4 goings going to college...& we don't want to work past 60 HELP!

VienneOctober 11, 2002

where are you all saving for your kid's college tuition?

We are in our late 30's w/4 kids, 12, 9, 4 & 1 who will be going to college sooner (or later.)

We watched their meager college fund savings get sliced in less than half recently during the money market slip/slide.

Any suggestions on where to save now?

We've received several 529 plan mailings but they don't fill in any details...


V :O)

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In Ohio, the state has the Ohio Tuition Trust. I know many other states have similar plans. It lets you pre-pay your child's college. You buy "credits" at today's cost for a state school, and in the future your child can use them for tuition. In Ohio, 100 credits equals 1 year's worth of tuition. The cost per credit depends on your child's age. The younger your child, the cheaper it is, and the better the bargain. The cost per credit is figured by taking the cost per credit at each state school and averaging it, so it's not tied to one particular college. You can also use credits at private college but they won't go as far because at payout time, you would be credited with the average cost for a state college. We prepaid one year for each of our children before their 1st birthday - it's cheapest to do it before their first birthday. If the child doesn't go to college, you can transfer the investment to another child or get a refund. If you get a refund, you get 9% interest. At the time we invested, our broker said it wasn't a good investment because 9% was too low, but the way things are going now, I'd rather have guaranteed 9% than money in the stock market! The tuition trust fund is also backed by the "full faith and credit" of the state of Ohio.

Could you look into this to see if your state has a tuition trust?

    Bookmark   October 14, 2002 at 9:01AM
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529 Plans are great. I think you can save up to $230K and if one child doesn't go, you can transfer it to another. Salomon Smith Barney has Scholars Choice and you can even link Upromise to their account. Grandparents can sign up form Upromise and have their credit go your kids' accounts. Do you have their savings in an education IRA right now? I did that first and I can also use that money for my son's private school tuition. I have his tuition money put into the education IRA.

I wouldn't worry about the drop in their college fund right now. They have a lot of time to recoup and grow.

The nice thing about the 529 and Education Ira/Coverdell savings plans is I have control of the money. In the event I really need to use the money, I can take the penalty and use the money.

    Bookmark   October 14, 2002 at 12:39PM
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Don't leave the kids out of this. Have them work on academics and study the scholarship programs. Do some practice SAT's. 12 years of age is not too young to start. Do some vocabulary sections with them. Unless you get perfect scores every time, there's room for improvement. Do a few math problems a week until the kids are doing practice tests on their own. Reward them and their friends with a pizza party for doing some study buddy sessions to work on their grades. Get school counselors to give you some practice test booklets. Good luck. -- Marie

    Bookmark   October 15, 2002 at 9:42PM
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Agreed on the kids working and planning for college along with you. They should be focused to academics, and find summer jobs to put in their college savings.

Who says parents are obligated to pay for college? Look at state schools with good value for the money, also consider techincal schools for a good start to careers. Kids can take education loans and pay their own way. If you can help, that's a bonus.

Your retirement should be #1 priority. Help the kids with your surplus.

Good luck to you,

    Bookmark   October 16, 2002 at 1:12PM
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Miko, my DH and I are with you. We would much rather fund our retirement so that someday we are not dependent on our kids as they are raising their families. We throw everything we can into our retirement savings and have small nesteggs for each of the four kids to get them started (one is applying to schools right now). The rest is up to them, loans, scholarships, whatever else we can pitch in plus the kids can go to local schools and live at home room and board free. Kinda like our parents did and we were just fine.


    Bookmark   October 16, 2002 at 4:56PM
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First: Don't Breed Them if you Can't Feed Them.
Second: Why do you have to send them thru College?? Can't they work?
Third: Vocational schools (technical schools), just might suit some of them. They often produce better paying jobs than the "high paying jobs" that College might hint to.


    Bookmark   October 27, 2002 at 10:08PM
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We felt paying for our daughter's college was the right thing to do. Otherwise, kids usually have to take out student loans and graduate with a big load of debt. Parents have to realize that college costs are MUCH higher now than they were back when they put themselves through school.

