Saving for college??

[ardrhi]

My parents helped me the most by not helping me too much. Most of the kids that I knew as a freshman who were getting a free ride from mommy and daddy were nowhere to be seen on graduation day. Here is what my parents gave to me and what I will give to my kids (with a little adjustment for inflation):
1. Basic transportation. They will get a fuel efficient reliable car. Most of the gas will be up to them.
2. Basic housing. About $200 per month. They are going to have to either find a shared apartment or live in the dorms. (My parents only gave me the option of living at home, with a 20 mile commute).
3. Basic food. About $100 per month plus all of the deer, elk, beef, and vegetables from the garden they care to cook (I only got the food part of the deal).
4. Free tickets home. I will pay for gas to visit and I will pay for any recreation that they do with the family back home. Hunting expenses, of course, are my treat.

The above "scholarship" is good for 5 years of school as long as they are enrolled full time.

Both of my kids (12 & 14) know about the deal and are working hard to make sure they have scholarships when they graduate from high school.

My total costs will be about $5 - 6,000 per kid per year. That is approximately what I spend on them now.

Instead of saving, I am paying down all of my loans.

 

[Dinkshooter]

It would be smart to let them pay the first 2 years or so then help on the back end. More of a return on investment at that point. No drinking and raising hell for 2 years then drop out......................

 

[Dinkshooter]

PS

Although someone wished me Happy Fathers day yesterday, I'm not a father.

 

[Oak]

PS

Although someone wished me Happy Fathers day yesterday, I'm not a father.

Did it start out like this?

"Dink, I'm your son...."

 

[Dinkshooter]

No it was the lady at the liquor store?

 

[idnative1948]

Both daughters have degrees. One in geology and one in secondary ed. Wife and I have never made a ton of money, but told them aside from any scholarships we would help them with tuition. Both of them made it by working through college and not having a vehicle. Tough on them, but both are very good money managers now that they are married and raising families. Bottom line is wife and I's parents never handed it to us and that is how we raised our daughters.

 

[Dinkshooter]

I had two "collage" roommates that both received checks each month for the necessities. They both bought new skateboards and several bags of weed with it every month. Neither finished school that I'm aware of.

 

[spook12]

Dink you weren't ''Working'' your way through school ,keeping the roomies in weed were you?

 

[Dinkshooter]

I've to many expensive hobbies to do recreational drugs; a drug user told this to me.

 

[Dinkshooter]

But I'd a least had spending cash if I had taken the route you refer to.

 

[Big Fin]

Pointer - You have received a lot of answers on raising kids and under what terms to fund any/part of college, but not much on HOW to fund.

The 529 is the no-brainer, if you are certain they will attend some college or vo-tech after high school. You have all kinds of investment options, if you go with one of the states that sponsor good 529 programs. My state of MT has one of the worst programs.

You can fund the money to any state, even if you don't live there and even if your child does NOT go to school there. Though your home state will possibly provide some tax-benefits if you use the home state 529 plan. In my case, the MT plan was so bad, I was money ahead to forego the tax benefit and invest it in a plan that had decent investment options.

Hard to be the tax-exemption the 529 plan will provide. Makes the true returns much better.

Good luck.

 

[dustinf]

My wife had to pay her way through college, and by the time she graduated she had $120,000 in student loans. Only 12 more years left at $700 a month.

Mainly because her dead beat parents didn't give her any help/advice on how to get any financial aid. The school just kept feeding her loan aps, and no other guidance. She did a 6 year masters in 5 years, so that doesn't leave much time for working.

I'm not saying she's innocent in the deal, I'm just saying the idea of working your way through college is extremely unrealistic.

 

[1_pointer]

Thanks everyone for the advice. I will look into the 529 options and probably enroll both in one in the next month. Any advice on what makes a "good" 529 vs. a "bad" one? Here's a brief + link of what the state of Indiana's basic plan provides (this state offers 3 529 options, see link if interested). It does offer an "age-based" investment strategy which I do like. As I said, I'm lazy and ignorant when it comes to money and investments.

CollegeChoice 529 is designed to give you an affordable, flexible, and smart way to save for college. See how you can benefit from all that CollegeChoice 529 has to offer.

Read on to find out why CollegeChoice 529 is:

Affordable: Low minimums, high maximums, and low average costs
Flexible: Range of investment options and online account access
Tax-smart: Tax-deferred growth, federal tax-free qualified withdrawals,* special tax credit for Indiana residents,** gift-tax and estate planning benefits
* Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.

** Indiana taxpayers are eligible for a state income tax credit of 20% of contributions to their CollegeChoice 529 account, up to $1,000 credit per year. This credit may be subject to recapture from the account owner (not the contributor) in certain circumstances, such as rollover to another state's 529 plan or non-qualified withdrawal.

http://www.in.gov/tos/iesa/

 

[1_pointer]

To address some of the other questions asked to me or other things brought up:

Why would you want to pay taxes now vs. later

I don't see taxes getting lower, only higher in my lifetime. Either way I'm sure it won't make or break me.

And as you know, living and learning in Logan is a pretty good bargain.

