College Savings Accounts

[Giro]

I've been going back and forth on how much I should put in my daughter's college account - she is 10.  Currently her balance in the 529 is $15k. 

One of my big issues now is how much is too much assistance to your kids.  My twins are 21 now and just graduated from college.  One of them is getting married soon.  I gave the engaged daughter a house for about 70% below market value - she's getting a mortgage after she gets married for the remainder...about $40K and I paid for her first car - $13k.  I also paid for her college but it was very minimal expense since she started at community college and received scholarships for the bulk of it...maybe $7k.

The other twin went to a state school for all 4 years.  I paid all of her tuition that wasn't paid by scholarships and tuition reimbursement - $20K, bought her first car - $12K.  She has not moved out on her own yet but just graduated and is looking for employment. 

So, where does that leave me with the 10 year old.  I was thinking of stopping the contributions to her 529.  I will be retired by the time she graduates and her balance should grow nicely over the next 8 years.  Is this enough?  On one hand, I think it's plenty.  It will be more than I gave the other two for college.  BUT, it won't be everything I gave the other kids.  should I worry about fairness? 

Is that a ridiculously low amount for a college account? 

[2Birds1Stone]

Consider that education and healthcare costs are the quickest to rise, greatly outpacing inflation.

An average 4 year school around here costs ~$100k state, or $250k private.

8 Years is a short enough time where you really shouldn't expect anything as far as growth, the market goes up, the market goes down, in 8 years when you need to start drawing it could be anywhere between.

Even assuming smooth 6-8% returns on 15k, in 8 years it won't be THAT much.

IIRC from your other posts/threads you and your husband sound like you are pretty well off. I would definitely pad that account a bit more. What's the worst that could happen?

[Giro]

I wouldn't say we are well off or I would be retired now.  :)   I'm joking.    I guess it's all relative.

I would NEVER pay $100k for college today.  no way no how....I would chew off a toe before I would allow that madness.  College isn't worth $100k and this coming from someone with 2 masters degrees. 

[pdxvandal]

Maybe just contribute until you get the maximum tax deduction, if your state offers that.  Otherwise, I'd just save in traditional retirement accounts. My state is generous with that, but I may be moving to one that has none or minimal, in which I'd likely stop contributing.

100k for college is insane. I went to an inexpensive 4-year public school and graduated with no debt, allowing me to begin investing, albeit on a low salary, at age 22. It's helped in the long run!

[Zette]

You could use a college calculator to see what 2 years community college plus 2 years at the college your middle daughter attended would be.  Then see how likely your $15k is to grow to that number in 8 years.  That would give your youngest about the same start in life that you gave the other two.  It seems unfair to buy a house for one child, 4 years of university for another, and then to tell the 3rd, "Sorry, you'll have to get loans because I wanted to retire early."

[MrsPete]

So in terms of "bridging to adulthood" expenses, you've paid about 60K for the first daughter, about 32 K to the second daughter, and you're holding 15K (with 8 years to grow) for the last daughter. 

I agree with the posters who say you need to treat them equally. 

You're not far off on educational equity with the twins.  I assume each girl attended the school of her choice, and you've helped them with that financially.  The hard thing with the younger girl is that you don't know what choices she'll make eight years from now ... and what college'll cost ... and whether she'll be a scholarship winner; however, the money you have for her education seems to be in line with what the others have had. 

You've helped the twins with first cars.  It'd be fair to do the same for the youngest child.  With inflation to consider, I'd set aside about 15K to help her with a first car. 

You've helped the first daughter with a first house.  Personally, I think you were over-the-top with this one, but since you've done it for the first ... you're in.  I think you should provide some downpayment assistance for the second and third daughters when they prepare to buy a house.

[Jaguar Paw]

I started running over projected college costs for my newborn the other day and almost fainted.

[SimplyMarvie]

As of yet no one has tackled the perception part that you asked about-  will the 2nd twin expect a house when they get married, will the 10 YO want a car and a house too when her time comes around?  Kids (even the 21 year old variety) don't seem to understand real cost vs. an itemized list of stuff, and comparisons are real.  She got a house! She got a car!  I don't care if my college was twice as much as theirs, it is not fair. 

Perhaps your brood is more mature and wiser.  I think my kids are very decent and not bratty (at 23 and 21) but I am certain that when it comes to huge life-benefitting items like a car and house it would be that what I gave to one would be somehow expected by the other.  I would hate to think that as I die they are arguing over who should get more from the estate since one had been gifted things once upon a time that the other wasn't.  If it were me I would now be planning on how to keep the "list" of items pretty equal even if the cost is not necessarily so, just to preserve life long peace.  If you can afford all that, go for it.  It gets too complicated otherwise.       

