Can we talk about saving for college?

dmartin726 · September 2013

I live in Florida so I know that we have Florida Pre-paid. Not sure if other states have similar programs. If we start this year, DD is 2, it will cost us approx. $325/monthly until she turns 18 for her tuition to a 4 year state University. I am also pregnant, and DS is due in March. That means next year I will have that payment X2.

I guess I'm just having a hard time wrapping my head around how much money that is monthly. I know there are other options out there, I am just not educated on them. I had Florida prepaid to go to college so it is really all my family is familiar with. Anyone taking a different approach towards savings for college expenses?

Mrs.Hizzo · September 2013

We use a 529 so they aren't locked into a state school.

fancefpp · September 2013

We have 529 plan too. We put money in each month, around $300 each, and then once a year at bonus time, we put in a decent chunk. The bonus amount has varied.

catycate · September 2013

We have a 529. MIL puts money in monthly and we put any birthday, etc in it. Hopefully in the next couple of years we will be in a financial place to contribute more consistently.

dmartin726 · September 2013

For everyone using a 529...can you explain how it works?

kcisthebombdotcom · September 2013

We are not huge fans of 529s and save for the future between mutual funds and a Roth IRA (outside of Dhs 401k). I feel 529s to be limiting. If your child chooses trade school or gets scholarships you're stuck paying a hefty penalty to withdraw your money. It's also considered in financial aid so if you don't save enough to pay 100% your child will be limited in need based aid options.

JeffandLeslie · September 2013

KC_13 said:

We are not huge fans of 529s and save for the future between mutual funds and a Roth IRA (outside of Dhs 401k). I feel 529s to be limiting. If your child chooses trade school or gets scholarships you're stuck paying a hefty penalty to withdraw your money. It's also considered in financial aid so if you don't save enough to pay 100% your child will be limited in need based aid options.

This exactly. My father is a financial advisor and doesn't recommend 529s because there are more flexible options. I think the tuition bubble is going to pop before DD is ready for post-secondary life, so we're trying to keep her money as flexible as possible.

roxy_jj · September 2013

I've heard about the Florida program and we don't have anything like that here. I wouldn't want to lock my kids to attending a certain set of schools. We have 529s.

fancefpp · September 2013

dmartin726 said:

For everyone using a 529...can you explain how it works?

www.savingforcollege.com has a lot of info on 529 plans

pastalady · September 2013

All I can say is I am so happy Canada is cheaper lol!

Minipenguin · September 2013

Honestly, right now it is just sitting in a savings account. We will look into investment options in a few years but I'm hoping the tuition bubble bursts soon.

beachy789 · September 2013

It may not always be like this, but Florida has an awesome scholarship program. I believe it's funded by the lottery proceeds. I received 100% of my tuition to UF, plus money for books and supplies. If you have the grades to get into the big schools (UF, FSU, etc), then you will likely get at least 75% of your tuition paid, and likely 100%, so I would definitely do a 529 over pre-paid if you want to save for extras, or in case they don't qualify for scholarships. I'm a lurker and have to idea how to make this clicky...

https://www.floridastudentfinancialaid.org/SSFAD/bf/

spring_time · September 2013

KC_13 said:

We are not huge fans of 529s and save for the future between mutual funds and a Roth IRA (outside of Dhs 401k). I feel 529s to be limiting. If your child chooses trade school or gets scholarships you're stuck paying a hefty penalty to withdraw your money. It's also considered in financial aid so if you don't save enough to pay 100% your child will be limited in need based aid options.

I was given this information before, too, and it is actually incorrect. The penalty to withdraw money from the 529 for non-education purposes is a 10% penalty on the earnings plus taxes. That is the same as a Roth IRA, although a Roth does have a few more options for withdrawing your money without a penalty. If your child receives a scholarship, the penalty is waived. You can also use a 529 at many trade/technical schools, as long as that school participates in US student loan programs.

We are doing a 529, but may combine it with mutual funds for their flexibility. I did not want to do a prepaid program because I am not certain we will be in this state, or that our child will want to attend an in-state school.

I know what you mean about the amount needed for every month. I recently did some calculations through a website and it made me sick to my stomach. There is no way we can contribute the "recommended" amount. My Dad insists the same thing happened to him when he was saving for our college, there was the recommended amount to contribute every month and he said the actual amount of college came nowhere near the predictions. I have had to resign myself to the fact that we will do what we can, help out when the time comes, and then they will have to fund the rest. I also think the pp who thinks the bubble will burst is right. There is no way tuition can continue to rise at this rate.

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