Have you prepaid for your kids college?

[bamamom]

How many of you have prepaid your children's college tuition? What plan do you do (PACT or etc..)? How old were your children when you did? The price of college has gotten so high that I can't imagine what it will be for 4 years of college when my kids get ready to go. They are two years apart so I will have 2 in college for at least 2 yrs I just don't see how we can not go ahead and do this, even though its expensive I'm sure it will be alot less than in 9 yrs when our first enters college. I have been a SAHM since the birth of my first and we didn't have the extra money when they were first born to buy it then....sure wish I could have.

 

[lgazz]

We purchased MET (Michigan Education Trust) contracts for our boys. DSs were 3 & 5 when we purchased them. (They are now 5 & 7...almost 6 & 8.) We purchased 4 year plans for both boys. I did a lot of research, and found the prepaid plans to be a great potential value.
To maximize the benefit, the boys have to attend a Michigan public university, but there are provisions for private schools and out-of-state schools. (Michigan has several very good universities, so I'm hoping the odds are in my favor!)
I did the first on a payment plan ($600/mo for 4 years), but paid it off in advance when I discovered I was paying 7% interest. (We were lucky to have the extra cash on-hand to pay it off.) My second son's contract was a lump-sum payment (~$28K).
We also have 529 accounts for the boys which (we hope) will cover books, room & board, etc.

The nice thing about MI-sponsored programs is that the contributions are MI TAX DEDUCTIBLE! That saves us 4% of our annual contributions right off the top!

 

[cruisnfamily]

My second son's contract was a lump-sum payment (~$28K).

Did I read that right? You paid $28,000 for a 4 year tuition only plan?

I'm wondering because I just bought the FL prepaid for DD12 and DS0 and the lump sum payment for DD12 was @$10,600. That's tuition only, all the same provisions you mentioned for private schools etc. We're doing DS9 on the 5 yr pymt plan which works out to only be $1,000 or so more than the lump sum and we don't have enough saved yet to do the lump sum for him.

 

[ReggieB]

We would have considered this, but we can't guarantee we will still be in the country let alone same state! (we are from UK, originally) Luckily my DH has been a very shrewd saver, so we should be covered! In the UK everyone has been lucky for so long that tuition fees were paid for by your county (you could also get a special living costs grant if you qualified) now that's all changing the UK is heading for a similiar US style fee base. It's going to be a shock for all some UK residents when it finally dawns on them that either they are going to have to start saving, or look forward to big student loans!

 

[sammielynn]

My children are enrolled in the BEST program (Tennessee). We have only bought 50 units for each. I work in Higher Ed. so I do get a 50% discount for my boys so these units will pay for two years at my Community College.

 

[PrincessofQuiteAlot]

We live in Florida and did the prepaid = two years of Jr. College and two years of state - bought it when my son was 2 years old - Well, the big day is now here - he went to one year of Jr. college last year and hated it - felt like he was still in high school. He wanted so much to go to art school so we switched him over to a private college this year at a cost of $23,000 per year (does not include board or books, thank goodness we live in the same town).

The good news is that the prepaid plan can be used at this school - the bad news is it is a rate of $1.400 per year.

He does love school thank goodness - hopefully he'll remember his poor old mom and dad when he's rich and famous!!

 

[Laurajean1014]

Not prepaid but I have a 529 Fund set up for him. I plan on paying 100% of his college expenses.

 

[DiznEeyore]

Nope. We're not handing our son a pre-paid education. He will appreciate it far more if he contributes to it, as we did. He can live at home and get his first two years in locally; that alone will save a ton of money. We will help him but he has to be willing to invest in his own future, too.

 

[JoiseyMom]

Nope, that is what scholarships, financial aid and loans are for. I have a son that is in his Senior year at a Private University out of state 400 miles from home. He is doing ROTC, scholarships, financial aid and loans. If we had had money put away for him he would have never been able to get an financial aid, besides the fact that there was no money to put away when he was growing up. Any money in the child's name and that is fair game as far as most colleges go, and the less aid they will get.

