Have you started a college fund for your child/children

[eisor]

I definitely agree that you need to make sure your child knows what your plan is for their post-secondary education. My parents made it completely clear that there was no money coming my way for college. They said they'd help as much as they could, but not to rely on them. I've seen maybe $1000 total from them, if that. But, I knew that was the case going into it. Thankfully, I live in a state that has the HOPE scholarship. A lottery funded scholarship available to ALL Georgia graduates with a certain GPA (and maintain a certain GPA). It is redeemable at any Georgia public university. I think you can also use it at technical colleges (but I'm not 100% sure). The scholarship covers tuition & fees and a book allotment each semester. Between the HOPE scholarship and working part-time (and sometimes full-time) I've been able to put myself through college. I'm almost done and I haven't borrowed a dime!

For those of you saving for your children's college education, I'd definitely put some contingencies on it. I'm not talking about controlling their every move because you are giving the money. But, require them to maintain a good GPA or be enrolled a certain amount of hours each semester. I know a ton of college students who took advantage of the fact that their education was being paid for. Definitely didn't teach them anything about responsibility. Many of them dropped out. Others graduated, but since they never had to work or manage their own money, they were lost when they graduated. Didn't know how to cope in the real world.

[disneysteve]

100% for a 4.0 grade pt. average

75% for a 3.0 or greater

O% for less than a 3.0

I hope she isn't quite that strict. Paying 100% only for total perfection seems a bit extreme. Not many students achieve a perfect GPA for all 4 years.

Speaking of 4 years, another good point is that you should make it clear to your kid that college is a 4-year endeavor. Not 5. Not 6. Not 8. I'll cover my daughter for 4 years of undergraduate school. If she decides to change her major 6 times and needs 5 or more years to earn a degree, she's going to have to foot the bill, or at least a much bigger piece of it.

[herm4]

I hope she isn't quite that strict. Paying 100% only for total perfection seems a bit extreme. Not many students achieve a perfect GPA for all 4 years.

Speaking of 4 years, another good point is that you should make it clear to your kid that college is a 4-year endeavor. Not 5. Not 6. Not 8. I'll cover my daughter for 4 years of undergraduate school. If she decides to change her major 6 times and needs 5 or more years to earn a degree, she's going to have to foot the bill, or at least a much bigger piece of it.

Yep, she's that strict, she also won't let her girls wear make-up, get their ears pieirced, go to a school dance untill their eighteen, etc....etc..... I could go on and on.......

learning to live well without spending alot of money

[skydivingchic]

I don't and won't have children, but I wanted to chime in with what my parents did with my brother and I.

From the time I started working - babysitting, mowing lawns, hotel maid, etc - I had to put 50% of my earnings in a savings account for college. Money I earned working full time during the summers while in college also got socked away for the upcoming year.

My grandparents on my Mom's side always gave us savings bonds for our birthdays, Christmas, etc. My parents also managed to save a few thousand in mutual funds for each of us.

When college came around, we were expected to apply for all scholarships we were eligible for. I worked part time in a job in my field during the school year (10 hours per week). That money paid for my gas and spending money. Between the saved money, scholarships, and some additional from my parents while attending college, I was able to earn an engineering degree at a public school. The very last semester I did have to take a small loan (just over $2000).

The system worked well for us and I'm extremely grateful to my parents for helping as much as they did. DBF's parents were not in a position to save money for his education. He also graduated with an engineering degree, but far, far more debt. He is still paying 7 years later, while mine was wiped out in a couple years.

[asmom]

I think a moderate compromise here is possible and one I adhere to.

I have told my 10 year old that we will pay 2/3rds of his education. That will essentially be tuition, fees (which appear to go up every year so they don't raise tuition) and car insurance for a clunker/bomb. He will be responsible for the other 1/3rd, which is books, room and board, and spending money.

