I am not sure what I should be doing to save for my Children' s College Funds.

cschin4 · #1 (**permalink**) 07-12-2006, 05:24 AM

I have 3 kids (10, 8, and 4). I don't have any designated accounts for them for college. I have been maxxing out our retirement plans and our home is paid off. We have no debt other than one car payment which we can easily afford. So, what should I be doing? I have looked into 529's and prepaid tuition but just don't see the advantages of these. The CPA said not to save anything in their names due to possible financial aid impact. I am expecting that they will take out some loans and may even need to work some as well if they all are going to college. And, we have some local colleges, so they could even live at home and attend if they are interested in going to those colleges.
When my kids do leave, we will most likely downsize our home. But, don't know what kind of market we will have then so I don't want to depend on any profits from that.
Advice?

poundwise · #2 (**permalink**) 07-12-2006, 05:37 AM

I do not like pre-paid tuition plans.

ESAs and 529 savings plans are sound options. Some details of the latter vary by state.

You might find some good information by visiting these links:

http://www.collegeboard.com/student/...it-up/395.html

http://www.savingforcollege.com/

Also, specific to your state (PA) there is something called a TAP 529. You may want to look into it.

http://www.lfg.com/LincolnPageServer...pa5/index.html

http://www.bankrate.com/brm/saving4c....asp?planid=88

jamreed02 · #3 (**permalink**) 07-12-2006, 08:37 AM

I've got 529 plans for my kids that I started when they were born (3 & 4 years ago, and 6 mos. ago) Our state gives tax breaks for 529's. If your state does, it might be worth looking into.

Dixiechick · #4 (**permalink**) 07-12-2006, 09:48 AM

I bought the prepaid tuition for both my kids...back when they were really young. The amount of money I paid in for my daughter 10 years ago (she was 8) will just barely cover her Freshman year tuition. That was a good deal for us... I don't think I could have quadrupled that money myself in 10 years.

My son's PACT I bought when he was 3 days old because the rates would have gone up beginning the next month after he was born. He's 9 now and his PACT was cheaper than my daughters so I know his will have been a great deal especially knowing what tuition rates are today...

But looking at the prices the PACTs are today may not be a very good deal - since they jumped up quite a bit after 9/11. But if your kids are very young, there is the safety net that their tuition is completely paid for if they attend in-state (as our case is) schools. Who knows what that will cost in 10-15 years. Just a thought....

Dixiechick

PrincessPerky · #5 (**permalink**) 07-13-2006, 06:06 AM

My 2cents

How do you know your kid is going to college? I personally will help my kids save, but I will not lock it into any particular plan..at one point GMC wanted to be a dr (need money for lots of college).....now it is making a game (gonna need money to build his prototype-and yes he often makes up games now). Another day it may be fixing computers (certification tests take money, the schooling part is not even noticed by many employers). Whatever it is I want him to have a good start of cash to get it.

I just think saving is important and good, locking money for any purpose is...not always as good.

Dixiechick · #6 (**permalink**) 07-13-2006, 07:21 AM

Quote:

Originally Posted by PrincessPerky

My 2cents

How do you know your kid is going to college?

They have been told from early on that college is something they will do after high school. Now if something does come along where college isn't needed or if something happens and college isn't an option, then I get my money back out of the PACT - just the amount I put into it. So, I wouldn't have earned anything on that $7 or 8K - no big deal. Now if I had >$20K in it as it is the price now in AL, then it would have been a bigger deal. But where could I put $8K (as is my daughter's PACT 10 years ago) to have grown to $25+K today? I'd have had to put it in something with 12% interest compounded monthly. I'd love to find that somewhere!!! My point is, before 9/11, these PACTs were good deals. After 9/11, they're not as attractive, but still a viable option because you're buying security with it; a guarantee that their tuition is fully (up to a certain number of hours) paid for. Right now, going to college is in my kids' future and they know it's something they are to do...

Expenses outside of tuition is where we/they will save for or cover with scholarships (as in my daughter's case)....

Dixiechick

PrincessPerky · #7 (**permalink**) 07-13-2006, 04:36 PM

Quote:

Originally Posted by Dixiechick

They have been told from early on that college is something they will do after high school.

My kids don't have to go to school, not highschool, not college..they do have to become civilized, competant, caring adults..but no strings on how they choose to do it..

But you are in the majority, I am in the minority.. so I make my point.. anyone on your side might want the locked in college.. and others might want to know they are not alone

(if you are curious about how, or why I do it my way, I would be glad to share - but it isn't particularly financial)

more freedom · #8 (**permalink**) 07-14-2006, 05:26 AM

What do you need to do if you would like to become an accountant? You go to business school.

How about becoming a cook? You take cooking lessons.

How about becoming rich? Same thing! You study how the rich gets richers.

I can recommend you some great books if you want.