All this talk on Amy's post has me curious, so I have some questions. First, my boys are in 4th and 6th grade already, so while I'm sure these programs would earn some, they won't earn near as much as they would if the boys were under 5 or so. What would be a good investment into a program like this? They already get $10 a week into their savings accounts, which they're not allowed to touch. We have no idea what we're saving it for, but they like the idea of having savings accounts and we like that they're getting some money in there for something in the future. Also, we have no idea where the boys will go to college (or even where we'll be living then), but from what I've read about Colorado's program it doesn't matter. They can go anywhere nation wide. So I guess my questions are how much to these accounts really grow in a year? How much should we put in each month for the best return in the 6 years we have for Robin and the 8 for Randy? (within reason--we're not made of money!) I did read if the child decides not to go to college you can name a new benificiary, but I also read there's a cap for each account/child. So if we max out the accounts (doubtful! lol) what can we do with the account of the child that doesn't want to go to college? Or can we just withdrawl it and pay the taxes and penalties? I printed out the brochure for the Colorado program (CollegeInvest) for dh to look over when he's a bit more lucid (he just had surgery yesterday and he's still a bit groggy). I do think this is something I'd like to look into. I have a friend with a son in his second year of college and a daughter starting in two more years. They struggle SO much month to month to pay for their ds's school, and they've already said they don't know how they're going to do it in two years when dd starts. TIA for any input.

By Rayanne on Tuesday, November 16, 2004 - 12:49 pm:

We have a florida pre-paid program for Rylee. I pay $68.28 every month and that goes for her tuition and books. She has to go to a school in florida though. What I like about it is that if she decides not to go to college, we get the money and she doesn't.

By Boxzgrl on Tuesday, November 16, 2004 - 01:32 pm:

I've read a lot about them and they seem great but DH and I want DD to do good enough in school to *earn* her tuition through grants and/or scholorships. We are focusing on a retirement account and once that is built up quite a bit, if we have extra money them *maybe* we will do it. It seems like kids get a free ride on life these days and I want DD to learn like I did; by working full time (or part time if she wants) and attending school full time. I did it and still left school with a 4.0 GPA. So, it's possible.

But goods sites to read up on are:

www.fidelity.com
www.vanguard.com
www.prepaidtuition.com

Good luck!

By Debbie on Tuesday, November 16, 2004 - 01:58 pm:

Cat, last year we opened a college fund account for each of our boys. We have ours through VanGuard. We took some of dh's bonus money last year and put a lump some of $1,000 into each one. We put $100.00 into each one every month. We are hoping to bump it up to $200.00 a month as dh gets more raises. The rule of thumb, I have heard, is that you are suppose to put $200.00 a month in a child's account from birth to have enough for college. We are definitely behind since the boys are now 6 and 4. We are hoping to add some lump sums when dh gets bonus's. Also, anyone can put money into them, which is a great idea for gifts. One of the reasons we picked Vanguard is because they can go to college anywhere. Most states have some type of program, but they limit you to just going to school in that state. There are also several funds that you can set up that you can use where ever you want. Dh did a lot of research and talked to several people before he picked Vanguard. Also, if your dks decide not to go to college, you can withdraw the money and you get interest. I am not sure how much though.

By Karen~moderator on Tuesday, November 16, 2004 - 02:13 pm:

Melissa, to get grants, you usually have to qualify financially, which pretty much means you have to have a very low income. There are many, many loans available for parents and students, in addition to many different scholarships, outside of specific college scholarships.

And I don't disagree with wanting your child to *earn* their education. But once you see the staggering costs of getting one when she's that age, you'll see that unless she gets a FULL scholarship, there are most probably going to be loans involved. Federal loans are either subsidized (the government pays the interest until graduation) or unsubsidized (interest accrues, or you pay it until graduation), and private student loans require a co-signer for college freshman.

We've been going through this for 3 years now with Jeff and Jen.

