Saving money for kids college

[Dustin07]

Does anyone have any specific recommendation for college savings funds for kids? I have heard good and bad about the 529 plan. My wife is not excited about it, however we'd like to get something started asap. our little guy was just born in May and I'm hoping an early start in the College savings will lessen the burden in 18 years.

[jbball50]

Tell them to get a job once theyre older in high school! Not really sure about college savings and all that, I just got done with college at Washington State University in May. I just did the loans thing and had a few jobs during summer.

[Mike Carey]

Does anyone have any specific recommendation for college savings funds for kids? I have heard good and bad about the 529 plan. My wife is not excited about it, however we'd like to get something started asap. our little guy was just born in May and I'm hoping an early start in the College savings will lessen the burden in 18 years.

You're smart to start early, because no matter how much you save, it won't be enough! We are helping our son to the tune of 50% us, and 50% him with student loans. I think it's important to keep in perspective that while you want to help your son out (which is great), he will have his whole life to pay back the money. On the other hand, you also need to be saving NOW for your retirement. Because when his college starts you'll find (in my current experience) that it will be harder for you to save anything for anything. And you don't want to miss out on 20 years of your own retirement money growing tax-deferred.

OK, that's my 2 bits. As to what we did, we did a couple different things. We started education IRAs and have put money in to them every month for each of our two sons. We also were buying government series E college bonds, which actually were very attractive back when we started. The educational IRAs went into stock funds, which generally did OK, better than the bonds. The key I think is to not put everything in one plan. Finally, be sure to "suggest" to grandparents to give savings bonds on birthdays and Christmas. They really do add up over the years.

Good luck, it will be there much quicker than you'll ever imagine!

[Dustin07]

Thanks Mike, that sounds a LOT like what i was thinking! Two thoughts that came to mind:

a. if I don't jump on this soon, I'll never do it
b. Any money I put in there today, is going to do better over 18 years... rather than starting in 15 years and only giving it 3 to grow, LOL.

So for now, I have started a regular custodial account and threw $1k into it just to seed it. I figure if I fall on rough times, forget, etc, at least there is something of value getting started, and like you pointed out...something that grandparents can contribute to!

I did running start myself, so first year of college was paid for by highschool. Ever since then, school was difficult for me to justify because of the price. (I did, and have continued, but intermittently, spreading the cost. I'm on the final stretch now..)I want to help at least subsidize my son's education however I can.

Funny thing is, I have written what I believe are strong arguments AGAINST college (cost)... but at the same time, it has it's place and it's a great insurance policy...

[Kfedka]

Pulling up an old thread. Since the last couple post have there been any new ways to get this started?

[Dustin07]

Pulling up an old thread. Since the last couple post have there been any new ways to get this started?

so I have a fair amount saved for my boys college now (interesting to see this thread from 4 years ago). Here is what I do. I have an automatic deposit from my paycheck go into my retirement account every pay period. for the most part it sits as cash until I choose to invest it, or I run DCA (dollar cost averaging) where the money goes into specific securities every month that I have pre hand-picked. I like my choices more than those of the brokers.

from the cash that goes into my account every month a small mount is ear marked and auto transferred into my sons account. also, when birthdays and christmas come along, the boy really doesn't need anymore toys than he has, so I encourage doting grandparents to make a small contribution to his college fund. I also do from time to time if I happen to find extra cash for some reason. even $50, or $250 or $500 all add up over 18 years.

I dont suspect I'll have enough saved for all of his college by the time he's ready to go, but I do think I'll have a full year, maybe even two full years worth of tuition covered That's huge if you ask me. If he can get into a running start program (high school) or any kind of scholarship at all, then it will all help greatly.

I finished my BA in Business at the age of 29. In fact I think i got my degree the week I turned 30. the reason I postponed it so long was the expense. If my boy doesn't have to worry as much about the financial aspect, I'm hoping it frees him to worry more on academics and girls. the important things in life.


even if you only set aside a few bucks a month, you'll be glad you did in 18 years.

[kodacachers]

I started buying credits through Washington's GET program about 10 years ago and it has been fantastic! I bought credits at old prices and with skyrocketing tuition its been great. However, I'm not sure its a good deal going forward--they raised the GET prices significantly so now you'd be betting that in-state tuition will continue to rise faster than the return you would make on a traditional 529 plan. I stopped buying credits 2 years ago an am putting the max into Education IRAs and am looking at a 529 plan for the younger kids (my daughter's a Junior, so not much time for a return on that!).

[Dustin07]

can you explain the monthly plans to me? looking at the current 2012-2013 monthly plan for 100 units (the value of 1 school year) for a student enrolling fall of 2026 is 174/month. multiplied by 168 months = $29,232 for one school year of GET credit? Or, you can just buy a lump sum of 100 credits @ $172 (current pre credit price) for $17,200. am I missing something? the monthly plan seems expensive to me.

[kodacachers]

Yeah, the monthly is expensive. They changed the calculation to add a higher payment based upon their estimated escalation in costs. Frankly I can't imaging public school tuition continuing to rise to $30k a year.