Personally, it wouldn't have felt right to me to retire in my fifties and see my kid struggle with a heavy debt load. I agree that people ought to think about their eventual financial obligations to their children before they even have them. Just to say that the kids "can work and take out loans" isn't good enough.

Of course, if you suffer financial reverses and can't pull it off, that's another thing. But retiring in your fifties shouldn't be anyone's first savings goal if there are kids to educate.

    Bookmark   October 29, 2002 at 11:49AM
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First talk to your tax advisor for advice. Talk to your bank/savings & loan/credit union etc. Make sure that where ever you put your money it is guaranteed and insured. I truly feel that if children earn part of the money, they will respect going to college. Not all children are college material. Even if I had the money,I would not just give the money to my kids to do whatever.

    Bookmark   October 29, 2002 at 10:05PM
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Here's an opinion that might not be popular...Let them put themselves through college.

Yes, they may have to take out loans. Yes, they may have to work. But so what?

When I was getting ready to go to college, my parents just didn't have the money to send me. So, I had two choices - cry, or figure out some way to do it myself.

Instead of attending a high priced private institution, I went to a community college instead. It took me four years to finish up there instead of two, because I worked 40 hours a week.

I then transferred to an in-state university, and now loans entered the picture. I still worked part time (16 hours a week), using the loans to make up the difference. I worked hard, and eventually got scholarships to supplement the loans.

It took me three more years to finish up my BS, and I still owe $17,000. But, I found that paying for everything myself gave me a much greater appreciation for what I was receiving. I worked much harder in my classes that I would have if someone else were paying (if I hadn't, it would have been just like throwing my money away).

I did so well that now I am in a Ph.D program, at the top school for my field in the country (a very pricy private institution). My tuition is paid for, and I receive a stipend to live on. There is no way I would be here now if someone else had paid my way through college. I would have partied all night, gotten mediocre marks, and probably dropped out.

So think twice before simply handing a future to your children. They may be better off making that future themselves.


    Bookmark   November 12, 2002 at 4:59PM
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Momma Bird,

If you use the Ohio-based investment plan, it'll only be available for your offspring to use while attending a school in Ohio, won't it?

Suppose they want to follow a profession where the best training schools are outside of Ohio?

I doubt whether the credit may be transferable.

My ex-, while training for hospital diet, in late '50s trained for two years in Iowa, her home state - and for two years in Cornell, in N.Y. state. Much of the time on scholarship.

At that time, those two schools agreed that they were the best in that field in the nation (but disagreed as to their relative standing).

When our offspring attended Univ., late '80s, they each paid part, their Mom paid part and I paid part. Grad debt-free - much easier than now. Also, tuition costs cheaper in Canada, I think.

And - by the way - neither went into the specific field for which they'd trained.

I agree with the suggestion of getting your young ones involved, and not only building their motivation, but getting them involved in saving towards it - it will help them become much more aware of the value of a dollar. The sweat and tears that go with building the savings - including foregoing immediate spending temptations to make preparation to implement a future dream.

And - in recent years the cost of education has risen faster than the rate of inflation.

If your kids grad with a heavy debt load - quite a few with about a third the amount of the average house mortgage - it'll be a long time before they can even think of buying a home.

joyful guy

    Bookmark   February 19, 2003 at 1:10AM
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Well, in the real world, it's called "Oh, well", Ed. Just because Snookums can't buy a house right after college is not the end of the world.

And think about this, if Precious graduates w/ $30000 of debt at age 22, s/he has quite a long time to pay that amount off. If mumsy/dadsey takes $30000 out of their retirement funding at age 50 (or so), the parents are not going to be able to make that money back (plus any gains) before they face retirement. Time value of money, doncha know.

As a 30 something who was offered a free ride to college, I elected not to burden my parents with their generous offer. They worked hard all of their life, and I think that they needed to relax and enjoy their savings. I am not some entitlement minded little creep. I am an adult with all of the rights and responsiblities (what a novel concept, huh?) that entails. I worked my rear-end off, and still managed to graduate with honors from a small, private liberal arts college. Would I like not to write those monthly loan payment checks out each month? You betcha! But this was my choice, and I am very grateful for being able to pull my own weight in this world.

My parents are proud, too.

