what are others doing or have done to save for your kids college? Our son is 3 and we have a savings account but I would think that there is something to get a better rate but fairly safe?? maybe not. just looking for advice/opinions.
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My nieces and my son all have a 529 plan set up in their names. My parents contribute to all of them bi-monthly ($50/contribution). My bro contributes to his kids plan monthly I think. We contribute monthly to our sons plan. Just my parents contributions alone (plus interest) have accumulated more than 10k in my 9 year old niece’s account. We figure each kid should have about 30k in their account when they get to be 18ish.
Being a fresh college grad this is the best thing you can do even if it is 10 or 15 k by the time they get to college. Best of luck.
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My nieces and my son all have a 529 plan set up in their names. My parents contribute to all of them bi-monthly ($50/contribution). My bro contributes to his kids plan monthly I think. We contribute monthly to our sons plan. Just my parents contributions alone (plus interest) have accumulated more than 10k in my 9 year old niece’s account. We figure each kid should have about 30k in their account when they get to be 18ish.
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My nieces and my son all have a 529 plan set up in their names. My parents contribute to all of them bi-monthly ($50/contribution). My bro contributes to his kids plan monthly I think. We contribute monthly to our sons plan. Just my parents contributions alone (plus interest) have accumulated more than 10k in my 9 year old niece’s account. We figure each kid should have about 30k in their account when they get to be 18ish.
Got one of these plans for each kid right after they were born! Highly recommend it. But setting it up is not where it ends. Like mentioned, you have to actively add to the plan!
I am currently a college freshman and I have a 529 plan. It plays a huge advantage in helping me pay for college, the only downside is that there are vast amounts of withdrawal fees for any money that isn’t used on college.
Im also a freshman in college, and i dont have any plan what so ever. Please, please help your child out and dont make them fend for their own after high school. I worked a job for 3 years, and was able to pay off my first semester of school. Now i must take loans, and the interest rates are crazy for us students. I was gonna take a $10,000 loan from wells fargo, and i would end up paying about $19,000 when all said and done. Save the family a lot of money, and get some sort of plan for them
I fended for myself pretty much and lived without huge college loans,
I’d reassess the need for college though. I wouldn’t do it again.
my family had a an account set up for me, when i graduated i had no plans for college went straight into the plumbers/pipefitters union, lost allot of money when we pulled the money out but there was still enough there to help on a down payment on my first house. one other thing maybe i was fortunate in 03 to have a good economy but i was able to save 10k myself just working summer jobs and after school. to this day i have never had as much money than the day i graduated high school. the real world sure knows how to eat it up.
529 you do not have to use Minnesota 529 if you make over $50k per house hold it has no advantage. At the time I started my kids 529 Iowa was the best return on my money. Look on line at teh the best performing 529’s The key is to put money in every month and more then one person can do that also.
We have a 18 month old. We set up a FS529 through our insurance broker. It is kind of depressing when they show you that your planned giving will only pay for one semester of college. Every little bit helps though.
How do 529’s affect access to other financial benefits.
Please explain the comment about the over 50k per household and no advantage.
My in-laws have set up 529’s for both our kids, just curious if that’s the best option.
My wife and I started a 529 for our first daughter at age 1 last year and since have added a second little girl to our herd. You do not have to start multiple 529’s, or one for each child. Just start one and divy up for each child. The truly depressing part is doing some math and figuring out how much it would take each month to set asside to pay for both of their schooling. I think our finanacial advisor figured about a 4% increase per year from what it is now (tuition, room/board, books, etc), we would have to put away in excess of $600/month to pay for both children, and this was for state college.
My wife and I both didnt get much help from parents for college. I have a BS and came out with 20K in debt, she has a BS, MS, and DVM, which was 8 yrs. of shool and graduated with over 100K in debt. Our student loan payments are over 1K/month. The good news is college was definately worth it for us and we should have it paid off in 6-7 years.
Our financial guy also mentioned that if the kids didnt go to school you can use the 529 on yourself and some people will take their spouse on vacation and go to some tropical place to “golf” school.
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Please explain the comment about the over 50k per household and no advantage.
