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    529 Education Plan

    Let's start!
    Kill the debt, before it kills you!

    #2
    How much do you put per year on 529?

    I'm thinking of contributing ~$10K a year, capping it at $50K for the first kid. Then starting another one for the other kid.
    Kill the debt, before it kills you!

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      #3
      As with retirement savings, the sooner you start, the easier it is. For both of our boys, we started 529 plans for each of them. After the initial $3k minimum investment, we've only been contributing ~$100/mo apiece, with it set up to automatically increase the contributions by $10/mo each year. After just 2.5 yrs, DS1's 529 has already grown to more than $10k. With 15 years to go, I'm confident that we'll be able to help cover alot (if not all) of our sons' educations.
      "Praestantia per minutus" ... "Acta non verba"

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        #4
        The amount we had going in monthly varied a bit over time but for the vast majority of time it was $300/month. We accumulated about $60,000 by the time college came along. We had enough to completely cover years 1 and 2, partially cover year 3, and had a small amount ($2,500) left to apply toward year 4 when we closed the account.

        Contribute as much as you can after meeting all of your other financial needs and goals including retirement planning. However much you can save will be a benefit when the time comes.
        Steve

        * Despite the high cost of living, it remains very popular.
        * Why should I pay for my daughter's education when she already knows everything?
        * There are no shortcuts to anywhere worth going.

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          #5
          We started my kids 529 plan when they were few months old. We only increased last year by $50, a total of $150 a month in VTSAX & S&P500 through Vanguard.
          it now little over $20K after 12 years. Because of my veterans status, the tuition would be likely be waived if school. So we don't plan to put too much money but enough to cover their living expenses.
          Got debt?
          www.mo-moneyman.com

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            #6
            We originally started with a Coverdell since we thought our kid would be going to private school, but she has been enrolled in public school the whole time. We have been contributing to a 529 for a few years. I have recently raised it to $350 per month.

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              #7
              We contribute a half semester of instate tuition a year. By the time they're 16 we will have enough for all 4 yrs if they go instate or hopefully enough to cover 2-3 years depending on financial aid and scholarships if they choose a different school.

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                #8
                Originally posted by MooseBucks View Post
                We contribute a half semester of instate tuition a year. By the time they're 16 we will have enough for all 4 yrs if they go instate or hopefully enough to cover 2-3 years depending on financial aid and scholarships if they choose a different school.
                How are you accounting for inflation, or are you hoping that the investment growth will cover it? What about costs beyond tuition: room and board, books, fees, transportation, etc? There is a lot more to college than tuition. I recently read that at many state schools, room and board exceeds tuition costs. If you only save for tuition, there will still be a big gap when it comes time to pay for college.
                Steve

                * Despite the high cost of living, it remains very popular.
                * Why should I pay for my daughter's education when she already knows everything?
                * There are no shortcuts to anywhere worth going.

                Comment


                  #9
                  Originally posted by disneysteve View Post
                  How are you accounting for inflation, or are you hoping that the investment growth will cover it? What about costs beyond tuition: room and board, books, fees, transportation, etc? There is a lot more to college than tuition. I recently read that at many state schools, room and board exceeds tuition costs. If you only save for tuition, there will still be a big gap when it comes time to pay for college.
                  We adjust the amount each year to match the increases in tuition. So as tuition increases we contribute the difference to make sure they're still on track. The plan for room & board etc is to possibly keep contributing past the time they are 16 to their 529s. If we're still in our current house when it is time for them to goto school we will have our mortgage paid off before our first child goes to college. That frees up 14k minimum but we've been paying closer to 18-20k per year. They currently go to private school so we will continue to be able to cash flow that amount into college.

                  As for transportation etc I'd like for our kids to work over the summers in order to earn some of their own money. I'm fine with paying for them come home over breaks but any extra times will be on them.

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                    #10
                    Thanks for the replies so far.

                    I am targeting $50K per kid x 2 kids.

                    My eldest is 12.
                    Kill the debt, before it kills you!

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                      #11
                      How do you use it? Is it like HSA where there is a savings account? How is it recorded that it is school-related?
                      Kill the debt, before it kills you!

