Parents: How Are You Saving for College?

[jad628]

I started with US Savings Bonds (when my first - now ten - was born) At the time, bonds were one of only a few options that were tax-free when used for education. Now several other options are available. We have Educational IRA's set up for both kids, and I deposit the maximum in those accounts. Be careful with various IRA's because some will exceed your maximum amount allowed for tax deferrment status and you will end up paying taxes on the interest. What I mean by this is that there may be a maximum amount of say $1000 a year that can be deposited without penalty. But the amount is for ALL of these types of IRA's, so if you have one where you deposit $900 and one where you deposit $500, you've exceed the maximum amount by $400 and the government will tax/penalize you on that. So be careful that the IRA's you choose are not in the same category and cumulative for the maximum amount of deposit.

We continue to buy EE series Savings Bonds along with the IRA's, which you can do without worry. The "tax-free" status when used for education (you have to pay taxes on the interest if used for anything else) makes up for the interest rate on these types of savings (although they ain't that bad).

Lots of employers will have programs where you can have a set amount payroll deducted for Savings Bonds, and an IRA is just a matter of finding the financial institution you want. I used my checking/savings account bank for the IRA accounts and those amounts are deducted directly out of the checking account.

I'm lucky in the fact that both my kids have a trust fund from my parents, but I plan on paying for 100% of their college. The best thing, in my opinion, is to get the amount deducted from your pay automatically. That way, it is consistently being deposited and you don't find excuses for not saving. I mean, I'm a cop and I might make 72K this year. It's important that I SAVE for them NOW.

Good luck.

[Sassy Cassie]

Jad, I'm right on the same page with you. My parents were so supportive in helping me pay for my education and I'd really like to do the same for my children. However, being that we're a single income military family, I know that we really need to plan ahead.

Right now, I'm leaning towards a state 529 savings plan. Congress recently passed a federal tax exclusion for qualified withdrawals on these plans so it seems like a pretty good way to invest. The only thing that is stumping me right now is allocating certain portfolio percentages.

[jad628]

Jad, I'm right on the same page with you. My parents were so supportive in helping me pay for my education and I'd really like to do the same for my children. However, being that we're a single income military family, I know that we really need to plan ahead.

Right now, I'm leaning towards a state 529 savings plan. Congress recently passed a federal tax exclusion for qualified withdrawals on these plans so it seems like a pretty good way to invest. The only thing that is stumping me right now is allocating certain portfolio percentages.

Cassie,

The hard part is starting. I've heard good things about 529 plans, but we were rolling pretty good with what we've already set up. It seems like the NC University system has a website that suggests several different options for college-savings and 529 plans are one. I'm assuming you are planning on a NC (in-state) college/university. My brother went to a small private college (Wingate) in the late 70's and it was something like 12K a year then. Now it's closer to 25K a year. I heard Duke is now 45K a year, and Davidson College (near me) is not far off of that. The UNC state schools for in-state seem to hover around 7-9K a year. I have several qualifications for some scholarships for my children (because of my military and police service and my dad's) but I have long since planned on saving over 40K for each of my kids. Due to your husband's military service, you may want to investigate what opportunities you have for scholarships and maybe low-cost college tuition assistance. It's good that you are doing this now, it's never too early to start.

I don't know if this interests you, but I have a slight "cushion" set up with a life insurance plan. My wife and I set up a life insurance plan with a separate rider, that allows us to recoup all premiums paid if we cancel the policy at an eighteen year maturity. This equates to about 20K in funds, that we CAN obtain, if college costs get ridiculous. It's a consideration, and of course, that particular policy ends when you take the payment, but it allows another option. The policy is just a supplemental one, so it's a viable option.

Also, if you consider EE bonds, you purchase at half the face value. The bonds mature to full face value in eighteen years and maximum accural in thirty years (no more interest after thirty years). That means nothing if you use them for education, but I thought I'd add it.

[jad628]

BTW, I saw this today.


http://www.cnn.com/2006/EDUCATION/09....ap/index.html


I am NOT saving for that!!!! Talk about spoiled kids who need a lesson in reality. One of 'em is even quoted about what USED to be considered "spoiled" isn't really spoiled today. What the hell is next, a damn SALARY to attend college? These punks piss me the hell off. College is SUPPOSED to be about an education and formulating social/problem-solving skills. These are probably exactly the same kids who ten years from now will tout about their "suffering" through college and demand high paying positions because of their education and experience. What a damn joke.

[crazy4jason28]

HOPE and my daddy.

[ramrod]

HOPE and my daddy.

awwwwwwwww hell no !!!

[crazy4jason28]

awwwwwwwww hell no !!!

He's always told me that he would help me.

[ramrod]

He's always told me that he would help me.

Have him help you little girl when your ready to settle down in life. Maybe wedding, or a down payment on a home. By the way don't you have school today ??

[crazy4jason28]

Have him help you little girl when your ready to settle down in life. Maybe wedding, or a down payment on a home. By the way don't you have school today ??

whatever . you dont have to be an ass.

[ramrod]

whatever . you dont have to be an ass.

Oh! I am far from an ass sweety. I am just blunt I have a sister your age and I get down on her like the wrath. It's tough love. Just some advice you shouldn't be playing where wolves eat . There are plently of other forums where there are teens your age. I mean come on honey how old are you? Your profile said 17 under your avatar, My space stated 14.. trust me I am helping you get out while you can... There are monsters on here..

[cheap80z28]

hey cassie,

here in wisconsin, if a parent gets 30% or more disability from the military, the children and spouse get free tuition at the university of wisc or milw area tech colledge. (And you can see from my spelling that I would never make it.)
Check with your local V.A. regional office and see if you get any help being a military family.

steve

[dock]

my $.02 - as someone previously mentioned, it would do you and your husband good to talk to a pro. Not neccessarily letting them invest your money for you but rather educating yourself on your options and their pros and cons.

Given the age difference of your 2 children, you'll probalby have long and medium term investments.

FWIW we opened IRAs / Roth IRAs in various stock funds for our son's education.

[nitrox28]

My wife and I are buying $1.00 scratch off lotto tickets once a week. By the time my son is 21, the odds are in our favor that we'll have enough winnings to send him to the best vo-tech school in the city.