Most states have a 529 plan, the Minnesota 529 plan will match a % of your contributions if you live in state, but you have to be low income or meet certain criteria.
It is best to talk to a financial advisor about what is best for you and your child. I spent many hours on the internet learned it by myself.
Max out your Roth IRA first which is $5000 dollars a year. Then start contributing to a 529 account. 529 can only be used for college expenses. Roths can be used for retirement and college, and you have unlimited choices to invest in.
jerad you might want to speak to somebody to give you solid advise, show me an accredited golf school where your wife would really be interested to go with. Unless all your kids are the same age, you will want a 529 in each of their names. Reason is, some of the investment options are portfolio’s based on age (usually lower expenses too). As a younger child can assume some extra market risk/reward, that child of yours one year out from needing the money has no business having 100% of their money aggressively invested. The portolio will rebalance automatically as the child nears 18 to become more conservative. Try to open the account with your parents or in-laws as owners. Assets held in the students name (they own the money) is counted against financial aid needs (FAFSA report) much greater than the parents assets. They don’t even look at the grandparents of the kids to determine financial needs.
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My wife and I started a 529 for our first daughter at age 1 last year and since have added a second little girl to our herd. You do not have to start multiple 529’s, or one for each child. Just start one and divy up for each child.
Our financial guy also mentioned that if the kids didnt go to school you can use the 529 on yourself and some people will take their spouse on vacation and go to some tropical place to “golf” school.
Both of these statements are ABSOLUTELY key. And a prime example of why you need to talk to a financial planner who knows what they are doing when setting up a 529. These things are not savings accounts and they have lots of little, but COMPLICATED rules that matter a lot.
My wife and I have also set up a 529 for our kids, but again it’s a single plan that we will then be able to divide up between our two boys as needs arise.
Don’t get suckered into the “feelgood” factor of having two plans just so you can put one child’s name on each. You’re paying more in fees and more in hassle to do it this way and you are potentially giving up some flexibility.
People get overly concerned about the “what if they don’t go to college” thing. As Jered mentions, there are already many adult-friendly “educational” offerings that can help mom and dad have a terrific time solving this problem. Cooking classes in Tuscany. Marine biology on the Great Barrier Reef in Australia. Golf academy. Advanced woodworking classes. Etc.
But realistically, this is a problem that very few people will have. Having 2 children growing up in the 21st century and neither goes on to any post-secondary education? Not going to happen very often.
Also, I think just showing your kids the plan and talking to them about how important this is helps to set the expectation that someday they will go on to college.
Grouse
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jerad you might want to speak to somebody to give you solid advise, show me an accredited golf school where your wife would really be interested to go with. Unless all your kids are the same age, you will want a 529 in each of their names. Reason is, some of the investment options are portfolio’s based on age (usually lower expenses too).
He is getting solid advice.
You can balance any portion of the funds within a 529 to any level of risk you want. If your plan is limiting your fund options by the age of the child, you should get a different plan.
I agree that to some extent it doesn’t matter because if the plan is set up properly, the parent is the owner and can re-assign funds should either child not go on to use them. But to me, this doesn’t answer the question: Why complicate things with multiple plans?
What difference does it make if you have 2 plans with $50,000 each in them or one plan with $100,000 split between lower and higher risk funds?
As with all investing, you should be diversified and you should be reducing market risk for any funds that are needed in the near term. You can do that inside of a single 529 plan. So why double the hassle?
Grouse
very good point Grouse.
The conversations with your children should NEVER start with IF YOU GO TO COLLEGE it should always be WHEN YOU GO TO COLLEGE. Even if that child thinks he/she will be going into a trade (ie: electrician, plumbing, etc). Investing in yourself is the number 1 greatest investment you can make.
Both of my boys have 529’s. I may not be able to pay for the whole thing but its worth the effort to try. I wish I would have had some of that financial support. I was very lucky when I grauduated with $80K of debt. The interest rate I got locked into 10 years ago was/is 1.6%, free money in my eyes. It will be the last bill I pay off. The true crime now a days is that the interest rates on these loans are not regulated nearly enough. No jobs for people and little incentive to back to school because of the rediculous interest rate on school loans. i don’t believe banks shoudl be allowed to make this much money on college kids.