That shouldn't stress him too much and I figure will amount to a 10-15 hour/week part-time job during the school year and 40-60 hours/week during the summer, which is doable for an able bodied, male 19 year old.

Besides, unless he plans to go to professional school, I'd rather see him work part time and get a 3.0 or even a 2.7 than not work and get a 4.0. Nobody looks at your GPA (besides medical and law schools). . .but every employer considers your work ethic.

Essentially, a degree is a degree is a degree.

And fiscal responsibility is a skill that everyone needs to have - and it starts with an awareness of how much something costs.

We have about $18,000 in a 529 and Education IRA's for our 10 year old and 4 year old

Yes, we are behind. At least I feel so.

I must agree with Scanner wholeheartedly here. I do think there is a middle ground between "I'm not saving one penny" and "I owe them a 4-year ride". My plan is to pay 50% of my daughter's costs, with her paying 25% of it as she goes, probably through part-time jobs and the such and maybe getting loans for the remaining 25%. I hate for her to start her adulthood in debt but I also feel that she should have a financial stake in her future. I also plan for her to apply for every scholarship possible and hopefully, she will get the HOPE scholarship offered here in GA but I am not counting on those things as they keep moving the target for that one. Unfortunately, I am waaaay behind; I have a small 529 but I was doing my budget just today and I have a plan to catch-up.

[Scanner]

25 Rules to Grow Rich By | 25 | Money Magazine

Rule #14 from Money suggests accumulating 1/3 of college costs in money.

This may be wise because the more you accumulate and save, the more likely you will be penalized and not qualify for financial aid.

My accountant, who is also a CFP, while not really doing a financial plan for me. .. just kabitzing with me, has suggested locking your wealth up in your house as I beleive it doesn't count towards the amount of wealth you have when you fill out the FASFA form or whatever it is.

Like Money suggests, you can then pull it out if you need to or maybe financial aid will pick up the 1/3 to 2/3rds in the air.

It's another reason I prefer "debt reducation" vs. "bond accumulation" when making a portfolio when aiming for the debt sector investments - the bonds can and will be held against you in a court of law. Your house won't.

It's a tough decision - what you do now affects what you get down the road and the stakes are high.

I guess I"ve decided I'm uncomfortable depending on the gov't one way or the other to provide and thus am aiming for 2/3rds cost.

BTW, DisneySteve, with summer jobs and not paying for winter semester, this often means a 4 year education ='s a 5 year time to complete. I can recall when I majored in biology at the U of D, it was practically impossible to squeeze in 15 credits per semester with labs. So I ended up with 14 most of the time. I worked on winter breaks and summer. It took me basically an extra semester and one semester part-time to graduate.

[avengerki]

I have two children and I put a little under a percent of each paycheck into a savings for each. My goal isn't to pay off their entire school but to pay about 25-50% of it.

I never went to college, I went into the military instead. I did watch my sister work three full time jobs plus going to college full time and don't want my kids to have to deal with that. I could never figure out when she could sleep, although she now pulls two full time jobs and a part time with a husband and child.

[Saving in So Cal]

I paid for undergrad and graduate school on my own and my husband did, too. So, we know our child could do the same if need be. That being said, I routinely run into people that have over $120k in student loan debt and I don't want that for my child.

Our compromise is to put $100 a month into the state's 529 plan. This is money that would otherwise go into a 401(k)/457 plan; however, since I am vested in a public retirement plan, we feel like we can spare this much without sacrificing our retirement security. We also add our spare change, any monetary gifts she receives, Upromise rebate moneym and any small amounts of unexpected money we receive. The experts say we need to putting away $300 a month if we want to pay the full bill. With our fixed amount and the little extras, we're saving somewhere between 1/3 to 1/2.

[disneysteve]

I paid for undergrad and graduate school on my own and my husband did, too. So, we know our child could do the same if need be.

While I respect the sentiment, keep in mind that the reality is that college costs have risen far faster than inflation and far faster than typical income. It is much harder for a student to work his way through college today than it was when I went to school 20 years ago. It is still possible, just more difficult.