    Bookmark   February 19, 2003 at 10:48AM
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I have to agree with Maddie. Student loans are not evil. I too, went to a small, expensive, liberal arts college. I had scholarships, but even without them, a state school would have been cheaper. I paid for college by working full time every summer, part time on campus during the school year (part of my financial aid package,) and with student loans. My mother also took out a small loan (PLUS loan.) My minimum student loan payment was $197/month, and they are structured to be paid off in ten years. $197/month is less than a car loan!!! So, what if the recent college grad can't afford a new car? It's a luxury item that nobody NEEDS anyway. $197/month has never kept me from living comforatably, and independently, not even right after graduation. Yes, college is getting more and more expensive every year, but salaries are also going up. A state school offers a far better "value" than a private school, and spending the first 2 years in community college makes the whole four year degree an absolute BARGAIN! (Remember, the diploma only says where they graduated from, it doesn't say that half of that time was spent at community college.) With that said, I do have a 529 set up for my child. But, I'm not gonna panic if I can't afford to pay for her education in full, myself. There's no reason why any child should spend an entire summer doing virtually nothing, when they could be working, and saving for their education. And, there's nothing wrong with student loans. Our retirement accounts are a priority over the 529 account.

I personally think that 529s are the best thing going. It sounds like the OP received some solicitations. I would suggest doing some intense research on the internet. That's how I decided that my state plan had the most to offer. It has low fees, etc, but the absolute best feature is that, when you need the money, if the stock market drops, they will still give you the original principle, even if your account is worth less than that. I found my info at HESAA.org. Most states have their 529 plan info online. Just do a search.

I just started adding up, in my head, how much I contributed to my college education, in cash, by working summers during high school and college. It was probably about $3000/year. That's after I spent some of my high school earnings to buy a 4 year old "economy" car for $2800, and insure the car, buy gas, etc. Of course, I also spent money on various other things that teenagers spend money on. But, I was a saver by nature, and I managed to save up a total of $12,000 without feeling deprived (had my car, clothes, entertainment, etc.) I bet $12,000 could have gone pretty far at a community college or state university. I would suggest getting your children ready, as early as possible, for the fact that they will be expected to contribute greatly to their own educations. Instill in them, a work ethic, and teach them the value of money, and the importance of saving for the future. And, open up a 529 and contribute as much as possible without jeopardizing your own retirement.

    Bookmark   February 19, 2003 at 1:08PM
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We have purchased tuition credits for our son here in Washington. The money is portable and he could take it to a school out of state. The tuition payments here are guaranteed by the legislature, but some states are defaulting or at least threatening to default. You have to read the fine print. The credits we purchased last June have already increased 24% in value and will climb again - probably by July. Nice return eh?

    Bookmark   February 19, 2003 at 7:17PM
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I think you should encourage them to study and prepare for the SAT and do well in their regular academics. That's the best investment I made in financing college for my kids. There are lots of test prep books in Barnes & Noble. Do those practice tests on a regular routine. That's a "job" that will pay more than any job they'll have for a long time. When in school, one of the best campus jobs is in the library, or in the department of their major. I was lucky enough to be able to do homework, research, and study, when things were light, which was most of the time. My boss would even help me. -- Marie

    Bookmark   February 21, 2003 at 12:32PM
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I just read this post and wanted to respond. I was interested in the responses that you recieved V. Some were helpful. I have a few thoughts on this subject as well.

I found it amazing that someone would have the guts to post that if you can't feed them don't breed them. As if by asking the question about how to prepare for the future, you are not doing your duty. It sounds like you are doing a great job feeding them, if you will, and are now looking toward the future. Good for you.

I also found it interesting that the debate came down to a pick one scenario for everyone who did respond. You are crazy to pay for their college and not take care of yourself or you are selfish to take care of your retirement and not help your kids.

I put forth that you have set two goals and want to know how to make both of those goals work. Without knowing more about your financial situation, no one can tell you how to do this or if it's possible.

What I will tell you is about myself. I am a stay at home mother of three. My husband is ten years older than I am. He wants to retire in his early 60's (62 at the latest). Our children will just be going to college at about the time he wants to retire. I want to pay for college for my children. These are both valid goals.