Grouse, while you are focused on the accumulation stage. Look at the distribution phase while your aggresive fund are tanking. Can you say double edged sword? And do you think having two accounts is a hassle, vs keeping money split up in one account and trying to work with two risk styles in one account? It’s the same thing, only different. One should really focus on expenses, given roughly the same rate of return, the account with lower expenses wins every time. Do your research on your states plan, see if it offers state tax deductibility. If there is no benefit, check with other states plans.
I paid for pretty much all my own college expenses for 5 years by working while in college and a summer concrete job. I consider myself lucky to have escaped debt free.
When my 2 daughters were born, my lovely wife and I set up accounts for each that we contribute to each month since then to help cover college expenses.
As noted previously, both of my girls have known for some time, that is it not if they will go to college, it is which one… 
Chomps is right, Jerad. Talk to somebody and get good financial advice.
You don’t have to set up multiple 529 plans. Many do and for good reason. Each state’s 529 plan is different. Some allow you to change the investment strategy, others allow you to choose the initial investment strategy. There are so many options and rules that you really need to speak to someone about your situation.
The guy that said people are taking the money and going to “golf school” is either an idiot or is not quite telling the entire story.
jd
I thought you were just supposed to Vote Dem and hope it all works out…
Aren’t the Dems going to take care of everyone? I think there is a school plan for everyone – I think it is in some bill that will be coming in 2015. Not to worry.
You are all crazy, planning for the future and taking matters into your own hands – like a responsible human being.
Shocking!!!!
Dog
Lots of good advice, I’m glad I asked. It looks like I am going to be making some calls to figure out what will work the best for us. This all came about because they were picking my corn the other day and I figured it’s about time to stop blowing it on toys and to start doing more investing for the kid. Thanks everyone for the input, very good info.
to play devils advocate here,I think saving for college is overrated. We have a college freshman this year and thought we were doing the right thing by saving. As previously stated it is impossible to save enough for a 4 or more year degree, and when you apply for financial aid you must report balances of all your accts and your childs, and if you have anything at all they will give you squat. We had 8-10k saved up (1 year maybe) and got no grants, we werent even given a deferred interest loan, it starts accumulating from day 1 at 6.8%. Several of our friends had the same results. Makes me wonder if we’d been better off being flat broke when we applied for aid.
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to play devils advocate here,I think saving for college is overrated. We have a college freshman this year and thought we were doing the right thing by saving. As previously stated it is impossible to save enough for a 4 or more year degree, and when you apply for financial aid you must report balances of all your accts and your childs, and if you have anything at all they will give you squat. We had 8-10k saved up (1 year maybe) and got no grants, we werent even given a deferred interest loan, it starts accumulating from day 1 at 6.8%. Several of our friends had the same results. Makes me wonder if we’d been better off being flat broke when we applied for aid.
please read above about putting the 529 account in the names of your parents or in-laws with your children as beneficiaries.
chomps,
Would putting those accounts in grandparents name really matter on the FAFSA if your household income was a decent amount (greater than $50K)? I don’t know for sure but I would speculate that if you make a certain amount it wouldn’t matter who’s name was on the 529. 
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very good point Grouse.
The conversations with your children should NEVER start with IF YOU GO TO COLLEGE it should always be WHEN YOU GO TO COLLEGE. Even if that child thinks he/she will be going into a trade (ie: electrician, plumbing, etc). Investing in yourself is the number 1 greatest investment you can make.
Totally agree.
I also say to my younger nieces, nephews, and cousins that are still in school, that trade schools ARE college. There’s nothing easy or fast about becoming an electrician, plumber, welder, or a diesel mechanic. While it’s different from a traditional bachelor’s degree, it’s no less demanding and these days it sure as heck isn’t cheap.
Sadly, I think the day has come when post-HS education is “transactional” for most kids, rather than a part of growing up. The costs are so huge and the job prospects are so limited it’s all becoming about getting an ROI so you can stay ahead of the student loans.
Grouse
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Max out your Roth IRA first which is $5000 dollars a year. Then start contributing to a 529 account. 529 can only be used for college expenses. Roths can be used for retirement and college, and you have unlimited choices to invest in.
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