[mom-from-missouri]

I agree with Steve. My dad who has 2 degrees went to school for $20 a semester. His books were another $3 a semester.
My total college bill for 4 years at a state college was just under $7000 TOTAL.
DD#1 pays $8600 per semester now at her full time college, and she is doing a double major and taking 1 class at a junior college because it isn't offered at hers when she has a free hour. At the junior college it is another $600. Luckly, she is on full scholarship at the full time school and got the Bright Flight. So, she gets the bill, but does not have to pay it. She graduates this coming May. This semester she took 18 hours. Next semester she will have 21 hours. 4.0 GPA and she works 30 hours a week. YES I am bragging. She has a work ethic and stick to it attitude. She is only 20 and had an early out from HS. Getting 2 four year degrees in 2 1/2 years. Her classmates think she is odd because she studies instead of drinking......

[Ima saver]

I have decided not to send Holly to college!! I will just buy her a new collar instead and maybe a new tennis ball.

[tabbycat31]

I hope she isn't quite that strict. Paying 100% only for total perfection seems a bit extreme. Not many students achieve a perfect GPA for all 4 years.

Speaking of 4 years, another good point is that you should make it clear to your kid that college is a 4-year endeavor. Not 5. Not 6. Not 8. I'll cover my daughter for 4 years of undergraduate school. If she decides to change her major 6 times and needs 5 or more years to earn a degree, she's going to have to foot the bill, or at least a much bigger piece of it.

AT my school it was impossible for me to graduate on time. In my last semester, I needed 3 specific courses to graudate. All 3 met at the same time. Had I been able to clone myself, or been dishonest and paid off friends to pose as me, I would have graduated that semester. Unfortunately I had to wait due to the scheduling conflicts. This was a SUNY (State Univ. of NY) school and I know I was not the only student in this situation.

[Coleroo]

im on the fence right now about what to do. we have our first child due in may of '08 and im debating on getting a coverdell or a specific roth earmarked for spending (since contributions can be taken out at any time - and it doesnt have to be for education) --- or not doing anything and just teaching them how to find the best scholarships and choose the correct schools where debt wont be much of a problem.

I come from a family where college was never a necessity - it was always up to me if i wanted to go or not...All through school i was a strait A student at a private school and was valedictorian at graduation. my "big plan" back then was to be a teacher and go to a 4 year private college..... but... due to struggles with death of loved ones in my senior year, i laid out a whole year after high school to learn "who i was". Then i went for 2 years (for free, due to scholarship) to our best technical college in our state and earned 2 associates degrees in management and marketing (graduated with a 4.0)...i was earning more at the time of graduation from our technical school than i would have if i would have gotten a bachelors degree in teaching (plus i had no debt). i started back to college this fall in hopes of achieving my dream of being a teacher and furthering my degrees - but the loans i have realized that i have to take now hold me back tremendously....since management and early childhood doesnt cross over well, i would have 4 years to acheive a bachelor of early childhood along with certification in SC....i realized over the past few months that even at our cheapest university i would aquire a minimum of $30,000 in student loans. NO WAY will i graduate at age 29 and put my family in that much debt - so i am not going back next semester and will continue only with cash savings permit! before this fall i never realized how truly lucky i have been not to have had student loans! we have our own home, 2 new cars almost paid for, good savings & retirement funds, and a great life on the road to soon being free of everything but mortgage debt. As i see it, in my personal life track and plans, a 4 year degree with $$$$ in loans by age 22 would have been detrimental!! i would not be anywhere near where i am today if i had to accumulate THAT much debt that young.

that said, my parents didnt pay a dime for my college education. i would have never even thought of asking them. they paid for 13 years of private school and i considered that well above and beyond their call of duty.

then theres my husband who never went to "college" - he went to a WEMOCO trade school and earned a certificate in electrical. He's a hard worker and in the nearly 2 years he's been at his current job he's earned a 33% raise from his starting level with another raise expected in march. he's now earning more than what i, with my "college associates degree", was earning as head payroll specialist on a management staff.

