saving for college

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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.

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This is where putting the money in a Roth IRA may be beneficial. Retirement accounts are exempt from the FAFSA reporting. 529’s that grandparents own would not need to be reported either.

As far as the original poster, if it is corn/grain that you raised, you may want to talk to tax adviser about options there. Not going to get into that aspect in the open forum.

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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).

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He is getting solid advice.

Grouse

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I couldn’t agree more. I trust my financial guy to steer me in the right direction.

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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

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So lets play some “what if’s” here. When I was told this was when I was starting up the 529 for my first child, before the second was born. What if, heaven forbid, something happened to my child? Either take a huge hit on the money by pulling it out or use it for some other “education”.

I shied away from 529’s because of the “must be used for school” portion. Sounds strange but hear me out….

What if they don’t go, get a scholarship, yada yada? I had previously purchased life insurance accounts on my kids with guaranteed insurability clauses built in. Guaranteeing my kids can have insurance despite health when they are older.

If you already own or intend to own a Universal, Whole Life, or variable universal insurance account and already intend to put money into the premiums, you can add additional cash, up to a limit (policy specific) that grows tax deferred. Again, this is in ADDITION to the premium. I don’t recommend life insurance with just premiums as college investments.

But the additional cash grows tax-deferred and can be used by you in any way you like, college or hot red convertible.

You can either cash out the policy, reduce the face value, or loan against it and pay yourself back when you use the $$.

Just another idea to consider.

ET

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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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FAFSA would have questions based on income and assets in the parents name, among other things. Yes income alone could show you have the means to pay for the entire bill, thus eliminating any financial grants. The child can work and get loans, and that will be shown, but we all know the reality of that. If you had a large stack of bills in the grandparents name, it would not be used in the FAFSA financial equation. The ROTH IRA is a great idea, but if we are talking about having too much income for college grants/aid we also might assume you make too much to contribute to a ROTH. The life insurance idea is also valid and can work, but if you do anything else but loan the money out and you have a gain over the basis, you would also have to pay the tax man. Lots of great input and ideas and something is better than nothing. I myself had 529’s set up for each of my kids. Son #1 fell into a full ride, the only thing I had to withdraw was for living expenses. He has a remaining balance. I’ll leave him as the beneficiary for now not knowing if he wants to continue with some more education. If not my daughter will have 2 529 plans from which to tap from. God forbid, if she dies the money can stay a 529, but now I wait for grand kids. If you take money from the 529 for any but qualified expenses it is treated like an early withdrawal from an IRA.

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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.

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Financial aid for many families is little more than a dream. My parent’s made way to much for an assistance. My fiance and I will make way to much for our son to get aid. That leaves us saving, him working and loans.

I came out of college with a couple degrees and 65k in debt. Thank goodness my field of choice could justify that amount of debt. However tons of students are graduating today with that much or more debt and making half that per year if they are lucky. That math does not add up.

That leaves us wondering what the future will be. What if my son has a passion for a career field that doesn’t pay crap? How can he justify a 40k-50k degree to make crap? What is the ROI there?

Hopefully he can learn from and avoid my mistakes. At least two years of post-secondary option = 2 years of free college. State Universities are just as good as private colleges and cost at least 1/2 the price. Go to school locally and live at home if possible.

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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

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So lets play some “what if’s” here. When I was told this was when I was starting up the 529 for my first child, before the second was born. What if, heaven forbid, something happened to my child? Either take a huge hit on the money by pulling it out or use it for some other “education”.

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Pulling the money out to go to “golf school” would not be a qualified distribution. Therefore you would still take a “huge hit” by doing what your adviser is suggesting. The education expenses need to be at an eligible school to be tax free. A golf school will not meet the definition.

Many 529’s allow you to change the beneficiary to another sibling, neice, nephew, grandchild, etc.

My kids are screwed!

My option was the GI Bill and a summer job and living on very little for those years. My son is on his 3rd year now and it’s about $26K/yr. Don’t think my option would work anymore.