Investments for your child

[Codewiz]

I am just curious what other people are doing for their children.

So far, we only have one child(2yr old). We were originally doing an Education Spending Account until this year when the Feds nuked the program. We moved to a 529 plan. We invest $2600/year in the 529. Additionally, we are throwing $100/month in a general savings account that compounds daily.

So what are you doing for your children if anything?

 

[Farmer]

Considering most good American universities offer unbelievably generous need based financial aid, it's actually beneficial to be dirt poor and not pay anything rather than be totally prepared and pay everything.

 

[nanette1985]

Considering most good American universities offer unbelievably generous need based financial aid, it's actually beneficial to be dirt poor and not pay anything rather than be totally prepared and pay everything.

True. Although that could change by the time a 2-year-old is ready for college.

 

[vi edit]

Check with your state first and see if they offer any benefits to a 529 plan (income tax deductions).

I'm signed up with the College Iowa plan, even though I live in Il.
https://collegesavingsiowa.s.upromise.com/

I went that route because it uses Vanguard index funds that are very low cost and it's fairly easy to reallocate later. I lose out on the state income tax savings since I don't live in the state of Iowa but it's still a better value to me than the IL plans.

I could "prepay" for college costs locked in at today's tuition rates through an IL plan but it locks me into the IL school system. If my kid choses not to (or isn't accepted) to an IL school then I get principal + like 0.5% interest back. I'd rather not risk that.

Sad thing is that I can still send my kid to Iowa at an out of state tuition rate cheaper than I can to IL as an instate resident.

 

[Texashiker]

Considering most good American universities offer unbelievably generous need based financial aid, it's actually beneficial to be dirt poor and not pay anything rather than be totally prepared and pay everything.

Community college for the win.

OP, I understand why your making these efforts, but why? Why would you save money for decades, just to send your kids to some over priced college? Whatever you save, your kids are go to a college that cost all of that and more.

~~ EDIT ~~

There have been a lot of articles lately in the news about how colleges and universities are charging too much, and new graduates are loaded with debt.

Some colleges let you pay at todays prices, and when your kid gets of age they can go to the college for prices paid for 20 years previous. To me, that would be a better investment, then saving a butt load of money, and little Suzy saying "lets see if we can spend all of that money 1 one semester".

Also, how many kids blow their first couple of years in college? When I went to college, I was 28 years old. those 18 and 19 year old kids were having their parents pay for college, and then either dropping out or failing the classes.

If anything, save up for the college, and have little Suzy pay you back, instead of taking out student loans from somewhere.

I disagree with paying your kids college, and not teaching them any financial responsibility until their in their mid-20s. Pay for their college, but have them pay you back.

 

[vi edit]

Considering most good American universities offer unbelievably generous need based financial aid, it's actually beneficial to be dirt poor and not pay anything rather than be totally prepared and pay everything.

Somewhat true...somewhat exaggerated. There's very little that a state school will offer to students other than student work, Stafford loans, and in very rare cases Pell grants..but you gotta be REAL poor for those.

Private universities are much more competitive with grants, scholarships, and all kinds of discounts and things they can apply. And while your tuition might be 50% off the MSRP...half of $40,000 is still $20,000.

Student loan interest rates are pretty sickening right now. I know some poor suckers that had 7% rates. My wife locked in at a touch over 2% when she graduated in 2006. That's a huge difference in monthly payments.

It's the loans that are really my worry. I just don't want my kid having to walk out of a 4 year degree with a $60,000 weight around their kneck. I'd rather just pay that out of pocket and have them walk away with no loans or very little ones so they can actually start saving when they get their first job.

 

[Farmer]

Guh guh guh guh.

Make sure to invest time into educating your child far beyond what is considered satisfactory by your local board of ed. I think that's far more important than financial planning for college.

For my first statement, I payed maybe 10% of MSRP for college. I know a guy whose dad delivered newspapers for a living. He went to probably the best school in the nation, didn't pay a cent, so I'm kind of biased against devoting so much effort into saving for college.

Pretty much, if your kid is smart, he'll do fine.

 

[Dirigible]

529 plan.

My parents were poor so I went to a fancy school and it was almost free. I'm not poor and do not want my kids saddled with big debt when they graduate.

Make sure you're saving enough for retirement.

 

[vi edit]

For my first statement, I payed maybe 10% of MSRP for college. I know a guy whose dad delivered newspapers for a living. He went to probably the best school in the nation, didn't pay a cent, so I'm kind of biased against devoting so much effort into saving for college.

