Have you prepaid for your kids college?

[hmgolden]

I just wanted to chime in here and say that my parents paid for my college education (not on a pre-paid plan, they saved from the time I was born and paid for it in cash - no aid or anything, we didn't qualify). They paid for tuition, room & board, books, and some living expenses. I have a very deep appreciation for my education and the fact my parents paid for it. And I appreciate it more every day that I am not drowning in $500 - $750 a month in student loans for the next 10 years like my friends are. I also appreciate that my parents didn't do any harm to their financial future by paying for my education since they saved and invested knowing the day would come, as well as saving for their retirement. And now they are doing the same for my brother.

I appreciate even more that my parents are great financial role models for me, my brother, and now my DH as well.

 

[DiznEeyore]

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.

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.

I (and other posters who agreed with me) did not say my son would have to "fully fund" college himself. I said he will have to be willing to invest in his own future and his father and I will *help* him.

We are obviously of a drastically different mindset -- we do not believe dorm life is a necessity and would never think of *buying* a place for our son to live in while away at school. A college education is a means to an end; the whole college "social life" isn't a necessary experience IMO. Different strokes for different folks, right?

 

[dcfromva]

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.

HaleyB,
I have a technical question...I suppose it is too late now, but I was wondering if you have 3 children, what if you changed the beneficiary of the 529 from your oldest child to the youngest child? (Would that still count against your oldest child?)

Alternatively, I was wondering if your child is attending a private school that participates in this pre-paid tuition plan: private school pre-paid tuition Could you roll over the 529 money for your oldest child into this account and lock in the price of tuition?

-DC

 

[dcfromva]

Last year's VPEP (Virginia's Pre-paid tuition) for a 4 year degree was a single payment of $30,584 for a 8-10th grader with graduated higher payments for children who are younger, reaching $32,772 for a newborn.

=439&page=compare_plan_questions]Here is a link to a few states

In Virginia, if your actual college tuition and fees turns out to be less than what you paid into VPEP, you can roll over your contributions (plus interest compounded annually) into a VEST account and pay for your tuition, mandatory fees plus room and board and books. (A VEST account is a Virginia college savings account with no guaranteed rate of return, but you can use it for more than tuition and mandatory fees. )

lgazz,

We do not plan to tell our kids about their savings either. Good grades and scholarships are very important.

We decided to tell DS about what we have saved for him. We told DS that this is his money to keep if he gets a scholarship... (Bad grades would be taking money out of his own pocket. )

Sorry too, to those of you who feel that a prepaid plan "forces" a child to attend a particular school.

Don't all the pre-paid plans permit the child to go other than a state school? (Virginia pays the lower of what you paid into the program plus a reasonable rate of return or the average tuition of all the state schools for a particular year.)

I know several parents who have told their child they will pay for in-state tuition. Beyond that, if the child wants to go to other than a state school, the child will have to make up the difference. At the very least, 4 years of tuition at a state school are covered--I think it is a really good deal for the child no matter how you look at it!

-DC

 

[got2lovedisney]

I have the Florida Prepaid Plan for my DD although I could only afford the the 2 year community college plan.

I don't see the sense in sending her out on her own saddled with thousands of dollars of debt when I can just sacrifice $55/month for 5 years to get her a better start. I know people in their 30's who are STILL paying loans. It's ridiculous. Besides, the cost of living is high enough in Miami without adding additional debt!

 

[antmaril]

I have a friend who purchased the Michigan Education Trust for her daughter when it was first offered - many years ago. Her daughter graduated from Michigan State University this year and the total cost for my friend for tuition was ----- $7,500! Obviously, she was VERY smart to buy into the MET at the time.

I, on the other hand, did not buy the MET when it was offered. My son is a freshman in college and let's just say, it's alot more than $1,875 per year

 

[lillygator]

I (and other posters who agreed with me) did not say my son would have to "fully fund" college himself. I said he will have to be willing to invest in his own future and his father and I will *help* him.

We are obviously of a drastically different mindset -- we do not believe dorm life is a necessity and would never think of *buying* a place for our son to live in while away at school. A college education is a means to an end; the whole college "social life" isn't a necessary experience IMO. Different strokes for different folks, right?

Relax, nothing was directed at you, don't know why you took personally.

buying a place would serve many purposes for us so yes, it makes good financial sense, not to mention Florida real estate is going through the roof. I even think the fact of actually wanting to go to college is "investing" in your future. If your child went away to school where would they live if dorm life or apartment life is not a necessity? Just curious?! I don't think my kids have to live in dorms but they have to live somewhere!!