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                        #12
                        Originally posted by Randomsaver View Post
                        How do you use it? Is it like HSA where there is a savings account? How is it recorded that it is school-related?
                        How does a 529 work?

                        It is an investment account, somewhat similar to a 401k or Roth. It is state-sponsored and each plan has it's own selection of investment options to choose from. Some states give you a state tax deduction for contributing so find out if you live in one of those states. If you do, your best choice is probably your state plan. If you do not get a deduction, you can invest in any state's plan. Personally, I live in NJ and get no deduction so I chose the NY plan which was higher rated. Do a search online for plan ratings.

                        When the time comes to use the money, you get a tax form each year when you make a withdrawal. At tax time, you need to document that there were education expenses matching the amount you withdrew from the plan.
                        Steve

                        * Despite the high cost of living, it remains very popular.
                        * Why should I pay for my daughter's education when she already knows everything?
                        * There are no shortcuts to anywhere worth going.

                        Comment


                          #13
                          Remember, you can use non-529 plan funds to pay for college expenses. Our kids are 22 and 19. We didn't do a 529. They were new when the kids were little and after a while, we decided we would pay off the house prior to college and then cash flow the costs and use savings when we had to.

                          In hindsight, this wasn't the best plan as one of us could have gotten sick or we could have not been successful in our jobs so the money might not have been there to cash flow it but it was...we were fortunate.

                          Our oldest is getting his masters and has a job as a graduate student instructor. Not only does he get a monthly salary but he also is receiving a tuition waiver so the last three semesters of his schooling are free in regards to tuition. We found that living expenses especially when he was in a dorm were more expensive than the tuition.

                          Our youngest has become a pilot instead of going to school so we paid for that instead of a four year degree.

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                            #14
                            Originally posted by sblatner View Post
                            Remember, you can use non-529 plan funds to pay for college expenses.
                            True, though there are certainly advantages to 18 years of tax-free growth followed by tax-free withdrawals.

                            One thing to keep in mind, though, is the education tax credit (assuming Trump doesn't eliminate it). You need to spend a certain amount out of pocket - not from your 529 - in order to qualify for the credit. I'm not positive but I think the amount is $4,000 currently. So if you pay 100% of costs from the 529, you miss out on the credit which I think is $2,500. Don't quote me on those numbers but you get the idea.
                            Steve

                            * Despite the high cost of living, it remains very popular.
                            * Why should I pay for my daughter's education when she already knows everything?
                            * There are no shortcuts to anywhere worth going.

                            Comment


                              #15
                              Originally posted by Randomsaver View Post
                              How much do you put per year on 529?
                              $0.

                              *We don't make enough money to get 529 tax breaks. (Our investments grow tax-free without having to jump through any extra hoops).

                              *We don't get a state 529 credit.

                              *College is inexpensive in our state and so we don't really have any incentive to tie up money for college. Rather keep any "college earmarked" money flexible since it most likely won't be used for college anyway. (In a 529 plan, you are penalized if you don't use money for college).

                              As to saving for college in general, we are in the "retirement first" camp and did not save at all for college ages 0-10. Age 10+ we plan to save about $60,000 or so before they are 18. Some of that is investment growth. This year we set aside $8,000 that is loosely earmarked for college. I have a freshman in high school. Might do $8k - $10k the next 3 years. I just started with that goal ($60k) because grandparents gave my kids $1k per year (each) and they are on track to have about $60k (combined) by the time they are both 18. So I started with just wanting to match that, as a starting point. We can probably catch up and have a full match by the time the eldest is 17. By then he should know what he wants to do for college and we can strategize from there.

                              If grandparents weren't in the picture, I doubt we'd save up more than $30k per kid (on our own). This would pay for an excellent public college education in our state, and is probably how I came up with a figure of how much we wanted to contribute. For example, if grandparents had just accumulated $20k total, I might have still felt like we should set aside $60k combined over the next few years. I actually don't count on the grandparent money *at all* because they are the types to withdraw if they don't agree with our choices. So I guess there is also that at play. It's nice if they want to be genuine gift givers, but not exactly holding my breath.

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