Learing, yes. Living...I can't speak to that as I never even lived in the valley. Though I cannot think it wouldn't be great. I only hope I am in the financial situation to be able to do what you've done (pay out of pocket). A helping hand does not have to be a hand out...

Pointer, I'm starting a Website called DoTheOppositeOfOscar.com

I would NOT invest in the 529's.... There within lies your answer

I'm taking that under strong advisement!

In 1988 I worked 3 months and maybe 2 weeks...my base salary as a gs-3 was 5.77/hour. I made $9,800 with 3 days off total in that time frame. My longest stretch of consecutive days of work was 36.

FWIW, I don't think work/rest regs allow for that much work driving a pulaski now. Granted, I think it'd be a great job and experience for them, especially if they want to get into NR management (which I hope and will support, if for selfish reasons )

Niether of my kids will be getting a completely free ride. They will definitely have some skin in the game. Additionally, any money we save will not be handed to them, the wife and I will decide where it goes. But, right now I do not plan on letting them have jobs, probably not even in the summer, until they graduate high school. That was the case for me and I think it worked well. No worries though, they will be taught responsibility by me and not an employer. Hopefully, they'll be too busy participating in things like sports and/or other extra curriculars to not have time between those things and studying to have a job. I can put them to work as well as anyone!

On another note, I plan on doing as much with them up until that point as possible. At 32 I lost my father and realize that memories are much to valuable to pass up on. I cherish what we did together and what he gave up to allow me to be where I am. I hope to do the same or better for mine.

PS- I am currently spending more per year on daycare than some of the college costs being thrown out there...

 

[MNElkNut]

Count me as another who shouldered the vast majority of the cost of college. My dad was always there to help out spring semester with books or whatever when my money just plain ran out, but that was measured in hundreds of dollars. I graduated with $9,000 in loans, $5,000 of which I took out to buy my first house.

Having said that, I expect the same type of thing from my kids. Work hard during the summer, have a part time job, be a good....errr great student. But even at that, I dont believe they will be able to make it without incurring some hefty loans. So we have a 529 set up for all 3 of them (8 yrs old, 4 yrs old and 4 yrs old). The wife has researched it and I believe we are on a plan from Utah or Idaho or something as it is rated much higher than MN. There is no way we will be paying for all of their education, but by helping some I hope that when they get done, they wont have a mortgage-like loan to pay off.

Buzz, interesting thought on the 1 semester on, 1 off idea. I would think however, financially speaking, you would be better off getting done and getting into your career sooner. the 2 reasons that jump out at me are 1. you will be making much more in your chosen career (presumably if you made a wise career choice) and 2. Your retirement savings is so dependent on the number of years you work...if you delay getting into the workforce, you really delay your retirement. Put another way, the last couple years your retirement account really should be increasing rapidly. Does this make sense or am I missing something?

 

[SDHNTR]

Thanks everyone for the advice. I will look into the 529 options and probably enroll both in one in the next month. Any advice on what makes a "good" 529 vs. a "bad" one? Here's a brief + link of what the state of Indiana's basic plan provides (this state offers 3 529 options, see link if interested). It does offer an "age-based" investment strategy which I do like. As I said, I'm lazy and ignorant when it comes to money and investments.


http://www.in.gov/tos/iesa/

You probably want the Direct version if you do not have a financial advisor you are working with, and/or if you want to invest in more than just CD's. If you are "lazy' and just want it on auto pilot, the age-based portfolios are great.

 

[1_pointer]

You probably want the Direct version if you do not have a financial advisor you are working with, and/or if you want to invest in more than just CD's. If you are "lazy' and just want it on auto pilot, the age-based portfolios are great.

Thanks for the suggestion.

RE: financial advisor:
I am currently only putting money into my employer retirement investment fund (it does have options as to the fund types) with the only other investments being real estate. Is there a need for me to see about getting a financial advisor?

 

[huskyhunter]

I am with Buzz on this one. As a recent college grad(within 5 years) and having 2 younger brothers who graduated college since then, I can say first hand that someone can pay for their own schooling still. All three of us boys worked summer jobs(construction of some sorts) to help pay for school. Out of us three, the most student loans any of us has is around $8,000 I believe and that is after 5 years of schooling each(all three engineering degrees). I actually think it hinders a person in the long term if their parents are paying for school. From personal experience, if someones parents are paying for their school they seem to not care as much, become lazy and not work as hard. Again, this is just my experience but I see no reason why someone can't pay for their own schooling. Now if that kid wants to go to a super expensive private school, well that is their own problem then and they are gonna get a rude awakening when they leave school with $50,000 or more of student loans.

 

[Moosie]

While we're on the topic of paying. Is it worth having a Stanford degree verses a state local degree ? Is the 30k a semester better than a 2k ?

Thoughts ?

 

[SDHNTR]

Thanks for the suggestion.

RE: financial advisor:
I am currently only putting money into my employer retirement investment fund (it does have options as to the fund types) with the only other investments being real estate. Is there a need for me to see about getting a financial advisor?

Only you can answer that question. It depends on the complexity of your financial situation. If you feel like you need more clarity as to when/if/how you can retire, then yes, it may be a good idea. If you feel like you have a good handle on things and are willing to educate yorself, then you may not need such assistance.