The prepaid plan can be used for any school, but you are buying the tuition rate for Florida public school today. And as far as the poster who said why would you want to send you kid to a public school, well there are many public schools out there that are top notch - just because it is private doesn't always (of course some definitely are)mean you are getting a better education just paying more $$ for it.....Florida is considered a very good school and admission requirements are extremely high.

 

[calypso*a*go-go]

There have been some interesting points made here. I have been considering a prepaid plan for my kids over the last year or so and have been comtemplating cashing in some savings bonds that have matured and purchasing college credits with them. However, I had not considered grants and endowments being based on our income. Would we be better off in the long run to have the kids' grandparents fund the prepaid plan? Would the prepaid plan automatically show up somehow in our kids' names regardless of who is funding it? Yikes, I really need to do some more research on this!

 

[lgazz]

I have a friend who purchased the Michigan Education Trust for her daughter when it was first offered - many years ago. Her daughter graduated from Michigan State University this year and the total cost for my friend for tuition was ----- $7,500! Obviously, she was VERY smart to buy into the MET at the time.

We too have friends who purchased METs the first couple of years it was offered and made out like bandits! Who would have even thought tuition would rise at these rates! With public funding on the decline and no hope of the automotive industry regaining strength to "where it once was", I see double-digit tuition increases becoming the norm in MI.

It will be unfortunate if my fear comes to fruition, but I guess I am hoping to benefit much like our friends!

 

[my3kids]

HaleyB: Great post. I have said here many times that private schools often come out cheaper than public by virtue of thier financial aid packages. Most will meet 100% of need; the quality of the applicant sometimes determining how the aid is allocated. Joe who is an average student might have more in loans than Sally who is a top notch student who might get more from grants. This is my issue with Dave Ramsey who says only public state schools.

I hate that so many parents totally dismiss private colleges and don't even let their children apply because they have seen the $40K+ price tag. In reality, the $5K you pay that state school might be a few thousand more than the private school would have cost in the end.

 

[ladyelle]

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.

Thanks for the information. We have five small children and we are not saving any money for them for college in THEIR name. We are trying to save alittle for their college in a mutual fund and a Roth IRA's in our names to help with the parent contribution after we fund our retirement accounts. We purchased an excellent book a few years ago which is called "How to Pay for College without going Broke". Alot of what you stated is in that book.

 

[NancyIL]

No pre-paid college for our family, and we have lived in a university town for almost 19 years. We saved over the years for college. This year we have two daughters at private colleges...one in IL and one in TX, with a bill of about $32,000 total. Between what we saved in the past, scholarships (we don't qualify for financial aid), what we can contribute from current income (my DH's annual bonus now goes in the college acount), and their summer/school year earnings - we have been able to avoid having to take out loans.

 

[nowellsl]

There have been some interesting points made here. I have been considering a prepaid plan for my kids over the last year or so and have been comtemplating cashing in some savings bonds that have matured and purchasing college credits with them. However, I had not considered grants and endowments being based on our income. Would we be better off in the long run to have the kids' grandparents fund the prepaid plan? Would the prepaid plan automatically show up somehow in our kids' names regardless of who is funding it? Yikes, I really need to do some more research on this!

It doesn't matter who funds it. It shows up under your child's name and social security number. At least in FL, my daughter didn't have to do anything, it just showed up in her account at UF.

 

[DiznEeyore]

Relax, nothing was directed at you, don't know why you took personally.

buying a place would serve many purposes for us so yes, it makes good financial sense, not to mention Florida real estate is going through the roof. I even think the fact of actually wanting to go to college is "investing" in your future. If your child went away to school where would they live if dorm life or apartment life is not a necessity? Just curious?! I don't think my kids have to live in dorms but they have to live somewhere!!

Thanks for your concern, but no relaxing on my part is necessary.

I didn't take the comments "personally" -- but your post included statements that were a direct counter to those of us who stated that we felt our children would appreciate their educations more if they contributed to it. Thus, I replied to them.

And I *don't* believe my child has to go away to school -- there are fabulous universities all around us (as well as good community colleges) that do not require living away. Thus, I have no need to provide him any place other than his own home to live.

 

[Debbie Jean]

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.

As a college professor, a graduate of Harvard and the mother of a college student, I wanted to respond to your post.

Many people believe that private schools are prohibitively expensive and consequently out of their price range. This is, as you say, often not true. While private education costs are higher, the financial aid offered is higher also, so the difference left to pay can actually be less than the cost of a public education. Parents should not discount a private school without going through the entire admissions process, including financial aid. You might be pleasantly surprised at how reasonable the cost is!

