Have You Started a College Fund for Your Children?

ABSOLUTELY! I enrolled both of my children in the FL Prepaid College Plan as soon as they were born. I strongly feel that this was a priority. When they get ready to go, they will be able to go to any of the FL State Universities and their entire tuition and local fees will be paid.

I know that some people do not feel an obligation to help with college, but I respectfully disagree. I think that I as a parent should help my kids the best that I am financially able to help. This way, I am putting away money each month for their education.

Theresa, that's just not true anymore. If your kids went to college some years ago that may have been the case. 529 plan assets can be set up in such a way that they are sheltered quite nicely from the expected family contribution and if the account owners are grandparents, those savings don't count AT ALL. Pell grants are for people who truly can't afford college (or gaming the system to make it look that way). For most normal, middle class families, Pell grants won't happen, college savings or not. A Pell grant maxes out at $5500 a year for a super-expensive college (you would get far less for a lower cost school). It's hardly a means to foot the whole bill, especially for a private college or expensive state school. For most middle class families, saving what they can in 529 plan is a great idea and NOT saving for the hope of maybe getting a few thousand a year in Pell grants is a pretty stupid gamble.

For anyone else considering college savings, the various 529 saving plans (some are just general savings, some are pre-paid tuition plans like L.'s link refers to and some are hybrids of that) offer lots of options and benefits are are definitely worth looking into. For the purposes of determining the expected family contribution for financial aid, the assets if a 529 plan are considered the asset of the parents and not the student and the first $50,000 in a 529 plan are not factored into the family's assets that are considered when coming up with the EFC. The current formula assumes that 5.64% of parental assets are available for college. So if you saved $100K in a 529 plan, the first $50K wouldn't count at all and of the remaining $50K, only $2,820 would be added to the family's EFC. If the assets were in the child's name (say a grandparent set up a trust fund or UTMA/UGMA account in the child's name) then the EFC would expect that 20% of those assets would be available for college. The beauty of a 529 is that the student is the beneficiary, not the owner of the account.

So to anyone reading this, please don't assume that the best way to pay for college is to not save at all - unless you are legitimately poor, all you're doing is setting yourselves and/or your student to borrow more. Better to save what you can now in a tax-advantaged college savings plan and reduce the amount of money that needs to be borrowed later.

Sorry JB, Hmmm, well if I had had a college fund (529) account for MY kids, they would not have anywhere NEAR the grants that they've qualified for.

So unless you can save MINIMALLY $75k PER KID, by the time they apply, 529 accts will actually COST your kids money.

There is no WAY we could've had $225k in our kids' accounts since the oldest was born. And since when they applied for college, we had NOTHING, they got (and still get) the MAX PELL/TAP (NYS) grants (which with 2 in college amount to about 15k per year EACH). If we had a savings specifically for college, they would get ZERO grants.

Point is, do your homework. Find out what will work BEST for your child financially BEFORE you invest.

It is often a WAAAY better idea to use that money to completely pay off your house. Which can be mortgaged if need be, for tuition. And your kids will STILL get the max fed/state grants.

:)

Actually, it's COMPLETELY true, in my case. I have two currently in college. I filled out the FAFSA/Tap on line and my kids would get NEXT TO NOTHING if I had a 529 with only 10k in it, sorry. I am head long into the college process with two different kids, and YES every family needs to DO THEIR HOMEWORK before opening a 529. Do you want me to send you the forms with the numbers?

I am NOT suggesting it's true in EVERY case, but in MINE it IS. Sorry.

We are currently spending it as my daughter enters her second year of college. Much like TF Plano/Allen, we feel it is our responsibility to educate our daughter (our parents did not).

I wish we could have started before she was born but we took her in in an emergency situation and then adopted her. I will not have her graduating with debt and contrary to what some parents think, she is the most appreciative and grateful young woman around. Fortunately, she is also a smart cookie and has scholarships.

Yes, we started our daughter's fund before she was born. I'm in the minority on this site because we strongly believe its our obligation as a parent to get our daughter out of college debt free.