[Dustin07]

Yeah, the monthly is expensive. They changed the calculation to add a higher payment based upon their estimated escalation in costs. Frankly I can't imaging public school tuition continuing to rise to $30k a year.

if you took the one time purchase (in my scenario, with a 4 year old, so roughly 14 years till school) at $17,200 for 100 credits (or the equiv of one year of school) and instead, invested it into an investment offering only 5% per year returns, you'd net $34,054 (compounding annually). of course if you can pull closer to 10% a year you're at double that.

BUT, you have no insurance. market swings come and go and I'm a believer in the market, but it would be a bummer if you had to cash out that savings during a down market

I always thought a mixture of my own investments + the GET was the best way to go, a little extra diversification. I just haven't followed up on that yet. maybe I should start acquiring some GET credits.

[Bodofish]

"Get" is the best bet going! Start buying credits now!!!! They really helped out!!!! I had bought a bunch for my kids and then a number of Repub legislators tried to scrap the program with the logic it wasn't making enough money for the State. Thankfully enough of our elected officials (on both sides) decided it was better to educate the populace than run the State as a for profit business.

[Dustin07]

I think we can keep politics out of the discussion and just focus on the economics of funding college

[Bodofish]

I think we can keep politics out of the discussion and just focus on the economics of funding college

Sorry can't be done. Politics has everything to do with the price of putting your kids through school. If you want to be able to afford to put them through school by the time they're 18, you'd best be getting political in a big way. Just the facts, like it or not.

[Gringo Pescador]

We started GET at age two and after the fact figure we were 2 years late After much research it was the best deal we could find as well.

[Dustin07]

since you guys have already used it, I'd be interested in knowing the process.

a. how many credits did you have, or did you use
b. where were they used and how many college hour credits did they cover?

The GET website says 100 credits is guaranteed to cover up to a full year at the States most expensive school. What schools did you apply credits to? I'd be interested in knowing (for example) how many credits would be required at say, UW, this year.? (assuming your credits were the minimum 2 years old)

[DavidA]

For what it's worth, I passed on all the new programs and invested in 2 mutual funds. This way I knew what I was getting and was able to determine the focus of the investments, and however you package it, these are investments. Don't want to be tied as much to the market? That'll cost you! Want anything guaranteed? That'll cost you as well - if not up front, then in return-on-your-investment.

Small contributions were made monthly and with any cost-of-living (hah!) or salary increase, half of that increase went to the household budget, maybe 2/3 went to increase monthly retirement funding and 1/3 to increase the monthly education funds. This partitioning is very important, however you do it, and I'm not saying I did it the right way, just what I figured was best. Something VERY important to remember: Though you almost always want to avoid debt, if needed, you can get a loan for education - there are none for retirement.

The money I withdraw IS taxable, but there are corresponding tax credits. My oldest took a few college courses and decided that was not for her. A few weeks ago I drove my middle daughter to out-of-state/country university for a Bachelor's Degree after she did a coordinated first 2 years at community college getting an Associates. She will only have to do 2 years for her Bachelors. We should have enough to cover my youngest if she follows a similar course, in 4 years.

Would GET or any other program permit this flexibility? I don't know and didn't want to chance it. Good luck!

[Dustin07]

I think GET does offer some flexibility, although its grey, and there is the potential of a refund, but it comes with small charges and i'm guessing that if you dump $10k into GET over the years, you get $10k - charges back. if you dump $10k into mutual funds you get $10k + returns - taxes back. that was one of the reasons I originally opted for my own investment choices over GET and that later in life flexibility. I mean if the boy gets a full ride scholarship or something (??) then the cash is there for a first house or business start up (??). maybe it will help entice the high school grades and sports

definitely like this discussion though and seeing that others have already used (and like) the GET program. makes me feel that much better about it already.

[Mordalphus]

We are using the get program. My roommate growing up had one and it saved his parents tens of thousands of dollars.

We have bought single credits (lump sum), but we are going to switch to a monthly plan soon and have it taken out of my paycheck.
I would never put it into a mutual fund, ever seen a college kid with a mutual fund? Yeah, me too, they're usually in the card rooms spending it on poker chips or buying a new beamer. Sorry, prepaying credits is a lot safer in my eyes, especially with how fast tuition is rising.

[Bodofish]

It's been a few years since I was in but, the thing that makes GET so strong is the guaranteed tuition. You have an edge on inflation by locking in tuition rates when you purchase. I can't remember all the details but I do know I would have never been able to afford to send a couple kids to school without it.

[Dustin07]

It's been a few years since I was in but, the thing that makes GET so strong is the guaranteed tuition. You have an edge on inflation by locking in tuition rates when you purchase. I can't remember all the details but I do know I would have never been able to afford to send a couple kids to school without it.

so it looks like a GET credit in 1998 cost $35. 100 of them would guarantee a full years tuition at any WA school ($3500 for total of one year promised tuition today?)

http://www.get.wa.gov/documents/Unit%20 ... 20Time.pdf" onclick="window.open(this.href);return false;

I looked up UW as a baseline and the cost of tuition was $3500. so that is perfectly inline. you bought 1 years worth of schooling for the price of one years worth of schooling and used it years later:

http://opb.washington.edu/sites/default ... istory.pdf" onclick="window.open(this.href);return false;

however the GET program today, to buy 1 years worth of tuition is $17,200 and UW's chart (above) puts 1 year tuition at only $12,383. I'm wondering if the GET program is still as profitable today as it was 15 years ago. that would put UW at a $50k/year school in 15 years.