How much for college?

[34saving]

I've been looking at posts about financial goals . . .one of my goals is to be able to help my kid(s?) with college when the time comes. How much should I be saving? Here are some of the factors I'm considering:

1) Right now we have one 1.5 year old child. She may or may not have siblings someday but I'd be really surprised if she ever had more than 2. (Thinking 3 kids max . . . more likely 2 . . . maybe just 1)

2) We don't really care about public vs. private.

3) Right now my husband works at a private university and our children would qualify for 75% tuition remission. However, I think it's unwise to count on him staying there for the next 20-25 years.

4) I don't want my children to have college debt when they graduate, but I don't want them to completely depend on "mom and dad paying for everything" either.

5) I have no idea what congress is going to do with 529 plans over the next 25 years.

6) I have no idea what's going to happen to financial aid over the next 25 years.

7) I'm not even positive my kids will go to college. (1 or 2 of them don't even exist yet )

Thoughts? What do you guys do?

[crosses]

One of the smartest things we did was when our kids were small on their birthdays and Xmas we asked everyone (relatives and friends that would have normally bought a gift of some kind)to make a donation to a college fund instead of buying a gift. We put all the money into a college saving fund and that added up to more than $15,000 each by the time they were ready for college.

[PRICEPLUS]

crosses, that is a dynamite idea. I save as much as I can for the college fund. My thinking is that more is better. So I guess I'll help out as much as I am able to save, I have 5 more years to continue saving for that event.

[34saving]

Thanks for the initial responses! My daughter has an ING account ($25 bonus for her, and $10 referral for me) for cash gifts. How do you keep the savings for your kids? Keep the money in your name? Their names? 529 plan? Also, where do you save first? Retirement or college?

[mjrube94]

Regarding the kids' money, if it's legitimately their money (e.g., bday or Christmas gifts) I put it in an UGMA in their name. If they want to blow it on a car or a trip to Europe when they're 18, it really is their money and I have no right to dictate how to use it (imo). For money I'm saving for their college, I put it in a 529 account for each of them. You need to check each specific plan for details, but we use NY's. We can deduct up to $10,000 of contributions on our state taxes each year, and if one of them doesn't need the money, it can be transferred to the other, used for grad school, etc. If your child gets a scholarship, some plans allow you to withdraw that amount of money from the 529 penalty free. Although we contribute each month to the 529, my plan is to increase the contribution once my little guy is out of preschool (Jun 06). That's a few hundred dollars extra right there!

[PRICEPLUS]

Some of the money is in bonds which are in my name. I'll be able to cash them in tax free(check with treasury for more info) if the money is used for tuition. Some of the money is in CD's held in trust for my daughter and some is in stock.

I also make my daughter put 10% of her allowance into savings. The account is in her name and she can withdraw it should she wish so.

Right now I split up money for retirement into a 70% retirement and 30% college fund. THe actual amounts vary with bills popping up at home!

[gakline]

I graduated 2 years ago and my parents put a lot of money into EE savings bonds for me. These definately came in handy for tuition and for a downpayment for a house. Beyond that, they had me take out the max that I could for subsidized student loans (I don't have to pay while in school and the gov't takes care of the interest till I graduate). The rest they paid for out of pocket. They could have easily paid for it all, but it worked out well. I ended up with about $17,000 in loans to be paid over 10 years ($12,000 and 8 years to go). I only know of 1 person that graduated without any S.L. debt. Oh and since I stayed in the dorms, some of my room and board got added in the loan.

Actually student loans work out well because they get added to your credit score. Also, since I didn't have to do anything to them for 4 years, they just boosted my score for length I've had the accounts.

I'd say don't worry about paying for all their tuition. Interest will still be reasonable, they can take years to pay it off and it gives responsibility. They'll need to get use to paying for stuff on their own sometime. The can't rely on having mommy and daddy pay for everything for the rest of their lives.

[gakline]

Oh and if they go on to become a doctor, do you really want to shell out $100,000+ of your money when you know they'll get their first job for over $150,000? (so I'm definately all for S.L.)

[34saving]

My parents made it goal that none of us kids would have to come out of college with lots of debt. Even though they didn't have the money, all three of us made it out without debt. (We worked, got scholarships, etc.) I really think that helped all three of us get off on a sound financial footing. (All of us own our homes free and clear and have no other debts. . . . okay my sister and I have debt on rental properties, but we owned our homes before we started that . . .) Anyway, I guess the balance is to contribute enough to help without contributing soooo much that kids loose all sense of what money is . . . Now all I need is a formula for the perfect balance and the money to fund my part. How hard can that be?

[sbsake]

Iyts good thing to save ahead but the real question here is how much will a four degree cost in ten years .... my daughter will attend college then and
I am afraid to even think about that

[mjrube94]

If you haven't already checked out Upromise, I highly recommend it. It's free to sign up, and the money gets directed into a 529 account. It's by no means going to make you rich, but even if it's enough to cover textbooks, every bit helps. (I think BabyMint is another, but I haven't checked that out).

[PrincessPerky]

My goal is to help my kid know what they really want to do, and hopefully be able to get an aprinteship, internship or volunteer opportunity for more experience (and hopefully monry) before college age ever hits. I also think that spreading the college out over more years allows more time for paying for it, but no one wants to be 30 and in college so I would rather have them in it earlier, if that is there choice. Age based education will not get them in early so I am looking at alternatives (I am not to confident of my teaching abilities after 3rd grade or so, and at the rate my DS is going that is all too soon!)

[miclason]

College? Here, either you go to the National University, or you pay to go to one of the private universities. No such thing as student loans...what they do is an "socio-economic study" to determine how much you are going to pay per course per semester (with the maximum courses per semester being 5)... If you are a good enough student (8+ on a 1-10 scale), you might get a partial scholarship...
Right now, I have to worry about getting $1,500 to enroll DD in school this fall! (see, the urgent tends to take precedence over the important around here!)

