Saving for college

[calv]

It's all so darn confusing to me and there seems to be a lot of programs out there. What if any program are you in to save for your childs college? I know the 529 is popular (don't know much about it). Looking forward to hearing advice and your experience. TIA! :)

[JBaxter]

We have 529 accounts for all 3 boys. We put DH's bonus checks and our tax refunds ( in years past this year we owe BIG TIME :( ) in and a regular set monthly amount. They way I understand it is if child A doesnt use all the money it can be transfered into child B's account.

[nfowife]

We also have a 529 for DD. We actually have accts. in 2 states because they were the states that offered the investment options we wanted for the money.

[calv]

so does either child get penalized if they dont use it? I.E. i have 2 girls. what if neither of them go to college?

[bcky2]

i have one 529 account for the boys, if one doesnt use it the other can. or else they have to split what is in there :)

[BeachBum]

We are in the process of setting up a 529. I think we are going to use Nevada.
There are two good web resources we found:
savingforcollege.com
and 401kid.com

There is also the option of a coverdell (coverdale?) IRA. I didn't like that one because the child owns the money but many financial advisors recommend it for one reason or another. If would be worth looking into.

From what I read, we need to add about $350 PER MONTH to fully cover college costs! Scary!

[calv]

good gawd, that would mean $700 for us! Is that for Ivy league or a state college?

[Sillygirl]

Nevada is one of the two best-regarded states for 529's. They have very low admin fees. That is where our college savings for Jonathan are.

[KrisM]

We decided we couldn't afford to save for both retirement and college, so we are only saving for retirement. Part of that reasoning, is that we can more easily borrow for college than retirement.

So, we have Roth IRAs set up for each of us. Any contributions can be withdrawn at any time without penalty, so if the market goes well and we feel like we can afford to pull some out for college, we can do so without a worry.

Plus, DH comes from a smart family. That, of course, doesn't mean DS will be smart, but he has PhDs and MIT grads in his genes, so if he does get a scholarship, we don't have to forfeit any money in a 529.

[nfowife]

We have the 529 like I said before and it is transferrable with no penalties for any of your children or immediate family member. So if DD doesn't use it, her sister/brother can, or I can use it to go to grad school, a cousin, etc. I'm not sure what we will do when #2 comes along- if we'll open a new one or just make this one bigger. There are limits to how much you can contribute each year so that is something to think about, if you are trying to catch up or whatever.

[DebbieJ]

I paid for my own college as did my DH, so our child(ren) will also pay for their own.

No college savings plans here. I fund my IRA instead. :)

~ deb
DS born at home 12/03
2 year check up: 25 lbs with clothes on and 35 inches!
BFARed for 20 months and 6 days
(Breastfeeding After Reduction is possible! www.bfar.org)

http://www.bfar.org/members/fora/style_avatars/Ribbons/18months-bfar.jpg

[o_mom]

Actually, if they get a scholarship, you can withdrawl from a 529 the amount of the scholarship without penalty (I think you still pay taxes on earnings though?), so that is not a huge worry.

[o_mom]

We have an Iowa 529 - mainly picked because it is linked to Upromise, and has very low fees. Our state does not give any tax incentives to invest in their plan, so we use an out of state plan.

I do like that the 529 is not owned by the child - they can't make withdrawls on their own. Also, it is transferrable if one child doesn't use theirs, you can transfer to other kids and other relatives (cousins, aunts, grandparents, grandchildren, etc.). If they get a scholarship, you can withdrawl that amount without penalty.

We are basically saving enough to cover in-state schools. If they want to go out of state or private, we will look into scholarships or loans to cover the difference.

[KrisM]

That's good to know. If we ever feel we can afford both, I'm sure we'd do a 529 then.

[icunurse]

Couldn't agree more! DH and I both paid our way through college (and grad school, too, for me). I think having some loans (and knowing that you will be responsible for them) makes you fiscally responsible and gives you extra incentive to graduate in 4 years. DH and I will help out if we can, but I honestly feel no guilt about saying that I will retire early before I worry about paying all of my children's college tuition (or for a wedding!).

Traci
~Connor's Mom 02/2004~
Agency paperwork completed - waiting (and waiting) for another baby!