My other son also has loans from school. I have 9 years and 14 years to worry about my little ones, but I am sure there will be financial aid and loans in their future.

I couldn't imagine prepaying for college and forcing my child to go to one of the pre-paid schools instead of one of their own choosing.

 

[Kitterleen]

Are you kidding?? I have 3 in college this yr and D7 bringing up the rear . They each are paying for themselves with loans and a job (one on scholarship). DH and I did it, and I agree...they'll make better decisions when it's their own $$ at stake.

 

[lillygator]

Yes - we purchased the Florida Prepaid Plan - 4 years University for DD #1 and have two years left to pay it. (we chose the 5 year option as opposed to lump or 18 years) We also have a 529 plan for both DD's and I plan to purchase the 4 year university for DD#2 in two years. I will probably add one year of dorm to both. We are looking at buying a condo in Gainesville now.

We plan on not telling the girls we have this. I still want them to get good grades, scholarships etc.

When I went away to school, my mother told me "parents don't owe their children an education"....I had no help other than a few care packages...I ended up working full tine through school and it became a priority to work as I had to "live" first....school suffered as did I. I vowed I would never do that to my children, I definitely want them to have better than I did. I will still make my girls responsible and accountable for things - they won't be handed everything - but I refuse to make them struggle and burdened with hefty student loans which I am still paying!

 

[lgazz]

Did I read that right? You paid $28,000 for a 4 year tuition only plan?

I'm wondering because I just bought the FL prepaid for DD12 and DS0 and the lump sum payment for DD12 was @$10,600.

MI college tuition is rising at the rate of 15%+/year right now. Basically, we purchased 4 years @ the current cost of the University of Michigan (the most expensive MI public university today). Just curious on the cost of tuition in FL...Can anyone let me know...It seems like everything costs more up north.

We plan on not telling the girls we have this. I still want them to get good grades, scholarships etc.

When I went away to school, my mother told me "parents don't owe their children an education"....

We do not plan to tell our kids about their savings either. Good grades and scholarships are very important. We are raising our boys to understand and appreciate the value of hard work. I don't view this as "handing" them anything. (DH and I both worked our ways through college - 4 year private univeristy with no more than 50% "assistance" in the form of loans/scholarships/varying degrees of parental help. We feel that there has to be a balance between "struggling to make ends meet" and "being handed something on a silver platter".)

We also struggled with the thought that these savings plans may inhibit their ability to get financial aid, etc. But, our opinion is "better safe than sorry"...
In today's world, there are no "guarantees", should something happen to myself and/DH, we want to know that the boys will not have to worry about getting a good education and achieving their dreams. (Again, this is predicated on their solid foundation of hard work and achievement.) Scholarships are relatively plentiful now, but who knows what the future holds...

Sorry too, to those of you who feel that a prepaid plan "forces" a child to attend a particular school. Currently, MI offers some of the best (public) schools in the nation - depending on major. As I stated, there are provisions for out-of state and private schools as well.

JMO...But we obviously felt it was a good decision based on our situation.

I am still curious about FL tuition rates...

Thanks!

 

[nowellsl]

My daughter has the FL pre-paid tuition plan (and fee plan) that was purchased when she was a baby. She also was awarded a FL Bright Futures scholarship which pays 75%. Since the tuition is paid she uses the scholarship for books, etc. She gets a check for that. She also gets a small Pell Grant. You can still get financial aid when you have pre-paid tuition and scholarships. She also has a job and pays her own car payment, insurance, cell phone etc. She totally realizes how fortunate she is to have the pre-paid plan. She has always known about it and still managed to get the scholarship - so I don't think it caused her to slack off in school. I can't imagine a young adult graduating with thousands of dollars of student loan debt!! If you can purchase the plan when your child is young it will be a blessing to them when they start college, plus you lock in the cost of the tuition which will only increase until the time your child gets old enough for college.