My wife and I are both in fairly high paying positions so any forgiveness in costs are going to be gone anyway just due to incomes. We can't fudge that. The 529 is in my name with me as the beneficiary so it doesn't count against my daughters ability to pay (like a trust in her name would). If she needs it then any income in the fund is tax free for college. If she doesn't need it then I can pay the long term capital income rates like any other stock and go buy me my Corvette and a boat for my midlife crisis therapy.

 

[Kirby]

529 plan.

My parents were poor so I went to a fancy school and it was almost free. I'm not poor and do not want my kids saddled with big debt when they graduate.

Make sure you're saving enough for retirement.

My parent's signed up for Alabama's PACT program in the late 80s. I think they paid about $3000 and that covers 4 years of instate tuition now. The program is currently bankrupting the state and they may not be able to pay out to everyone that has a contract. Good for me and my sister, sucks for the state.

http://blog.al.com/spotnews/2010/12/despite_bailout_alabamas_prepa.html

 

[Codewiz]

When I went to school, I used pell grants and subsidized loans. I managed to get out of college with 15K worth of debt. I worked 30+ hours a week while carrying a full course load.

Needless to say, my mom was poor hence the Pell grants.

Do I think I will have enough saved to pay for my son's college? Hell no, the expense is through the roof. However, I will do what I can to help. One of the reasons I like the Education Savings Accounts was that I could use the money towards private schools for elementary through high school in addition to college.

My son is going to have three options. Get a full scholarship like his mother did for undergrad/grad. Get an athletic scholarship, or get loans to cover any amount over the 529. Or his other choice is to learn a trade skill. I really don't care which way he goes.

The savings account we are putting together isn't something I plan on telling him until he turns 18.

As for our retirement savings, we already max out our 401Ks and Roth IRAs. The only thing else we could really do for our retirement is opening a standard IRA. However, with the money we put away in our 401K, I don't have much incentive to do it.

 

[DaWhim]

my plan to when my kid is 17 y/o, give them 10k, go have fun for the gap year.

make the preparation, if the kid is going to a different state university, then establish a residency there before off for the gap year. if it is private school, it doesn't matter, when the kid apply for financial aids, now he/she is independent, doesn't live at home, and "dirt poor".

my parents didn't give me a penny for university. i got through it with financial aids and loans. still 20k in debts

 

[highland145]

$5K/year for private school now. Smart kid so I'm hoping for some free $$. With state grants and lotto $$, he can have a free ride at our local university, which is a top tier B school. He can transfer after a couple of years. Also, have a 529.

 

[JTsyo]

529 plan.

 

[polarmystery]

Teaching your child how to make important financial decisions should be #1. By the time they are ready to go to college if they choose to, their knowledge of how money affects them will be worth it's weight in gold.

(That being said, I wish my parents understood this )

 

[Elbryn]

As for our retirement savings, we already max out our 401Ks and Roth IRAs. The only thing else we could really do for our retirement is opening a standard IRA. However, with the money we put away in our 401K, I don't have much incentive to do it.

if you went the roth route, you cant contribute to traditional iras.

we went with the 529 route. we get some state tax breaks for the first 2k in contributions and the state 529 has vanguard funds. opened one up for each one, our goal is to try to maintain the 2k/year for each kid to get us the biggest break.
our folks have pitched in a bit here and there for bdays/xmas. whatever it takes

the second option is employer discount. i work for a state university. should i still be working there when the kids get to that age, they'll get a 50% tuition discount.

third option should our taxable or roth retirement investments pan out is the entertaining thought of going part time and making just below the federal income limit the year prior to first kid going to college and qualifying to use the simplified EFC calculation for the FAFSA which does not count parental or student assets in the efc calculation to get as much public assistance as possible.

 

[blackdogdeek]

529 plan.

this

 

[Oyeve]

Liquid assets. back in the 80s, 90s and early 2ks I bought tons of comic books, sports cards and tons of collectible stuff. In the last 25 years or so this stuff has skyrocketed and when my son goes to college in the next 1.5 years I will sell this stuff and pay his way.

 

[joesmoke]

cigarettes

 

[JS80]

529. If my kids go to college I will tell them you can use all 529 funds, if cost is over you're on your own.

 

[RKS]

we have 529 plans but I wanted to tie their right hands behind their backs. There ain't nothing more valuable than a left-handed starting pitcher.

 

[Nintendesert]

Nothing. I'm spending all my money on ME!