Poll: How Are You Saving For Your Child’s Education?
By Jeremy on Jul 01, 2009 with Comments 15
If you have, or plan on having kids, how are you preparing for their education? College tuition continues to rise faster than the rate of inflation so parents need to plan ahead more than ever. How are you preparing to pay for their college education? Are you saving any money to help them out or will you let them rely on student loans and working to pay for school? If you are saving, are you using a special college savings vehicle or just setting money aside at the bank?
College savings was never a major priority for us for the longest time because we didn’t have children. But with the birth of our daughter, an 18 year clock started ticking. It may seem like a long time, but when you think about what college might cost 20 years from now and the many changes that are bound to happen to borrowing money for college, it makes you stop and think about how important it might be to try and set some money aside.
While our daughter is only a few months old, I made sure to get a 529 plan established right out of the gate. So far we aren’t aggressively funding it or reducing our retirement contributions or anything, I know that the sooner we can start putting some money to work, the better off we’ll be.
So, that brings us to today’s poll. How are you saving for your child’s education, if at all? Even if you don’t have children yet, have you thought about whether or not you’ll save?
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My situation I voted for the scholarship since my spouse went to school and then, instead of working, decided to start a business. We’re 3 years in to the plan and so far things aren’t going well, so we had to collapse the kids savings plans. Unfortunate, but they are still young, hopefully we will get there again.
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I don’t have kids and already feel the pressure to plan ahead. I didn’t have a college fund, and still managed to work my way through college. Sometimes I think I would be robbing my children of that accomplishment, but at the same time education costs (and everything else) is rising dramatically relative to incomes.
I voted for I don’t have children yet, but I have started investing in a 529 through Upromise. Although I may use it for my own loans if I do decide to go back to school.
I put “I’m funding a 529″ but in reality, his grandparents are – we started it as soon as he was born so when people asked what they should give him, I could say “he doesn’t need anything but if you want you can put some cash into his college fund.” It’s working beautifully – we do fund it some ($50/mo) but most of it has come from birthday and Christmas gifts.
We are expecting our first child in September and will be opening a 529 account and will be using Rosa’s strategy. Be sure to look at which state sponsors it for any potential tax breaks, mutual fund expenses and contribution minimums. I also pick up loose change others are too lazy to get, and have started her savings account at our credit union with this years findings to date. We will also set up a Upromise account, and if I had my druthers, I’d buy a municipal bond, with a maturity corresponding to her college entry, to have relatively safer tax-free money waiting for her to help with college costs. Unfortunately we don’t have enough money to do that strategy.
I’m saving through a Roth IRA in my name as well as a brokerage account. The Roth IRA won’t be considered an asset by the schools (who now ask about 529 plan balances even if the government doesn’t) and I can invest at a much lower cost than a 529 plan even with the tax deduction. I’ll withdraw contributions at the time and see where we stand. My son won’t be in college for 14 years and I have no idea how the college system will change but I do know I will still want to retire.
I don’t have children yet, and I don’t plan on having any in the future. Planning for my own and my wife’s retirement (many, many years from now) is enough work. I can’t imagine the stress of trying to save for a child during this economic downturn. Times are tough and the latest unemployment figures today bear that out.
I’m saving through a whole life policy with a very strong mutual life company(not one of the options). Many people who have no idea how whole life policies downgrade this option because they believe it has a low rate of return. Although this is true of the internal rate of return, the access to cash on a tax-free basis in effect doubles any return.
Most parents don’t know that a 529 plan can hurt a child’s chances of getting financial if the 529 falls short of funding the school they wish to go to. Since the 529 plan counts as an asset in the child’s name, it will reduce their ‘need’ for aid. Whole life policies do not count as an asset, because it is normally owned by a parent.
Lastly, if a child doesn’t end up spending the money at all because they either got a full ride, went to a cheaper school, or just plain didn’t go for whatever reason, the 529 is going to be drilled on taxes when you try to take distribution. One note, the 529 can be transferred to any direct relative of the child – parent, sibling, or child, so that is another option.
I really wanted to start a 529 plan for our baby daughter this year using our tax refund but instead used the money to pay down some credit card debt. I keep hearing that you shouldn’t start funding college savings plans until you max out your own retirement accounts.
Obvoiusly, I voted for I don’t have children yet. I’m only 16,
. Otherwise, I think the 529 plan would be the most valid approach.
If I look at this from my parent’s point of view then it would be scholarship. I’m pretty confident that I can get a scholarship easily in college.
I don’t have any children yet, but as others have said, I am going to start putting money into a 529 as soon as my children are born. I do not want to leave my kids with large loans as soon as they get their start in the world.
Currently not planed for kids only because of funding as you said all thing becomes very costly and specially education, but i have started saving in such plans like 529 so i can secure future of child and avoid tension. your post very helpful who planning for child or already having kids.
I don’t have any children – but when I was in college I had scholarship money and federal grants to survive on. I also had to work a full time job while going to school full time – so it’s very doable. I only had to barrow about 3K in total so I’m pretty debt free. Since I did it, I’m sure soon to be college students will be able to survive. It’s also a good idea to start at a community college and then transfer – that way the cost wouldn’t be too much. I didn’t go that route – but I had plenty of friends who did that and were able to save thousands of dollars.