I would, however, disagree that all top-notch schools are private. This simply isn't the case, the University of Michigan, Rutgers and UCLA being obvious examples of top-notch public institutions. There are also many, many private institutions that are, frankly, mediocre at best. I've studied and taught at both public and private institutions and my experience is that if you send your son to Princeton but he's a lousy student, he'll get a lousy education, if he's a good student you can send him to the Salem State College and he'll get a fabulous education.

I did not buy a college prepay plan for my daughter, though she can attend the University I teach at tuition-free. She decided on her own after a lot of thought and reflection that she really wanted to start by attending the local community college. She loves it! I pay her tuition now and will continue to do so if she transfers schools. While she does work part time to earn spending money, I want her to be able to focus on her classes... I tell her that's her main job right now.

I have to agree with the people who say that whether your child is "appreciative" for your contribution to their education... their future, really... has more to do with the child and their general relationship and attitude toward life. Lots of kids these days have the idea life owes them something... that they are entitled to things simply because they think they are

 

[Julia M]

I (and other posters who agreed with me) did not say my son would have to "fully fund" college himself. I said he will have to be willing to invest in his own future and his father and I will *help* him.

We are obviously of a drastically different mindset -- we do not believe dorm life is a necessity and would never think of *buying* a place for our son to live in while away at school. A college education is a means to an end; the whole college "social life" isn't a necessary experience IMO. Different strokes for different folks, right?

That's why the comment wasn't directed at you.....other previous posters (page 1) made comments such as "that's what loans, scholarships and jobs are for", and " I didn't get help, and I won't help my kids" (maybe those aren't the exact words, but they are close enough)

My goal is to provide what my kids will need. For one child, working a part time job during school may be too much (they need more study time, for example). Another child may be able to handle a full class load and part time job with two hands tied behind their back.

In my family, I attended a private 4 year university (out of town), my sister stayed at home and did junior college and local college, and my brother attended an out of area state university. We all made the choice we wanted, for different reasons. My parents supported those individual choices.

Julia

 

[Debbie Jean]

That's why the comment wasn't directed at you.....other previous posters (page 1) made comments such as "that's what loans, scholarships and jobs are for", and " I didn't get help, and I won't help my kids" (maybe those aren't the exact words, but they are close enough)

My goal is to provide what my kids will need. For one child, working a part time job during school may be too much (they need more study time, for example). Another child may be able to handle a full class load and part time job with two hands tied behind their back.

In my family, I attended a private 4 year university (out of town), my sister stayed at home and did junior college and local college, and my brother attended an out of area state university. We all made the choice we wanted, for different reasons. My parents supported those individual choices.

Julia

Well said, Julie!

When it comes to getting a college education, ones size definitely does not fit all. It's about choices... that's why there are so many out there ... and figuring out which one is right for your child and your family.

 

[Longsx3]

Hi Everyone, I have read the entire thread and debated whether or not to comment obviously I decided to share

DH is AD Military but we are Florida Residents so we were able to purchase the Florida Pre-paid plan and we did. For Multiple reasons but what influenced us the most was the rate at which tuition is increasing, even at State Universities in Florida. I have been faced with many questions by friends and Family about the what if's? and what we have always said is that this is our safety net, it is paid for! That being said if DD gets into Harvard or Yale...or wherever we will do our best to make 1st Choice happen. If she gets scholarships or an appointment to the Air Force Academy then she will have a nice cushion to begin her life because her prepaid fund will be refunded to her. But if she decides that she wants to be a Seminole and attend FSU well it is paid for at a reasonable rate and we will only have to consider books and housing costs for 2yrs.

At 9 DD is aware that her College is paid for but we also talk about the importance of school and good grades. A prepaid College fund does not equal acceptance to a University in Florida and therefore working hard in school is still a requirement.

 

[Rowlf]

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 ....

I'm SO glad for you and your son. However, please don't make generalizations based on where you live. I live in Virginia, where we have public schools such as U.Va. (my alma mater) and William and Mary that are ranked up there with nearly any private school.

That said, within weeks of my son's birth, I bought a five-year pre-paid tuition plan for him. One of the main reasons we aren't having another child is that I can't afford two plans, considering that the price has nearly doubled in just over two years. We have that plus some other money in his name; I plan on giving him in-state tuition if he goes in-state and the equivalent amount if he goes elsewhere. I hope he chooses to go in-state; I had to work throughout college and it definitely affected my experience on several levels.

 

[PrincessofQuiteAlot]

I'm just so glad these kids are getting the opportunity to go to school. When I grew up, my parents never pushed college, I thought being a secretary and finding a wealthy husband would be enough lol!

With my kids, it wasn't a question of "if", it was "where".