[smmasi]

We have one child who is almost 5 and we contribute 100$ a month to a 529 plan. According to the calculators I ran it won't be enough to fully pay for his college, but we plan on increasing the amount when he's out of his very expensive preschool. He also has his own savings account that he puts in 50% of any gift money and a decent amount of gift savings bonds. I would like to be able to pay for 75% of his college and have him responsible for the rest.

[mccartygirl]

I do not agree with having your kids take out student loans. I worked 2, sometimes 3 jobs to go to college and a week before I graduated I found out that my mom forged my names on $25,000 worth of college loans. Starting out your adult life owing $10,000, $15,000, $25,000 is not good - you're starting out in debt and a lot of debt at that. I know that you can take 10-20 yrs to pay it back but still, that's a lot of money and when you look at the interest added up, it's unGodly. My child will have her college paid for, she will learn money responsibility before she even goes to college. She will not depend on mommmy and daddy for everything. We will put away into a 529 account and I've signed up at Upromise but the 529 account is basically to pay for books and room/board. We are going to get a Educational IRA that our credit union has and we'll also invest and save. I don't want to put all my money into a 529 account in case she doesn't go to college. I know we can transfer to a sibling but at this point we're not sure on a sibling. I went to college, had no fun because I was constantly working. My mom picked my college and picked my major - I hated the school and the major. I didn't have much of a voice then. My child will work in the summers to pay for her bills while in college but the tuition we will pay for. We have started funds for the various things we will be buying for her when she gets older - car fund, college fund, wedding fund and a savings fund. We take her money she gets now as gifts and put it into a savings account. She's still an infant yet so when she gets older she'll get a %age of her birthday money and such and the other will go into savings. That's just how we've figured it will work for us though. Looking at some of the websites that tell you how much college will cost in 16-17 yrs is scary!

[34saving]

I'm thinking of starting a 529 for my infant daughter, but I'm a little concerned that the law is set to expire long before she's due to go to college. Are any of you concerned that the rules on 529s are going to change a lot? Or it this something Congress won't dare to non-renew?

BTW, I agree that starting "grown up" life with a huge amount of debt isn't the best. I hope to avoid that for my daughter. (A friend of mind and her husband have combined student loans of $200,000. Starting with a mortgage before you even have a house really cuts down on your options.)

[BlingBling]

My daughter is in her third year and entering the teacher program definitely raised the cost!

I am a single parent and by the time we bought her a reasonable and "used" car my savings was minimal. Still you have to have the car!

She attended the local college the first 2 1/2 years which made college very affordable. When she was accepted into the teachers program we had to transfer to a 4 year college. The transfer scholarship was a tremendous help, and since the colleges are "courting" the kids at the 2 year colleges are easily attained. Good grades!

Something else I've seen discussed here I am sure, is the opportunity to pick up college credit in high school. The courses cost about 220.00 but were invaluable in getting her ahead. I believe she begin those in her sophmore year.

Other then that its very day to day and I sometimes I worry. We will make though, because we have to!

[gakline]

Originally Posted by 34saving

I'm thinking of starting a 529 for my infant daughter, but I'm a little concerned that the law is set to expire long before she's due to go to college. Are any of you concerned that the rules on 529s are going to change a lot? Or it this something Congress won't dare to non-renew?

I don't have any kids yet, but when I do, I'm not going to do a 529. I don't have a lot of confidence that they will be there when they're needed. I think it's a great idea, but it doesn't always work out with scholarships and whose name is in and all that stuff. (I've heard of problems already) I'll probably do savings bonds, and joint accounts or just my name. I don't want the school to see that my child had assets, so won't give as large of a scholarship.

[squirlma]

I know this is an old thread, but for any of you that may live in Florida, you should be aware of the Bright Futures scholarship program. There are various levels of this program. Students are rewarded with scholarship money based on several criteria, including completing the required high school courses, maintaining a certain GPA, and completing a certain number of community service hours, and achieving a certain ACT score. A student can qualify for 4 years worth of tuition paid at 100%, 75% or 50%, depending on their achievement level. They also can get up to $300 per term for fees, and $300 per term for other expenses (like books). A son of a friend of mine qualified for at the highest level so he has 100% tuition paid. My son, who will graduate next year, is on track also to qualify for the 100% tuition. Of course, there are other expenses, like housing and food, that you still have to pay for, but this sure helps a lot. Also, the high schools here offer dual-enrollment college courses which the students can take which cost NOTHING. My son has been maxing out those too. I believe that this program is funded by the lottery. I think lotteries are stupid, but at least the proceeds are going toward something worthwhile.

[jmjj215]

I just have a little 9 month old boy. I also still have one year left in college. My wife and I have paid our way through with our sweat and scholarships. I always knew my parents would help out if we needed it - but a certain prideful part of me didn't want their help.

I'm very thankful I will have no debt when I graduate from college. I don't think you should go into debt during school - even at a subsidized government rate - It's baggage you'll carry with you for a long time that is hindering your wealth-building potential. Also, to live on someone else's money (the government's) usually causes the recipient to be less..picky about what they spend their money on.

Above all, I want to teach my son and his future siblings how to work for what they want, avoid debt, save for a rainy day, and to live within their means. If they are doing that and they want to go to Harvard for an MBA I don't think I'd have a problem helping them out (theoretically, not saying I have 100k to drop )

I plan on setting money aside in my name for use with college tuition for my kids, just in case they need it. But I'm not going to let them know I have it for them. I want to teach them to make it on their own as my wife and I did: sweat + sweat + scholarship (sweat).

My two cents.