So.... i guess i have a good while yet to decide where i stand. I know many for many families, college is a requirement but i was always taught that college is just another life track one can choose to take -- and there are alternative ways to go if college and its high cost doesnt fit into the plans.

I dont want my kids to feel pressured to go to college --- I watched way too many of my friends go to college (or worse - a certain college the parents liked) and then drop out, skip classes, fail or party their way through. They could have cared less about college! I also watched many graduate and then never put their degree to use - or just become stay at home moms. I want my children to know that college is not a "right" but a privelege to learn more in life.... i want them to understand that it opens doors if they want to focus on certain professions (i.e. a librarian needs higher degrees...a doctor needs higher degrees, etc). I also dont want my children to feel pressured to go immediately after high school either if they dont know their way in life --- and in the same sense, i will let my child start take college credit classes in high school if they're motivated.

So anyway... i guess my point being, I havent decided yet if i want to pay my child's college expenses so they'll be debt free upon exiting (neither i nor their father had to deal with large debt that early) or if i want them to find their own way in life and do it "the hard way" (scholarships, grants, working, etc).

YET, in the same vein i dont want my children to graduate at 22 with a multitude of loans! i detest student loans AND the idea of them. I think its horrible that america as a whole think its perfectly fine for a young adult to start life straddled with horrendous debt. Its NOT good and its not healthy emotionally.

One thing my husband and i have discussed (which we may end up doing) is focusing hard on teaching money value to our children, saving methods, investing as well as helping them focus on what they want in life ---- and then having a secret fund (probably a roth) set aside, and present half of our contributions to our child at 18 to help out with college should they choose to go, with a promise to present the 2nd half if they finish 2 years with high marks. If they choose that college is not for them, they still get the first half and the 2nd half, along with earnings, goes into our retirement.

[Scanner]

Coleroo,

I think you probably summarized every parents worries and hopes pretty well.

Let me add a few thoughts:

1. Yes, college is an expensive place to "find yourself."

2. 90% of people who graduate college don't work in their chosen major. The bachelors is more important than the major.

3. With the 529 (probably the chosen account for education), it can used for a multitude of expenses and schools. If your child goes to automotive school for instance (these guys are like rocket scientists nowadays) or learns the electrician trade, often they need to buy their own tools. That would probably be a qualified expense. Maybe even the insurance on the tools.

4. I don't beleive in mandating all education but there is some things you would choose to mandate. Let's say one of my kids isn't academically inclined and just want to go "work." Well. . .they still need to take a course on Personal Finance and Communication, even if not for credit IMO.

Why? Because personal finance is a huge commodity skill in life and the best communicators rise to the top of any field (public speaking, 1 on 1 communicating).

So, at the very least, I will make my children take a course on this in "Listener" or "Audit" status, even if not for a grade. I may even make it for a grade and say they must get a B or better or re-take it.

5. Don't get hung up on penalties. I see many people, I'm even guilty of it. who figure, "I'm not going to do this because if it doesn't get used, than I get taxed!!!" Well, let's say you save $50,000 in 529 and your child refuses to use any of that money by age 28. He/she is just stubborn and won't ever take 1 class again because they hate school and it's a waste of time.

Wow - you would owe $5000 in taxes. You are left with $45,000.

There are worse things in the world.

I hope these thoughts offer you some direction - again, as I wrote above, I think a middle ground goal is probably the best compromise.

[Coleroo]

thanks scanner! i definately agree with mandating learning life skills... logical mental math, reading, personal finance, etc, because those are things you must know to succeed in any area of life with or without a college degree under your belt. i also feel those are parents responsibilities too so children will have a firm foundation for breaking into the "real world" when they pass 18.