By the way, tuition at the University of Florida for new students this semester is $103.12 per credit hour (FL residents) It's $574.08 per credit hour for non FL residents.

 

[canwegosoon]

Nope. We're not handing our son a pre-paid education. He will appreciate it far more if he contributes to it, as we did. He can live at home and get his first two years in locally; that alone will save a ton of money. We will help him but he has to be willing to invest in his own future, too.

This is what we are doing (but I have resort realestate to fund college loans if needed). This is one of the 2 minor points I wavier on with Dave Ramsey. He suggest funding your children's education. But just like a car or other item I think they should contribute to it, and not know they are going on their parent's dime. DH and I came from famlies that took loans. Infact for our first 10 years of marriage his student loans were more than our mortage. But he worked hard for a good job. A friend of his whose dad paid the ride never felt compelled to find a good job, and has floundered for almost 15 years. I don't mind helping them after they show college is something they will work hard at and get a good job, but they will not know that until college is over. We plan on helping our children with either college or 1st home, but not both.

 

[patsal]

Nope. We're not handing our son a pre-paid education. He will appreciate it far more if he contributes to it, as we did. He can live at home and get his first two years in locally; that alone will save a ton of money. We will help him but he has to be willing to invest in his own future, too.

Exactly my take on it. If I'm lucky I'll have my grad school loans paid off by the time DS enters college. I'll only have one year where DS and DD overlap. They'll appreciate their education more if they are actively involved in getting it.

 

[christinadei]

I have my DS on the FL prepaid plan as well. It's around $65 a month. I started when he was around 3. I did the 2 year community college/2 year university plan.

I am still in school because I had to pay for my own college and I had to work full time, so I ended up dropping out and going back as an adult. I dont' want DS to have to face that. I am still going to encourage him to get scholarships. It's still a long time from now, but if he gets a full scholarship, I plan on taking the prepaid college money and buying him a car with it, so it would be wise for him to work for a scholarship. If he ends up going out of state or not going to college, the money is refundable. If he goes out of state, we'll apply it to that. If he doesn't go to school, we'll me and DS will have some extra money, won't we? The way I see it, it's dumb not to lock in rates, they are rasing so fast. Whatever decision DS makes about college, we aren't losing anything.

 

[lillygator]

although my girls will have the prepaid plan - it doesn't mean they will get less out of college or life just because they are not fully funding it themselves. It also DOES NOT mean they will appreciate it any less than the next student who is working their way through school. Everyone's experience is different and of course, we all know Joe X, who's parents paid for everything and he ended up dropping out etc...while Suzy Q worked her way through school paying for everything herself and now is planning on running for President.

Whether school is paid for by the parents or not and how a child "appreciates" it, IMO it is all in how a child is raised. There are many students who excel and are extremely appreciative to their parents who's educations have been funded by their parents its just usually more "fun" to talk about those spoiled kids who fail and don't care what their parents gave them.

Also - when I went to UF '92, the dorms were around $800 for the semester....now they want around $500 a month! That is why we are looking into buying a condo up there. If my girls don't go to school there that is fine - we have season tickets and could use a place to stay or we could keep it and rent it out.

 

[HaleyB]

My son just strarted college. We did not have the pre pay plan when he was younger but I would never do it. The top notch schools are private not public. Private schools have endowments... My son has a finacial aid package from the school.

$43,000 a year
$4,000 in student loans- lowest rate money you can borrow for anything.
$26,000 University Grant
$13,000 from 529 and parents income.

Here is the kicker. His University Grant would have been more if we had not saved money for him. They take the 529 money, divide by 4 and subtract that amount off the top of the University Grant. We had only a tiny bit in his 529, thank goodness. We are not going to fund our younger twos 529 accounts unless we have made maximum Retirement contributions first. There are no student loans and University grants for retirement.

No matter how much we had in the 529 they would have expected us to pay 12% of our income on top of that money unless we had $170,000 in there (because that equals four years tuition). Otherwise it is 12% of your income/assets (that is an over simplification, my point is that this amount is fixed really, and any savings you have is put in on top of that).