We gathered all of our information together and went and paid 400$ to a financial planner. It was the BEST thing we ever did. We are not rich. But we thought it was well worth the money to have someone help us look at our overall financial well being and help us draw some basic predictions (conservative predicitons) towards the future. He looked at our insurance and our finances. We found out we probably needed more disability insurance, if something were to happen to my husband, there is no way we could have held on to the house and made things work, even if I went back to work. We found out that we were doing fine with retirement and needed to think about college funds.

I have the peace of mind now, knowing that if my husband were to die or get injured we could keep the house, maintain our style of living and be OK. And I won't have to go to work. That is important to us. We can retire in our 60s but it will most likely be age 65 (instead of 62) and pay most of our kids college expensis.

I would strongly suggest that you think about going to a financial planner. Pick one wisely but know that they are worth the money in my book.

Some things to think about- you can save for the local state university and your child will end up in Harvard. Then what? For us, we decided to save as much as we could towards helping our children get a basic four year degree. If we have enough to pay for their college, great. If they go to Harvard, Yale etc- high expensis, they will have to work and get student loans and scholarships.

Or you will save for college and they won't go to college. Then what? This is one reason we have not put anything in their name that will equal a large chunk of money that will be theirs at age 18. Although they are adults at age 18, we know that they are still young and still lack the in depth decision makign skills they might need. We would hate to see our money spent on a nice car at the expense of college.

The choice will be theirs at that time. What college to go to? How to help pay for it- live at home, work, not go? They will be well on their way to adult hood and able to make decisions that impact their future.

Even now, our children are encouraged to save for college. (ages 4,2,5 months). We take any gift money sent to them and put it in the bank in their name. We give them a small allowance and help them split it up to tithing, spending, savings (my 2 and 5 months old don't get it yet, but they will). We are setting a policy now that any money they get in gifts at least 1/2 will go to the bank. This will be their money towards college and other expensis they may have as they grow and leave home. (Down payment on a home? Down payment on an appt? Down payment on a car? college?)

The other thing we did- we took all of our money (except for a little bit) and put it in our accounts. We have not seperated out college vs retirement vs a big wedding. We figure it is all ours and if something comes up that we have to spend it, we want to be able to do so with out feeling like we are spending our childrens' money. WE earned it and we want to use it the best way we need to at any given time. You just never know what will come up (accident, job loss, etc.)... So it's in one big pot with our name on it (except for a very little bit).

Closer to college time we will sit down and figure out where we stand- how much we have total, how much we can help each child out with college, how much we need for retirement etc. Then we will help our children.

It is my belief that we had these children and along the lines of if you can't feed them don't breed them- we want to help them along in their adult hood the best we can. It seems a shame to force them to take on student loans when we will hopefully be in a position to help them if not pay for their college totally. I have some personal reasons for wanting to help my children through college based on my history. But there you have it.

On the flip side though, we do not want to hurt our retirement or not retire to help our children. As someone posted earlier- $30,000 at age 30 is easier to pay off in the long run than the same debt at age 60 on a fixed income.

I maintain that there is probably a fine line between these two goals that you can walk. I would put forth that with some research and budgeting, most families can be in the position we are now in. It's not ideal- we scrimp a bit and we don't do everything (many) of the things I'd like to do (like move to a huge house, go on more vacations, fly etc). But I feel good about where we stand. We know we can take care of ourselves and our children now and for many years to come. We know we can retire and help our kids through college.

A 529 is a great option. We have one for each child. There are other options- roth iras, coverdale ira, schwab accounts, drips, etc. You get the idea. This is one reason we went to a financial planner. He helped us untangle the information and then backed off and let us make the decisions that we felt were best.

Good Luck.

    Bookmark   December 27, 2003 at 10:00PM
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Thanks for a variety of opinions, all.

I expect that quite a few readers will have found some new ideas on the subject.

If it gets people thinking along several lines, with new viewpoints, good.

Good wishes to all for the New Year. May it bring the fulfillment of some of your dreams - and the development of some new ones.

ole joyful

    Bookmark   January 9, 2004 at 1:33AM
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