Yeah, my sis and I are legit adults (38 and 34) with kids and houses and everything and it's STILL a bit of a point of contention. In our defense, it's very, very unbalanced -- with her getting the majority of the parental support, but also NEEDING the majority of parental support because she's more economically vulnerable. She thinks she just never got the breaks I did, I think that because mom saved her butt every time she had any difficulties she never learned to budget, plan or hustle. Mom's perspective is that she desperately wants equal outcomes for the two of us and has to put her finger on the scale to get to that because I'm an upper middle class professional and my sister isn't.

No one is right here. But my upshot for you would be yep... it's unequal. But your worries about coddling are valid and founded, and that by the time they're getting to being college aged and married they need to start adjusting to some inequality in their lives, because you can't guarantee equality of outcome for all your kids.

[MrsPete]

I started running over projected college costs for my newborn the other day and almost fainted.

Don't trust those gloom-and-doom estimates.  My oldest just graduated in May, and we spent not quite 20K total for her education.  That was tuition and fees, housing and meals, EVERYTHING for four years (including one mandatory summer school) in an expensive major.  We didn't have to dip into savings to pay her expenses, and no one took on any debt. 

[Jaguar Paw]

I started running over projected college costs for my newborn the other day and almost fainted.

Don't trust those gloom-and-doom estimates.  My oldest just graduated in May, and we spent not quite 20K total for her education.  That was tuition and fees, housing and meals, EVERYTHING for four years (including one mandatory summer school) in an expensive major.  We didn't have to dip into savings to pay her expenses, and no one took on any debt.

20K?!?! How?! My wife and I both went to state schools with in state tuition and Mine was around 22K per year and hers around 28K!

[Giro]

My twins graduated a few weeks ago.  Scholarships paid for a considerable amount of the tuition.  One went four years at a state school...advertised price was 22k a year we paid less than 6k.  The other kid went two years at JC and 2 years at the same state school.  Don't underestimate scholarships, apply for everything.  And we received no grants since our hh income was about 300k in a LCOL area. 

[frugalnacho]

I started running over projected college costs for my newborn the other day and almost fainted.

Don't trust those gloom-and-doom estimates.  My oldest just graduated in May, and we spent not quite 20K total for her education.  That was tuition and fees, housing and meals, EVERYTHING for four years (including one mandatory summer school) in an expensive major.  We didn't have to dip into savings to pay her expenses, and no one took on any debt.

My bullshit detector is going off.  That's only $5k per year for tuition, housing, meals, and books.  What school was that?  The most reasonably priced community college in my area is nearly $5k/yr just for tuition, not to mention housing, food, or books.  That price seems suspiciously low for any degree.

[Giro]

My prices were ONLY tuition, books and fees.  This was not at all room and board.  That expense is more than tuition in a lot of cases. 

MissNancy...wow!  :(

[MakeSmarterDecisions]

I have one in college at a state school (in NY) and luckily she is graduating in 3 years (not four). The bills altogether will be around $70K... but with a lot of work and planning we have cash flowed it too.

[Johnez]

I started running over projected college costs for my newborn the other day and almost fainted.

Don't trust those gloom-and-doom estimates.  My oldest just graduated in May, and we spent not quite 20K total for her education.  That was tuition and fees, housing and meals, EVERYTHING for four years (including one mandatory summer school) in an expensive major.  We didn't have to dip into savings to pay her expenses, and no one took on any debt.

My bullshit detector is going off.  That's only $5k per year for tuition, housing, meals, and books.  What school was that?  The most reasonably priced community college in my area is nearly $5k/yr just for tuition, not to mention housing, food, or books.  That price seems suspiciously low for any degree.

In California education is reasonably priced. Community college is $40 a unit, takes 60 units for an AA/AS degree. $2400. Cal Poly Pomona runs $7000 an academic year all fees included. Total cost for tuition-$16,400, with enough left to play with given Mrs. Pete's numbers, a child of a Mustachian probably spent it well. Used books, rooming up, and bike for transportation. Doable.

[frugalnacho]

I started running over projected college costs for my newborn the other day and almost fainted.

Don't trust those gloom-and-doom estimates.  My oldest just graduated in May, and we spent not quite 20K total for her education.  That was tuition and fees, housing and meals, EVERYTHING for four years (including one mandatory summer school) in an expensive major.  We didn't have to dip into savings to pay her expenses, and no one took on any debt.

My bullshit detector is going off.  That's only $5k per year for tuition, housing, meals, and books.  What school was that?  The most reasonably priced community college in my area is nearly $5k/yr just for tuition, not to mention housing, food, or books.  That price seems suspiciously low for any degree.

In California education is reasonably priced. Community college is $40 a unit, takes 60 units for an AA/AS degree. $2400. Cal Poly Pomona runs $7000 an academic year all fees included. Total cost for tuition-$16,400, with enough left to play with given Mrs. Pete's numbers, a child of a Mustachian probably spent it well. Used books, rooming up, and bike for transportation. Doable.