Jeff had a partial scholarship to Loyola, plus a TOPS scholarship. Even with those, it required over $10,000 year in loans for tuition, and books. That was a private college. Now he's at UNO, a state college, and he still has $6000 in loans for one entire school year.

I guess the point I'm trying to make is, the cost of education is skyrocketing and your kids are going to need all the help they can get. It's easy to say they can work their way through college, but working full time and going to school full time is hard.

If I had it to do over again I'd definitely get *some* type of college savings plan going for my kids, because we were totally unprepared when they graduated high school, and now they (and I) are inundated with student and parent loans for education.

By Boxzgrl on Tuesday, November 16, 2004 - 02:52 pm:

Karen, i'm not saying its a bad idea. I just want myself and DH to be financially secure before we start paying our childrens way through college. I dont want to end up struggling financially. And if I do happen to get one for the children I plan to not tell them about it until needed so they will still strive to be their best thinking that scholorships and such are whats going to get them through college. And id those scholorships pay the tuition in full, that would be great, if not well pull some from the college savings account. DH and I are still young and trying to establish ourselves before worrying about things like that. And of course depending on her major and what she wants to do with her life, she may never need to go to anything but a junior college. Who knows?

Its definitely not a bad idea, just not on my list right now.

By Melanie on Tuesday, November 16, 2004 - 03:21 pm:

We have a 529 plan for each child. We can put in a maximum of $11,000 per year, per child. If a child does receive a scholarship, we can withdraw that same amount from the fund without penalty. The money within the accounts can be shifted from one to another without penalty. If we have more in the fund than is necessary or if a child decides not to go on to college, the money can also be transferred to any other family member to use for education. (Dh can use it for golf school, we could shift it to our niece or even future grandkids). We definitely saw this as the right option for us.

By Yjja123 on Tuesday, November 16, 2004 - 03:22 pm:

The beauty of prepaid college programs is you lock in TODAYS rates so you are paying a lot less than what the cost will be when it is time for your child to attend college. The earlier you start the lower your monthly payment. We pay $75 per child a month. $150 a month is 34.62 a week. When you break it down that way it is one less dinner out, 6 less gourmet coffees a week, etc. Yes--I am a fan of the program If your child does not attend YOU get money back. It is much like a mutual fund as it increases in value so is better than a savings account.

My parents did not pay for college or any financial assistance. I was required to pay for my own food/clothes/etc at 16. It made it near impossible for me to afford college and rent. They also claimed me on their taxes so I could not qualify for financial assistance. This is why we have a college program for our children and a saving account for both. I think paying your way is a great concept but...If your kids do not have to struggle so hard they can concentrate on their learning. Just my opinion, and as you now know my story, you understand why I am biased.

By Kittycat_26 on Tuesday, November 16, 2004 - 04:02 pm:

I appreciate the thought of a prepaid college tuitition for your kids but I agree with Melissa in that you have to take care of the here and now.

There is no way that I could afford to put $100-200 into a college fund at this point. It's not possible, we live on a budget and it's stretched pretty thin.

One day I'd like to help him pay for college but not by putting all of us in the poor house now.

By Cat on Tuesday, November 16, 2004 - 04:40 pm:

Okay, I did talk to our Prudential agent, and she did say one big downfall of the 529 is that it is considered an asset and could cause the child to not qualify for financial aide if needed. So what we're going to do is get with a local agent (the person I talked to is our agent from Montana) and set up a financial planning meeting. Another thing we need to talk to this person about is life insurance for dh since he's retiring next summer. He can keep his military insurance (SGLI) but it's term and get pretty expensive pretty fast. There are a couple other things involved with him retiring, too, so we'll just need to meet with someone. We can talk about savings plans for the kids then. Thanx for all the input and info. It really has got my interest peaked. Thankfully, we are at the point where we can put some money aside every month and I figure we better while we can.

