

Another thing that is really helpful is our credit card which puts 2% of what you charge right into her 529. Some people use their points for other things. We put $750 into her college fund last year just from being careful to use the card to pay things like utility bills and whatever else we could use it for.