As reasonable as those rates are there is absolutely no way they jive with mrspetes numbers.  $16.4k for tuition only leaves $3.6k left for four years of boarding, food, and books.  That's only $900/yr.  I don't care how frugal you are I have a hard time accepting you can find rent/dorm and food for an entire year for that price.

Do the rates not increase for upper classman?  In michigan they automatically jump once you have enough credits to be considered a junior.  It always pissed me off knowing other people in some of my classes were paying less than me for the exact same class, and the only reason is they were freshman and I already had enough hours to consider me a junior.

[jredman]

Not sure if this is in your state, but I work in the schools as a Librarian and Ohio offers a community college program where kids can attend for free. I had several seniors tell me they had been able to take several classes and save a ton of money. The textbooks were even free for their use for most courses.  And I am not sure if this will still be around in 7-8 years but I am going to encourage my 11 year-old to participate in it if it is. Some of our more ambitious kids got all their electives finished. I work in a lower middle class/working class district. Most of the kids are wonderful but too many are dealing with terrible home lives. I am so happy they offer this - it really helps the kids out. They are even starting to offer courses after school in place for the kids. Of course, our district has 3 large high schools. But it would be worth checking it out for your child.

I started saving when my kids were born. Just kept putting in any money we could find.  I hear people at work whining about college expenses all the time - claimed they could not afford to put anything aside but most have newer cars and nice homes. We make good money - at least I have been happy since I grew up working class.  Most teachers are not putting anything aside for retirement because they are counting on their pension. Ohio just raised the age to 65 no mater how many years of service (all is on the age now) for those of us younger than 50. I don't trust that it will even be there because Ohio keeps losing teacher jobs  - to me it looks a bit like a Ponzi scheme. They promised way to much to the current retirees. I know people who started working in a dept at 18 and retired at 48 with the pension. I have no idea how they think it will be able to pay out what it promised.

My husband and  lived in a tiny place for many years and saved up to purchase a lot. Then a few years later, we built a modest house. Oldest son is commuting to Kent State and we are paying the tuition from our College Plan Savings. (As long as he maintains a 3.0 GPA) He is responsible for his gas, spending money and books. He is working full-time this summer with a heating & cooling company and is starting to learn about installing. He also does yard work locally. He wasn't a good student in high school and got poor grades due to a lack of effort so there was no way we were going to pay for him to go away to school. We made him sit out Fall semester to work and mature a little. He realized he did not want to work a minimum wage job forever so he decided to become more serious about school.

[MrsCoolCat]

Following since I created the 529 thread. Thnx.

[marion10]

My kids are fairly recent (they are 28 and 24) and we paid for their undergraduate degrees in full. We saved for them starting very young. They both went to 4 year private middle tier schools and got merit scholarships- not full rides- but it helped.  I worked part time for a while and went back to work full time and used that excess salary to pay tuition. We told the kids we would pay for 4 years and they had to get decent grades. I've seen too many kids burdened with student loans- and did not want that for the, They both worked while in school and paid for their spending money. They also managed the application process themselves. If they couldn't handle that, they were not ready for college.
Both finished in 4 years (daughters has a masters that she got a fellowship for) and are working and living on their own and very grateful they do not have student loans.

[MrsPete]

20K?!?! How?! My wife and I both went to state schools with in state tuition and Mine was around 22K per year and hers around 28K!

Inexpensive state school, which includes textbooks in tuition.
Total of three scholarships -- nursing offers loads of scholarships.
Frugal living choices; for example, no car until she started nursing clinicals.
We paid all her needs, and she earned pocket money through a part-time job, which also boosted her resume. 
Good planning and hard work resulted in graduating on time.

It's not all that rare.  Our youngest is only a sophomore, so I can't say how much her total'll be, but thusfar we've spent less for her education than we did for our oldest's. 

[BoonDogle]

If your oldest weren't already through college, I would have recommended that you set an amount for your kids and give that amount to each of them.  I set aside $75 per month for each of ours from the day they are born.  It is unlikely that it will cover all the costs of college but I am OK with that.  They are bound to learn a valuable financial lesson.  It they want to spend 100K for college or go to college for 6 years to get a 4 year degree, then they will find themselves in debt.  On the flip side, if they are frugal, apply for scholarships, go to community college for a couple of years, work part time, etc. they could come out without any debt.  Either way, they will have skin in the game and will be accountable for their decisions.

In your situation, when your 10 year old gets a little older, I would sit down with her and explain that you are contributing 20K (or whatever you decide) to her education.  She is responsible for the rest.  You can help her with her first car or pass one down to her.  Sounds fair while still holding her accountable for her decisions.