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University costs for your kids -- do you have a plan?

University costs for your kids -- do you have a plan?

Old May 19th 2014, 5:09 pm
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Default University costs for your kids -- do you have a plan?

Given how pricy university is in the US, how are you anticipating paying for college (if you are)?
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Old May 19th 2014, 5:18 pm
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Default Re: University costs for your kids -- do you have a plan?

Originally Posted by transatlantic_chap View Post
Given how pricy university is in the US, how are you anticipating paying for college (if you are)?
All in the past for me, kids are all grown up now.

But for me, moving to the US with children aged 8 and 6, and no savings or house equity at that time, my strategy was simple. Plan to get a job at a university or college that paid tuition benefits for employees.

It worked pretty well. The actual value of the benefit, for me, over eight years of college, (i.e. Four years per child) was about $160,000. There were significant additional costs, but the tuition benefit meant I was able to cover the rest out of current income so no lingering loans to pay off.

Last edited by robin1234; May 19th 2014 at 5:21 pm.
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Old May 19th 2014, 5:22 pm
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Default Re: University costs for your kids -- do you have a plan?

We plan on him going to college or university in state to save on some costs. He is taking a lot of dual credit courses at high school, hopefully he will graduate with his high school diploma and associates degree which will (again hopefully) shave some time and cost off of college and university. On top of that we have been saving, no special account, just putting money aside.

If on the other hand he lands a full scholarship, although I can't imagine how, then he go wherever he likes LOL.
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Old May 19th 2014, 5:28 pm
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Default Re: University costs for your kids -- do you have a plan?

Our two year old has a 529. It is unlikely that it will have enough in it to pay for college given the rate at which such costs are rising. One hopes the education bubble will burst or something.

As our financial adviser said, you can borrow for college but you can't borrow for retirement. i.e. as good as it is that we've set up a 529 already, we should concentrate on our retirement plan.
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Old May 19th 2014, 5:38 pm
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Default Re: University costs for your kids -- do you have a plan?

Originally Posted by sir_eccles View Post
Our two year old has a 529. It is unlikely that it will have enough in it to pay for college given the rate at which such costs are rising. One hopes the education bubble will burst or something. ......
From what I have read, increases in costs/ fees have flattened out dramatically since 2010; arguably the bubble has already burst.
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Old May 19th 2014, 5:59 pm
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Default Re: University costs for your kids -- do you have a plan?

529 plans are probably your best option since there are tax benefits for 529 plans. In some cases, money from 529 plans can even be used at approved universities outside the US. A big savings usually also occurs for in state tuition and with some states, out of state tuition is only for the 1st year of college or residency in the state.

http://en.wikipedia.org/wiki/529_plan

http://www.savingforcollege.com/529_...plans_by_state

http://www.usnews.com/education/best...s-of-529-plans

http://www.finaid.org/savings/state529deductions.phtml
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Old May 19th 2014, 6:02 pm
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Default Re: University costs for your kids -- do you have a plan?

We setup a 529 for our 3yr old. Check to see if your state offers tax benefits (mine, CA, doesn’t, but I think over 60% do), and if so, consider investing in your states plan to get those benefits. If there are no state benefits, then just have a look around and find the best performing/lowest cost plan and go for that.

529's differ from 401ks in that the money you put in is post-tax income. Once invested though, all growth is tax free (fed & state), and so long as you use the money for qualified college expenses, you don't pay tax when you withdraw it either. The disadvantages with it will be factored when you apply for financial aid for college, and if your kid doesn't go to college or you need to withdraw it for some other reason, you pay state and federal taxes on the earnings, and a 10% penalty. Here are some more of the benefits of 529s:
http://www.savingforcollege.com/intr...-529-plans.php


Some people now are saving for college in their retirement accounts. If you use a 401k for this purpose, you can take a loan from the 401k, but you would then need to pay that loan back. Many people are looking at Roth IRA's instead. Check it out, as it is income capped and high earnings can't open them, but if not, you can contribute to a Roth IRA and withdrawn funds, penalty free, to pay for your kids qualified college expenses - and it's not a loan, it’s an allowable withdrawal, irrespective of your age. The downside is, you can only withdraw contributions - not earnings - if you take earnings, and you must pay a penalty also.

There are lots of online calculators for future cost of college tuition out there if you have a google, and lots of reviews and info on 529 plans - Morningstar is a good resource for those.

Personally I think the college fee hikes in this country will slow down. I think they sort of have to - otherwise smart people will eventually start deciding it’s not worth it to them to have 250k worth of debt to pay off when they enter the job market. That said, college is never going to be cheap, so it’s wise to save if you can.

My strategy - I opened a 529 for my son, and have an automatic monthly payment into it. I used the CA fund, which is substantially better than it used to be - it's not the top performing fund, but as a CA resident I'm hoping California state assembly bill 1956 will pass, and then there will be tax benefits for me using my home state plan. I make modest contributions to the 529 - what I can afford, but I don't think enough to completely cover my boy’s college - it will however, take a big bite out of it. The fund was easy to setup – took less than 10minutes to do online, and they have those age-based funds, as a hassle free version if you don’t want to constantly monitor fund performance and switch to less aggressive/risky strategies as your child gets older. As a 'back-up' I'm also changing my 401k contributions - reducing them, and with that reduction I'm moving that money to a Roth IRA. So I contribute the same $ amount to my pension, but now they’re split over a 401k and a Roth IRA instead of just the 401k. That gives me a more diversified retirement strategy, both in fund selection, but also a pre and post-tax retirement plans - which can be very useful as no-one knows what tax rates will be like in 25yrs when I retire. Then, having some of my retirement in a Roth IRA also gives me a back-up to help pay for my son’s college, should I need it and be limited on other options when the time comes.