By Ginny~moderator on Tuesday, November 16, 2004 - 06:06 pm:

Cat has a good point. If you set up a 529 or trust or other account in the child's name, I believe it is deemed 100% available for the child's tuition. I believe (and you whould check this out) that if the account is in your name, only a percentage of it is deemed available to the child (as a percentage of your income and other assets are deemed available). There are pluses and minuses of each situation, and you have to factor in the tax-free savings aspect as well. Definitely, a financial advisor is a good idea. But if you talk to a financial advisor, talk to one you pay by the hour, not one who is in the business of selling investments or making a commission on your investments. Make sure they know you want to explore a financial plan but do not want the advisor to manage the plan.

Remember, under the present rules you can give a child $10,000 (or maybe a bit more) a year, to a lifetime maximum of somewhere around $100,000, with no tax consequences to you or the child. That doesn't offset the tax savings on a 529, but is yet another factor.

By Karen~moderator on Tuesday, November 16, 2004 - 08:56 pm:

Believe me, I TRULY do understand not being able to afford to do it, but if I could do it over, I'll say again, I'd find a way to put SOMEthing into an account for my kids' education.

I was a single parent for years, and there wasn't a whole lot left over at the end of the month. X certainly didn't help, and before we knew it, it was *that* time. X had the gall to tell me *I thought YOU had taken care of that*!

And he is actually not helping Jeff at all, *I* am. He's helped Jules and Jen, but not the boys, which is really unfair, IMO.

The point about working full time and going to school full time should be well taken. Jen attempted it and flunked out. Jeff's done it for over 2 years and it is HARD on him. Hard to the point of actually cutting back to part time next semester, because he is training to be promoted into operations with his company and the next 8 months he HAS to work Tuesday through Saturday, all day.

So, I'm just offering a little advice from a BTDT, or should I say, Been There and STILL Doing That prospective. LOL

By Boxzgrl on Tuesday, November 16, 2004 - 10:02 pm:

I totally understand Karen. I went through the cost of college not too long ago and had no option but to pay for it myself!

By Kittycat_26 on Wednesday, November 17, 2004 - 08:28 am:

Rereading my response, I guess I should have stepped back for a few minutes before I jumped in.

We do save for Timmy's college but we do it in a much smaller way than expecting to completely prepay for his college. We have a small savings account that $5 a pay is put into plus we add his birthday money and that sort of thing.

For us it's what we can afford now and rereading things, I believe that is what everyone is saying. Do what you can now but if you can do more in the future, do that too.

By Janet on Wednesday, November 17, 2004 - 09:55 am:

I had thought about a pre-paid plan, but the way Illinois is, I'm not sure the state will be able to keep it's promise when the time comes! Probably they'll have used the money for something else..like flowers for the highway! (OK, OK...I'm just in a mood this morning.)

By Juli4 on Wednesday, November 17, 2004 - 10:33 am:

I say instead of putting your money into a gov or state plan where they probably spend the money beofre hand. Keep the money adn invest it wisely. You will get good return on it and not have to worry so much about penalties

By Annie2 on Wednesday, November 17, 2004 - 06:59 pm:

With the pre-paid college you pay a locked in rate for when your child will reach college age. For instance, we paid appr. $6900. for daughter number one. Now that is for a four year school, plus one year of room and board. We paid less for the next three kids. We can get all of the money back, at any time, without a penalty, just no interest acrued. The tuition can be transferred to another family member and can be transferred to out of state schools. If the child obtains scholarships, this money can be withdrawn or applied to books, more room/board, etc.

We also have separate savings accounts for the kids which they put half of their monetary gifts into for college or later teen years.

The reason why we liked the college pre pay program is the amount of money is not just saved dollar for dollar but we are locking in rates 10 years (at least for older dd) before kids will go to school.

It's a good plan for us, where we live, the number of kids we have, etc. It might not work for everyone. It is something I would at least look into.