College Savings Plans

[MtBikeLover]

We are going to be paying off our car this month and I would like to take the amount that we used to use to pay the car and put it into a savings plan for college.

If you have a college savings plan, can you tell me about it? Any good websites you used to help make decisions? Do you have a 529 or something else?

TIA!

[tarahsolazy]

We have our state's 529 plans for both kids. In our state you can deduct up to $2500 in contributions per kid on your taxes each year, which is very nice. We also have additional mutual fund investments that can be used for college, or whatever else we want to do with it down the line. Its all automatically deducted monthly, so I don't need to think about it, which is my kind of investing.

[velochic]

Savingforcollege.com is a good place to start to do some research.

We have Virginia's plan. We didn't choose our state because the plan was not very good and also because the money we could earn in another plan vastly out-earns any gains we would make by taking the state tax break.

Also note that the tax deductions you can take are for *state* taxes and only if you participate in your own state's plan.

Good luck!

[MommytoTwo]

We have the prepaid college plan for all 3 kids.

[Qestia]

We have a 529, add a couple hundred dollars a month to it, and have a credit card that contributes a % of purchases to it as well. DS has a nice little start to college going, especially considering I work for a school that would give him tuition for free.

The main thing I would tell you is to be sure the savings are in your name--when colleges look at financial aid eligibility they treat parental savings much differently than savings that are in the student's name.

[crazydiamond]

We have an ESA/Coverdell plan for DD and will be opening one up for the new baby as soon as he arrives.

It's similar to a Roth IRA, in that you contribute after-tax dollars to the plan. The money can be used for any educational expenses for the child, not just college. So you can use it to pay for high school band or private school tuition, etc. There are no conditions to where/how the money is spent, as long as it's for a qualified educational expense. If the child does not use it all, it can be rolled over to a sibling.

For us, this kind of plan made the most sense. We did not care for the restrictions of the 529 plan so we went with the Coverdell instead.

[Jessy1019]

We just have mutual funds for our kids -- not connected to college or education at all. This way, they can use them however best suits them, whether they want to go to college, travel, put a down payment on a house, buy a car, start a business, or do a few of those things (or things I haven't thought of).

I graduated from college because my parents set money aside for college and my mom basically bullied me into going. It was the biggest waste of money ever, for me. I don't use my degree, and didn't appreciate the college experience at all. It is really important to me that my kids go to college if and only if it will benefit them as individuals.

[MtBikeLover]

Originally Posted by Jessy1019

It is really important to me that my kids go to college if and only if it will benefit them as individuals.

I completely agree with this! I went to college, but my parents did not make me or bully me into going and I got a lot out of it and am really glad I went. But it was my choice. My sister did not go to college and she is happy too.

I am really glad my parents left the decision up to me. It made me appreciate it a lot more!

I will tell my kids what college does and that it can help and of course, I hope they go. But in the end, it is their choice.

Right now, I think I am leaning towards a 529. If the kids choose not to go to college then the money can be taken back out, it just gets taxed again if used for anything other than school. Even if I start putting money in now, I won't have enough in it to pay for 2 kids to do 4 years of college. At the most, there would be enough to pay for a total of 4 years of college (assuming private school for worst case scenario). Since I have 2 kids, there is a high liklihood that at least one of them will go to school so I feel the risk is pretty low. Plus, I think I get a state tax benefit for putting money into a 529.

I am just shocked at what the expected price for college will be in 13 years.

[velochic]

It looks like the Illinois 529 utilizes Oppenheimer actively-managed funds and Vanguard Index funds. Probably a good program, and yes, if you use Illinois' program, you get the state tax break.

Happy investing!

[KalamazooMom]

We have the 529 plan for our state (Michigan) which is run through TIAA-CREF. It seemed like a good deal, and the state contributes I think it was $200 if you set it up before your child is 5 I believe. Every little bit helps. I liked that the money was sort of transferable within the family. So if one kid doesn't go to college but the other one wants to go to grad school they can have $ from the other account. And if they both don't go to college, or get scholarships (after all they are brilliant ) then maybe I'd take some classes in my old age and use the $.