Student Loans - how to minimize impact.

[Radiance]

I hear a lot here about student loans.

I was lucky enough to have my parents pay for my college for all semesters but the last two. I took a loan for that which is currently paid for. Actually I paid it off in 1996.

I have a 16 month old baby and I have not started pre-paid college.
Is that the way to go?

What are things I can do (besides hoping for scholarship) to minimize the need for a student loan for my son?

Will pre-paid college cover all? If not, how much money needs to be saved up to cover? Assume he is going to college locally (Miami).

Thank you!

[disneysteve]

The most important priority is to ensure your own financial future. Make sure you have an adequate emergency fund. Make sure you are carrying no consumer debt. Make sure you are maxing out your retirement accounts.

If you are doing those things and still have money free to invest for college, that's great. I do a 529 for our daughter. If you do a 529, find out if your state offers a tax deduction for contributions. If so, you probably want to use your state's plan. If not, you can use any plan. I believe Utah has been getting the best ratings lately. Check savingforcollege.com for all kinds of info.

[Joan.of.the.Arch]

What other things can you do? Help him to get a great education and some subjects he is passionate about while he is a little kid and on through high school age.

We did much of our education spending before our child was anywhere near college age rather than saving it for college. Much of it didn't look at all like what most people might consider "education," but I believe it was so. I believe that following those passions led him to the school he is in now with full undergrad scholarship.

I'm sure you've seen it happen for others. The kid who showed early interest in music winds up with a violin scholarship. The kid who could never be kept from running, running, running, winds up with the athletic scholarship as she builds upon her skills. The little kid who was always trying to poke his head into the motor rooms at amusement parks and office buildings goes on to take up hobbies that involve motors, then electricity, then pneumatics and hydraulics...*poof*... before you know it that kid has an engineering scholarship. The kid who finally decides she like to read when she has a great teacher for high school sophomore English finds her passion , suddenly devours the public library, and finds she has a plethora of scholarships to choose from come senior year.

[zetta]

I would probably advise a 529 plan over a prepaid plan. It's more flexible, and the prepaid plans could be vulnerable if there is a state budget crunch when your kid is in college.

[Runaway Finances]

Steve is absolutely right...get your financial house in order before worrying about the college fund. I have followed many of your posts and you seem to be working hard in this area. Also, remember there are many scholarship opportunities out there especially if a child is from a lower income family. So depending on your financial position when your child is ready to go to college, this will be another avenue for you, in addition to what you can save between now and then. Those scholarships take A LOT of work to get, but I've read about and known several kids that paid for 4 years of schooling via scholarships.