How much do you put away for child's college?

[RadioFanatic]

We have a just turned 2 year old and, after a lot of deliberation and stress, decided to open a 529 as the means for his education. Currently, we are putting $200 in it a month and, when we opened it in 12/09, we put in the amount that would have equaled $200 a month up to that time. We intend to put at least $200 a month in it for him; however, I'm not sure if I'm not putting in enough or what I need to do. Calculating it, it seems by the time he goes to college, he will be 19 because of where his birthday falls, so he will have $45,600 at the very least if we don't have another market crash. Then, while he is in school, another four years would equal another $9600. This is all without interest from the account. I'm unsure if it's enough, but we also have to worry about retirement, etc.

If it's not too nosy, I would love to hear what others are putting away in anticipation of their child's education to see if I'm in a decent range or if I need to figure out a way to contribute more -thanks!

 

[JamesMom]

We have a 7 yr old whom we purchased a TX prepaid tuition plan for when he was born - 128 any state school credit hours for $2400 a year for 10 years. Just 3 more payments and that contract will be paid in full.
For our 4 year old, they just re-opened the plan last year and the costs have increased. We purchased 400 units (equivalent to 124 credits at University of North Texas or 110 credits at UT Austin) for $3,600 a year for 10 years.
Together we pay $6,000 a year for the plans, but only have 4 years of double payments. So that will be $60,000 for tuition for 2 children. After that we will probably continue to contribute to a 529 to help pay the other half of the cost of college: room, boards & books. Currently tuition, fees, room & board at UT Austin is around $18K a year. That number should at least double in the next 15 years.

 

[PrincessMom4]

We live in Canada and the education is completely different. We have RESP that we can put up to a certain amount in and our government will match the same up to a certain limit (I think its $4000 per annum). College here can be paid per semester which is Sept to Decemeber and January to May. We can go to New York and there are a few colleges there and same thing would apply...The mighty bank of mom and dad-cash...lol

 

[RadioFanatic]

We have a 7 yr old whom we purchased a TX prepaid tuition plan for when he was born - 128 any state school credit hours for $2400 a year for 10 years. Just 3 more payments and that contract will be paid in full.
For our 4 year old, they just re-opened the plan last year and the costs have increased. We purchased 400 units (equivalent to 124 credits at University of North Texas or 110 credits at UT Austin) for $3,600 a year for 10 years.
Together we pay $6,000 a year for the plans, but only have 4 years of double payments. So that will be $60,000 for tuition for 2 children. After that we will probably continue to contribute to a 529 to help pay the other half of the cost of college: room, boards & books. Currently tuition, fees, room & board at UT Austin is around $18K a year. That number should at least double in the next 15 years.

That sounds so wonderful. I really wish our state would do something like that.

 

[mickeymaker2003]

We put $100/month into a savings account for our DD3 (the account is in our name, but it is earmarked for her) and have been doing that since she was born. By keeping it in our name, we retain control of the money so she can't decide to skip college and use the money to go run around Europe or buy a car instead.

 

[bettymae1121]

The other important thing is to remember that college savings isn't a long term goal, but more of a short-to-intermediate savings goal. Where a lot of people got into trouble the last few years is that they were still heavy into stocks when their kids were only a few years away from needing they money. Experts agree, you should never have the majority of your money in stocks if you need the money in less than ten years, because you may not have time to recover from a major crash. That means that you should transition out of stocks by the time the child is about eight years old. I would argue that college savings should never be in stocks to begin with, but that a nice bond fund getting around 5% is much safer, but for sure you should not have the majority of college money in stocks past your child's eigth birthday.

 

[kelleyrn2000]

I'll admit we are behind in college money contributions at this point. We have 3 kids, ages 8, 7, and 22 months. We're only putting in $100 per month total right now. Every once in a while we will put a lump sum into their accounts. My intent is to pay for half of their tuition per child, the other half I expect my kids to contribute. Once dh's job gets more stable, we will probably increase the amount we contribute each month so that by the time our kids get to college we will be able to help with half their tuition. We are also planning to have our mortgage paid off by then, so we can start using some of that money for their tuition. OP sounds like you are off to a great start!

 

[HM]

We didn't start on the kid's 529s until pretty late. We've been putting aside $300/mth for each child over the last 5-6 years. Unfortunately, we lost a lot in the stock market tumble. I think we're finally back to about the amount we've actually put in, but that means we haven't made a thing on them in all that time. We'd have been better off putting it in a bank account. We've continued to contribute though. We've got one more year before the first goes off to school/three years for the last.