Of course this only works if your child can get accepted to a highly selective well funded private school. We never had any doubt he would. Harvard, MIT, and The University of Rochester all fund 100% of "need" out of endowments. When it comes time to apply for your children that is the information you need. DH went to graduate school for free doing this. I think it is the big secret in the college application world. Some schools only fund 40% of "need" and you have to borrow (parent loans) the rest, others fund 100% of "need" and they "protect" retirement assets (don't use them to figure your ability to pay) but they assume any college savings will be spent on college.

If you do not intend to send your child to a private school (I am not sure why this would be the case) I guess prepaid is a good plan because it would have been $17,000 more for my son to go to a public school (out of state) which offered him their maximum grant of 40% of need.

"need" is a finacial aid term and not really need- it s the number the school comes up with after looking at your income and assets (for private schools) or just income for public (I think). Private schools have their own formulas and they do ask about assets including all college savings plans. They ask additional information beyond what the FAFSA asks. Every time I see advice on paying for school it is based on FAFSA numbers, and how FAFSA treats savings and they never mention Private schools do it another way, I don't know why.

Well I did ramble on forever, didn't I. A good (private) admissions counciler is worth their weight in gold. You should find one by Jr year of HS at the latest. They not only know where the money is and how to get it, but also how to get into the Tier One schools.

 

[dcfromva]

I don't know if this is old news, but I noticed a few states have closed their Guaranteed plans to new enrollments. The folks that are already in the plan are really lucky because they have their tuition guaranteed! (Maybe they have been reopened by now?

From Saving for college.com
Ohio prepaid plan closes to new enrollments

(October 10, 2003) - The Guaranteed Option of the CollegeAdvantage 529 plan closed its doors to new enrollments on October 8, 2003. The prepaid plan took the step after reviewing its financial prospects, anticipating 10% tuition increases in the future against only 7% investment returns. Current participants can contribute the annual maximum through December 2003, and promised benefits are backed by the full faith and credit of the state of Ohio. The program board will review the situation in December 2004 and decide whether to reopen at that time

West Virginia prepaid plan closes to new enrollments

(March 20, 2003) - The West Virginia legislature has passed HB 2953, closing the state's prepaid tuition program to new enrollments on an indefinite basis, and securing current contracts with up to $500,000 per year from the state's unclaimed property fund. The legislation also permits the governor to request additional appropriations if needed, although the legislature is not obligated to authorize any such appropriation request.

Texas prepaid plan to end new enrollments

(June 4, 2003) - The Texas legislature voted this week to deregulate tuition levels at Texas public institutions, creating the expectation that tuition rates in Texas will soar. In response, the Texas Guaranteed Tuition Plan has decided to suspend new enrollment for an indefinite period. The last enrollment period ended May 23, 2003.

-DC

 

[georgina]

although my girls will have the prepaid plan - it doesn't mean they will get less out of college or life just because they are not fully funding it themselves. It also DOES NOT mean they will appreciate it any less than the next student who is working their way through school. Everyone's experience is different and of course, we all know Joe X, who's parents paid for everything and he ended up dropping out etc...while Suzy Q worked her way through school paying for everything herself and now is planning on running for President.

Whether school is paid for by the parents or not and how a child "appreciates" it, IMO it is all in how a child is raised. There are many students who excel and are extremely appreciative to their parents who's educations have been funded by their parents its just usually more "fun" to talk about those spoiled kids who fail and don't care what their parents gave them.

I agree with you. I was one who had to pay my own way, and had planned to help my kids. Then my in-laws told us they would help their grandchildren with college expenses and opened 529's for them. My oldest DD is working very hard in high school, and knows if she gets a scholarship she can withdraw an equal amount from the 529 tax free (she is thinking she would buy a car with it!) I'm not worried about her work ethic - she got a job at age 15 this summer on her own.