So yes, she is funded plus more. She'll start college in the fall of 2013.

We are also string believers of funding for retirement as well so we didn't slack on either, we made big sacrifices to do both.

We are not in the TX plan, we opted for another 529 route. We also have other funds allocated for her in different types of accounts.

My hubby is a numbers man, we plan, forecast, invest more when needed, and are focused on the college expenses and our retirement, both of which are fully funded at this point...BUT. Just because we may be "fully funded" does not stop us from investing more. We also follow advice from our tax and legal counsel closely.

Have not and will not. I had to pay my own way through and years of paying off my own loans prohibited me from saving for them. Plus I just can't now...and saving for my retirement is more important.

However, I do plan to help them pay off their student loans....I plan to match what they pay so they can be out of debt sooner.

Nope!!!

I had my son about 10 years before I'd planned to. I'd finished my bid in the USMC, but hadn't started college myself yet. I started college when he was 2 months old.

I've had to take a few years off here and there, and I only was able to attend part time... so now that he's 10... I have about 6-8 more years in front of me. Which means that by the time I graduate? He'll be starting.

I call it the "Paying for College Perpetually Plan"

I've been contributing monthly to a tax free Registered Education Savings Plan for both boys since they were born.

We've saved and planned with a financial advisor to pay for both of our daughter's to go through as much college as they need to reach their goals. My husband and I both believe that education one of the most valuable gifts you can give your children. That being said, we are also counting on our girls to do their part to earn good grades in school and on entrance exams to earn scholarship $. Our oldest has already earned enough to attend out of state at in state residency tuituion charges (in Arkansas). I've met with her college/career counselor and will be applying for many additional scholarship based on academic and leadership merit. By putting in all this work along the duration of their education, we are hoping our daughter's both see this as their own personal investment in their future.

Just don't ask me if we've saved for weddings!! Ouch!!

I have started one for my son, but it is a basic 529 plan. There were some pre-paid options available, but I didn't want to lock my son into a school or group of schools before he even turned a year old! Once he gets older and has an idea of where he might like to attend, I will revisit that option.

Yup. We were not able to get the sks' started til late but DD's is off and running. SS was able to graduate with money to spare because he got an academic scholarship and SD is going to need loans, but it will be less with the contribution. I paid my own way but I'd like to do what we can for DD. Not because we have to, but because we want to and can to an extent.
And if we can afford to pay some and spare the grant money for kids like I was, then I feel it's kind of paying it forward.

we have basic 529 accounts for the kids. We don't put much in it, but money goes into them every month.

I honestly am not too worried about it. College is the next big bubble. It will pop. When middle class families can no longer afford to send their kids to college, the colleges will have to chance.

Not from lack of wanting to. For the longest time we were barely able to go month to month on expenses. If any emergency came up we were in debt for a long while trying to catch up and we could never spare anything for savings. We finally got to a point in our lives where we made enough to have a real savings and not have emergencies put us under. We were saving for a new home and then was going to set up savings for the kids...until my husband got laid off. He just got a job a couple months ago after 7 months of unemployment. So we are now paying off the debt that built up keeping food on the table and a roof over our heads and we need to build the savings that is largely gone back up, all with a 10% pay cut. UGH!
We were just talking about this yesterday so it's all fresh in my annoyance scope at the moment so sorry to be a little whiny.
I figure I'll go back to work at some point to help the kids pay as much as we can and we hope to save at least something for them in time. I just don't want to see them buried under so much debt they can't breathe before they even get a chance to start their lives. How horrible!!

We are getting ready to invest $5k in an Exchange Traded Fund that follows the Dow. Using the average percentage return of over a 20 year investment, our $5k becomes $43 in about 18 years.

It's not much but about 6 months ago I started auto transfers into a basic savings acct of $5 a week. It's small, but it's something. I'm hoping as she gets older (6 now) and on and off daycare costs go away I will be able to add more to it.