Good for you OP, getting started so early!

 

[RadioFanatic]

The other important thing is to remember that college savings isn't a long term goal, but more of a short-to-intermediate savings goal. Where a lot of people got into trouble the last few years is that they were still heavy into stocks when their kids were only a few years away from needing they money. Experts agree, you should never have the majority of your money in stocks if you need the money in less than ten years, because you may not have time to recover from a major crash. That means that you should transition out of stocks by the time the child is about eight years old. I would argue that college savings should never be in stocks to begin with, but that a nice bond fund getting around 5% is much safer, but for sure you should not have the majority of college money in stocks past your child's eigth birthday.

thank you. I didn't know this so I will have to keep it in the back of my head to remember when he turns eight. I really had a hard time deciding what to do because of the economy. I wish we had something like Texas so we could contribute to that and not worry about it so much.

Thanks to the others for your honest answers - I would love to hear from others as well - I love this board!

 

[lisaross]

I have a couple of Mutual Funds - in total, they probably have about 25,000 now - i have only been contributing 50.00 per month for the last couple of years - i have 2 boys ages 7 and 9! i am planning to use this money towards their college - also our mortgage will be paid off just when my older son starts college, so i figure we'll hopefully have about 500 a month to contribute to college funds.

I realize i need to up this money, but i am also saving for our retirement. I would like to pay for atleast 1/2 their college costs, considering they go to a in-state school etc.

 

[Mickeypooh99]

We have a 529 plan that we started several years ago after my kids inherited (sp?) money from an aunt who passed away. They each got $10,000.00, and it all went to the 529. Now we just put away any gift money they recieve, which is quite a lot each year. My husbands relatives give money for birthdays, Christmas, valentines, halloween, easter... Its kind of crazy. They also have a lot in savings bonds gifted from relatives over the years.

I also expect my kids to pay part of their own college. When I was in college I paid for all my classes, and my dad paid for my housing expenses. My grandma always bought my books. I never had to take out a loan, and I did get some financial aid grants.

 

[goodeats]

DD is 8 months old and we started a 529 as soon as we received her Social Security card. It's with a target-dated Vanguard mutual fund. We opened it with $3K of our money and any gifts she received (including grandparents this was significant). Right now since we are focusing on retirement and moving to a bigger house we are only putting $100/month in. We hope to put more in on a monthly basis eventually.

There are calculators out there that will tell you how much you should be saving. I will add I hope DD will go to a good state school since I can't imagine paying for a private school for undergrad! I also think something will have to change with current college prices as it's becoming completely unaffordable.

 

[princessmom29]

I put a little back here and there that will be for unforseen expenses ect, but I expect her to do exactly what DH and I did. Work hard, get good grades, stay involved, and earn a scholarship. We both went to college on full tuition scholarships and took out loans and worked summers to meet room and board expenses. I would expect her to do the same. I never expected my parents to pay for college, and knew I needed to get a scholarship to get there. She is bright and perfectly capable of doing the same. If she chooses not to keep up with school work and excel in high school, she will pay the price by bearing the financial burden of her college expenses. If something catastrophic should happen that would prevent her doing well and getting a scholarship of course we would help, and have a plan for funds to do so, but at this point they are not specifically earmarked for college.

ETA: We are paying private school tuition now and expect to do so until she graduates. That money would then be rerouted to go towards college if some sort of unforeseen circumstance amde it necessary. It is pretty close to what tuition at a 4 year in state university would cost at this point.

 

[Goofy'slady]

ZERO - the beauty of having well to do inlaws. At the birth of each of our girls my inlaws presented us with a check in the amount of 100,000.

My older sister started a wedding fund for each one of her nieces and nephews as well (she and my bil have no kids of their own) and each has 5,000. However, when my sister heard that our kids were pretty much taken care of education wise she gave each one an additional 2,500. In our family we feel like education and marriages are the two events that can mean so much to ones future but that can cost so much. If they don't marry by a certain age the money is thiers to do with as they please. When my hubby and I finally bought a house she instantly mailed us a check for 10,000. I love her to bits.

T.

 

[JEA2009]

We have an almost 4 year old. Started a 529 for her when she was born. Have contributed $300/mo. in years 0 - 3. We just upped it to $318/mo. We will continue to contribute monthly until she goes to college.