Anyhow, I think dedicate yourself to some good solid online research - there's plenty of good info out there. And then do something, if you can afford to put money aside somewhere, then do it, and the sooner you start, the better.

-Matt
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Old May 19th 2014, 6:05 pm
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Default Re: University costs for your kids -- do you have a plan?

Scholarships......

Young friend of ours in Tennessee just got a full scholarship from Vanderbilt.
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Old May 19th 2014, 6:10 pm
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Default Re: University costs for your kids -- do you have a plan?

Originally Posted by mmhendrie View Post
Some people now are saving for college in their retirement accounts. If you use a 401k for this purpose, you can take a loan from the 401k, but you would then need to pay that loan back.
Be careful about taking a loan against your 401K plan. Even though the interest you pay is paid to your account, if you lose your job or change employers, I believe you have 60 days to repay the loan or else it is considered a distribution and become taxable immediately.
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Old May 19th 2014, 6:24 pm
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Default Re: University costs for your kids -- do you have a plan?

Originally Posted by steveq View Post
Scholarships......

Young friend of ours in Tennessee just got a full scholarship from Vanderbilt.
Yah, I have a niece that is very good at soccer and she is currently in the 10th grade and universities are already scouting her and want her now to agree to attend their university in exchange for a scholarship. She's also a straight A student but she lives in the Midwest and so far about 6 major universities have expressed interest but none from the big California schools which she would prefer since they are more competitive in women's soccer.

I talked to her father and mother and said that I thought that agreeing now was much too early and he agreed and said they were going to delay the decision until the end of the summer. WTF.
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Old May 19th 2014, 6:28 pm
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Default Re: University costs for your kids -- do you have a plan?

Originally Posted by steveq View Post
Scholarships......

Young friend of ours in Tennessee just got a full scholarship from Vanderbilt.
I think I read somewhere in a previous post that a lot of scholarships are only available for citizens (which we aren't). I haven't done a lot of research into it but we are not relying on there being much, if anything and then we can be pleasantly surprised if there is anything

Might be a shoe is here though, at 15 he's already 6'2"...http://tall.org/tci-acts/scholarships-2/

Last edited by ChocolateBabz; May 19th 2014 at 6:30 pm.
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Old May 19th 2014, 6:34 pm
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Default Re: University costs for your kids -- do you have a plan?

Originally Posted by ChocolateBabz View Post
I think I read somewhere in a previous post that a lot of scholarships are only available for citizens (which we aren't). I haven't done a lot of research into it but we are not relying on there being much, if anything and then we can be pleasantly surprised if there is anything
A lot of them have strings attached so you can't bank on them for the whole course.

My son has gone to a good state college which offers reasonable value for money. You can get a FAFSA loan if you are a LPR.

My daughter will be going to a UK university and paying overseas rates, we can finance that from selling our house in the first instance.

PS We'd have to go for short scholarships
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Old May 19th 2014, 6:44 pm
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Default Re: University costs for your kids -- do you have a plan?

We have 529 plans for my son and stepdaughter. I doubt they will come anywhere close to what they need to get them through college though. I imagine we will end up refinancing or downsizing the house.

I am just finishing up an online degree with Charter Oak State College. http://www.degreeforum.net/forum.php has a lot of useful info on how to test out of degrees. Although of course it's all about the college you went to and you're paying for the name really - but at least it allows me to tick the 'do you have a degree' box.
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Old May 19th 2014, 6:56 pm
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Default Re: University costs for your kids -- do you have a plan?

We took out a Florida prepaid plan when the kids were born in the mid 1990s.
It was about $7k then for four years tuition - now it costs that much (in state) for one year. My son is at UF so the plan has worked out pretty good up till now. My daughter will be college bound in a couple of years and is looking to go out of state but may get some scholarship money for swimming.
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Old May 19th 2014, 7:07 pm
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Default Re: University costs for your kids -- do you have a plan?

We are also looking at the state colleges route even though our 11th grader has now discovered 3 or 4 private colleges she really likes. Have also been looking at McGill in Canada as its considerably cheaper than the top tier US colleges.

During spring break we did a 1000 mile road trip covering the east coast, down to Maryland and up as far as Rochester NY and lots of places in between!

We are LPR and having spoken to lots of college admissions advisers/directors and VP's they all seem to say the same thing. If they want her they will work out a way to contribute financially to get her to go to their college. We also found they were more interested in the fact she wasn't a US citizen as being British adds to the diversity of the campus bearing in mind we has been in the US for over 8 years.

We have also been looking at the colleges with the biggest legacies that tend to offer more $$$ per student.

All very scary considering OH got his PhD in the UK, he got paid unemployment benefit during the summer was sponsored to do his doctorate and never had to pay a penny in tuition. Oh how things have changed!!
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