How do you save for your kids college?

[Laurabearz]

It just dawned on DH and I that we could have three kids in college at the same time!

We really should start saving up now, but are clueless on how to do it......

We have heard of the 529 plan but that is about it.........

How are you saving? Or are ya like us, and just have a huge water jug with quarters in it???

 

[Steve H.]

Aside from various investments we've unofficially earmarked for college, we have a 529 fund for DS that we donate to each year ($2,000 a year -- the state deductible limit).

 

[minniecarousel]

How 'bout community college and then state colleges?

 

[FOJMO]

which is, I think, the same as the 529 plan. Unfortunately, we started WAY too late (8th grade), and the monthly payments are very high and there won't be very much saved for her, but at least it's something!

 

[whirlsy]

I am sending my kids to Alaska as long as your a resident you go to college for pratically free.

 

[maleficent1959]

Our DS is 2 1/2. The year he was born, we set up an Education IRA and contribute the maximum every year. In addition, we started putting $50 a month into mutual funds, and funded a 529 with a big (at least to us) initial investment. We also joined Upromise and Babymint. Not that we expect much from them, but every little bit helps.

 

[janette]

We have 529's and a few other things. My understanding is that you can't do Education IRA's and 529's at the same time, 529's have a much higher limit you can save more that way.

 

[Steve H.]

janette's right -- you can't contribute to both:

Q.4. May contributions be made to both a qualified state tuition program and an Education IRA on behalf of the same designated beneficiary in the same taxable year?

A.4. No. Any amount contributed to an Education IRA on behalf of a designated beneficiary during any taxable year in which an amount is also contributed to a qualified state tuition program on behalf of the same beneficiary will be treated as an excess contribution to the Education IRA.

 

[Serena]

We have investments.

 

[Amy]

We've been paying extra toward the principal of our mortgage ever since we bought the house; DH figured that the house would be paid off during oldest DS's first year of college, so then we can just use our normal mortgage payments for college payments.

 

[maleficent1959]

Originally posted by Steve H.
janette's right -- you can't contribute to both:

That is no longer true.

We opened the Education IRA (now a Coverdell ESA) in 2000, the year the baby was born. In 2001, we opened the 529 with me listed as the beneficiary because then we could not contribute to both if DS was the designated beneficiary. But in January 2002 the tax laws changed, and we now could contribute to both a 529 and a Coverdell with DS the designated beneficiary. So we changed beneficiaries on the 529.

 

[Steve H.]

Really? Cool, thanks for the info!

 

[bsnyder]

We haven't saved anything, which means DH better not quit his job!

We're fortunate that he works at a university that's a member of the tuition exchange scholarship program. As an exempt employee, his dependents are eligible for tuition scholarships at a number of different schools.

Oldest DS, who's a freshman, received the scholarship (along with some small state scholarships) from 3 of the 5 schools he was accepted at. It means we're only paying room & board for him to go to a private university (and that's less than we paid annually for his private high school tuition, so it's like getting a raise!).

DS #2 will be a freshman in the fall of 2004. We hope to utilize the same program for him.

During the two years that they will be in colllege at the same time, this benefit is worth about $60,000 a year in pre-tax earnings!!

Our daughter won't start college until fall of 2012, so I hope DH is planning on working at UT for a loooooong time!

 

[Kermit]

We're planning on getting a 15-year mortgage with our next house, and we really should look into moving soon. If we do that, we won't have a house payment by the time Jacob goes to college, so we'll just spend that money on college.

 

[NancyIL]

My kids are 12, 15, and 18. I opened custodial accounts for each of them when they were babies, and we saved for them when we could. When Education IRA's became available in 1998, we contributed the $500 maximum per child per year. (The limit was raised to $2000 per child in 2002, but that year we contributed only $500 to our oldest.) I opened an IL 529 plan for the two youngest last year.

Our oldest is getting through her freshman year at a private college with a scholarship, 1/4 of the money we saved for her while she was growing up, her own job earnings, and the balance out of our current income.

http://kiplinger.com/managing/college/plan/index.html

Laura - Bright Start is the Illinois 529 College Savings Program: http://www.brightstartsavings.com/index_home.html

 

[annemariec]

We have investments and we signed up for the Upromise program. If you haven't heard of Upromise check out their website: www.upromise.com.

It's a 529 plan.

Anyway, if you buy name brand products (including vehicles!) the companies will donate a percentage to your account. And it adds up! They take airmiles which is nice. I cashed in number of mine to contribute. If you buy or sell a house check with the real estate agent, because some companies participate in the program.

It's a great way to save, while spending the money you would normally spend anyway.

Annemarie

 

[DisneyHumbug]

And for those of us who never got around to saving.....there's the PLUS loans (Parent Loan for Undergraduate Student.) I have 10 year loans at 4.86%.

 

[DiznEeyore]

I'm probably in an unpopular minority here -- dh and I are firm believers that children should not be handed college educations, esp. if they're wrapped up with loan paperwork for the parents! A degree is much more appreciated if the student shares in the expense. I've known far too many couples who live like paupers while junior is livin' the high life on campus.

That being said, we're paying for an expensive private education for our ds (elementary through high school), which we feel are the most crucial years. Ds will then be welcome to attend community college (with assistance from us, but he will be expected to hold down a job) and then move on to a four-year school. We will discourage him from taking on student loans -- I took no loans, and we just paid off dh's loans (he's 34), so neither one of us looks at them in a positive light.

 

[maleficent1959]

Bet -- Which university is your DH at? A private or public? I see you are in West Florida, and my DH is at UWF. We were told that there was no tuition waivers or anything for dependents.

Nancy -- We invest in Bright Start too! (through Upromise)

 

[DisneyHumbug]

Well I had student loans, which I paid off and my parents took out loans, too. I guess I'm just doing for my kids what my parents did for me. I am proud to help pay for my kids' educations. And I know they appreciate it!