We are also making extra payments on our home mortgage so that it will be paid off the month before she goes off to college. This will free up quite a bit of cash each month and we will use that to make up any shortfall.

We have another on the way and plan to set up the same system for that child.

As a financial counselor - I would advise to not forget about your own retirement. If I had to choose between retirement and college - I would put the money into retirement. While it is nice to be able to provide your children with a college education - there are also scholarships, tuition assistance, and loans - aside from your child working and contributing to their own education.

 

[disfan07]

I am in college right now. i went into college with about $40,000...most of which came form my grandparents.

I did 2 1/2 years of community college (1 year paying out of state tuition) and I have enought left over for 1 year of in state tuition at a UC school (about $22,000-$25,000 for the year)...plus I should have about $7000 left over for the next year.

The expectations are different in each family. My parents dont want me to work if I dont have to. i worked last year 25 hours a week in addition to 16 credits and saved $3000 but it took a toll on my health. I am payign for the rest of school with money from my grandparents, plus scholarships adn loans.

Right now, even though I have enough for next year, I'm getting about $5,000 in scholarships + I qualify for financial aid.

When talking about college adn retirement....as my mom has said, you can always take out loans for college and repay them...you can't take out loans for retirement. Ultimately in our house, my dad is 60...he wants to retire eventually so for my paretns the retirement fund comes first adn college tuition comes second.

 

[daughtersrus]

My children are older. We didn't put anything specific away for college (prepaid plans didn't come out until they were older) but we did agree to pay for 2 years at the community college and then they would be responsible the the last two years.

DD graduated from ISU last Dec with a degree in Special Education. She was lucky enough to get tuition waiver from the state of IL that covered only tuition. The catch is that she has to teach 2 years out of the first 5 in IL in the field of SpED. If she doesn't, the waiver will convert to a student loan. Right now, she's only been able to find a long-term sub job that will last until the end of the school year. Because it's a sub position, it won't count towards the waiver. We're keeping our fingers crossed for next year. With the waiver, she only ended up with $13,000 in student loans. This was for room and board for 3 semesters. She moved back home and did her field base(one semester) and a student teachers (a second semester) here in the suburbs so she didn't have to pay.

DD2 will transfer to ISU in the fall. She is also a SpEd major. She applied for the tuition waiver as well but we won't know if she gets it until July. If not, she will try to be an RA the second semester so that her room and board would be paid for.

DD3 is severely disabled and she will never be able to attend college. However, we do have a lot of uncovered medical expenses. This is part of the reason that we were only able to pay for the Community College.

 

[Leajess99]

I don't put money away for them for college as that is already 100% paid for and I do not choose which school they go to as long as it is a public college or university. My kids have had this benefit since 2002 (before the youngest was even born). The money they get in their savings account is for them to do with as they please upon either turning 18 or graduating from High school (whichever comes later as one will turn 18 after graduation and the other 2 will turn 18 months before).

For those that prepay for certain schools, what happens if the kids decide not to go there or that school does not have the degree plan your child wants to pursue?? I am just curious as I have a child who wants to be a marine biologist and this is not something at every school.

 

[Pakey]

We put $500/month into a 529 for our grandson; we started it the month he was born. We hope his parents are saving too but we want to make sure he gets a start at an education even if they don't.

We did not do 529's for our sons; they didn't exist at the time. We just had passbook savings accounts for them. After retirement, those came before everything else. No student loans were necessary (of course, they didn't go to Harvard; state schools here were very reasonable).

 

[JamesMom]

For those that prepay for certain schools, what happens if the kids decide not to go there or that school does not have the degree plan your child wants to pursue?? I am just curious as I have a child who wants to be a marine biologist and this is not something at every school.

I posted earlier about the prepaid plans in TX. They are extremely flexible. My oldest plan is good at ANY state school for the number of credits. The younger ones is good for a certain $ amount- depending on the school it might not buy enough credits (ie., UT Austin 110 7 semesters vs. UNT 124 or whole degree). They have up to 10 years to utilize the contract so if they want to backpack in Europe for a year or join the Army for a tour, the money will be waiting for them. If they chose a private school or out-of-state school - the plan will pay the average state school costs to that institution with the student paying the difference. Also, if they get a scholarship or simply chose not to attend, the money we paid in (little interest) can be refunded to US or we can move the plan to another relative (like our niece or nephew). All in all, sounded like a brilliant idea to us. Ideally it would be awesome for them to get scholarships for tuition and use the refunded plans to pay room and board!