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College savings plan - where to start?
Posted on 5/28/20 at 3:14 pm
Posted on 5/28/20 at 3:14 pm
Our first child is expected in September, and I'd like to start saving efficiently for her college education. Using University of Illinois as an example (we live in Chicago), I am expecting tuition and fees to cost a draw dropping $200,000-$250,000 for 4 years by 2038.
Does anyone have any tips or advice on how to best invest for college? We've been looking into 529 plans and they seem like a good thing to take advantage of. What qualifies as an education expense for these plans seem to be pretty broad - and can include fees, tuition, etc. for public or private schools. They appear to be generally run by a plan administrator, with minimal to moderate input on the investment mix. This seems like a pretty good start.
Any advice would be appreciated. Thanks in advance!
Does anyone have any tips or advice on how to best invest for college? We've been looking into 529 plans and they seem like a good thing to take advantage of. What qualifies as an education expense for these plans seem to be pretty broad - and can include fees, tuition, etc. for public or private schools. They appear to be generally run by a plan administrator, with minimal to moderate input on the investment mix. This seems like a pretty good start.
Any advice would be appreciated. Thanks in advance!
9
Posted on 5/28/20 at 3:16 pm to dewster
Following. My first is also due in September. From what I've gathers the Illinois 529 is quite good. I'm in PA so I will get a state tax break no matter which 529 I put into.
The qualifying expense part is defineately something I'm not quite sure of. Debating just a money market account and buy into index funds. Therefore I'm no help but in same boat as you haha.
The qualifying expense part is defineately something I'm not quite sure of. Debating just a money market account and buy into index funds. Therefore I'm no help but in same boat as you haha.
Posted on 5/28/20 at 3:31 pm to dewster
The LA START program is a really good 529 program. It's about as low of fees as you can get as it uses primarily passive Vanguard funds. I would suggest using that if you are going to do it yourself, particularly because of some of the other incentives.
The only other 529 plan that might merit consideration would be Virginia's plan that uses American Funds, which are relatively low cost actively managed funds. Historically, they have slightly outperformed Vanguard net of fees, but both Vanguard and American Funds are a few hundred basis points above the rest of the pack.
As far as what can be an educational expense, you are correct in that it is a pretty broad definition.
The only other 529 plan that might merit consideration would be Virginia's plan that uses American Funds, which are relatively low cost actively managed funds. Historically, they have slightly outperformed Vanguard net of fees, but both Vanguard and American Funds are a few hundred basis points above the rest of the pack.
As far as what can be an educational expense, you are correct in that it is a pretty broad definition.
Posted on 5/28/20 at 3:56 pm to dewster
I use Louisiana 529 start program also. Low cost vanguard funds and I get a tax deduction for my contributions on my state taxes but I think that might only apply to Louisiana residents. I put 150/month for each child for now and will re-evaluate how much more I want to come out of pocket when they get to college. I know 150/ month prob won’t be enough but I don’t want to have too much trapped in there incase they don’t go to college bc you get penalized if you withdrawal it without college expenses. I’d recommend sending them to a smaller college at least for a year or two to save some money.
Posted on 5/28/20 at 3:57 pm to juice4lsu
We use LA Start 529. I’ve read that you should put in $100 per month for every year that you want to cover. So if you want to cover all 4 years, then put in $400/month. It’s a rough estimate but a good place to start.
Posted on 5/28/20 at 4:02 pm to buffbraz
Send them to trade school or to get a technical trade. Save money and he'll make more out the gate than going to college. Unless your rich and he's goi9ng to med or law school.
Posted on 5/28/20 at 4:04 pm to Potchafa
I went to trade school but I wouldn’t force it on my kid if he or she wanted to do otherwise. Shift work and manual labor is ok for me right now but I bet when I get older I’ll be looking for something easier on the body.
Posted on 5/28/20 at 4:05 pm to tigersfan1989
Is the Louisiana program a direct sold plan?
Posted on 5/28/20 at 4:18 pm to dewster
I know people are big on the 529s but the qualifying education expenses are something that make me a bit hesitant. Our income only allows for a 2% match from the state as well.
I am looking at starting an UTMA for Lil Crawfish coming in July. It is still a tax advantaged account. The only issue is that it counts as income/assets for him that could potentially impact federal aid. Both of us (especially his mom) received scholarships to attend college and I don't want $50,000 tied up to only be used for education expenses. Plus there are very real things like a vehicle that will also be needed to purchase further down the road that aren't eligible for purchase with a 529. Ideally, he can get a scholarship, we can pay for a car out of his UTMA and then if there is any left give it to him for a down payment on house. Only issue is that he becomes the account owner at 18, but its on me to not raise a shitty kid who would abuse those funds.
I am looking at starting an UTMA for Lil Crawfish coming in July. It is still a tax advantaged account. The only issue is that it counts as income/assets for him that could potentially impact federal aid. Both of us (especially his mom) received scholarships to attend college and I don't want $50,000 tied up to only be used for education expenses. Plus there are very real things like a vehicle that will also be needed to purchase further down the road that aren't eligible for purchase with a 529. Ideally, he can get a scholarship, we can pay for a car out of his UTMA and then if there is any left give it to him for a down payment on house. Only issue is that he becomes the account owner at 18, but its on me to not raise a shitty kid who would abuse those funds.
This post was edited on 5/28/20 at 4:21 pm
Posted on 5/28/20 at 4:28 pm to Drunken Crawfish
Hope your daughter/son is an all world athlete and get the schooling paid for
Posted on 5/29/20 at 10:57 am to dewster
quote:
(we live in Chicago),
START is a decent plan for Louisiana residents since there is a benefit to the state deduction and match. Does Ill have something similar?
Posted on 5/29/20 at 12:04 pm to dewster
1. Max retirement accounts.
2. If you have money left, consider 529 or Coverdell IRA for college.
College is probably worth for many fields, but some degrees will not provide an income high enough to justify the costs.
The kids may get scholarships, work some, or join the military.
They may decide to do a non-traditional route to a career.
2. If you have money left, consider 529 or Coverdell IRA for college.
College is probably worth for many fields, but some degrees will not provide an income high enough to justify the costs.
The kids may get scholarships, work some, or join the military.
They may decide to do a non-traditional route to a career.
Posted on 5/29/20 at 4:07 pm to Drunken Crawfish
quote:
starting an UTMA
I have setup both a 529 and a UTMA. There are many non-qualified education expenses that creep up when the kid goes off to college. The UTMA will help with those.
Posted on 5/29/20 at 4:17 pm to dewster
quote:Holy fricking hell
I am expecting tuition and fees to cost a draw dropping $200,000-$250,000 for 4 years by 2038.
Posted on 5/29/20 at 8:38 pm to makersmark1
quote:
1. Max retirement accounts. 2. If you have money left, consider 529 or Coverdell IRA for college. College is probably worth for many fields, but some degrees will not provide an income high enough to justify the costs. The kids may get scholarships, work some, or join the military. They may decide to do a non-traditional route to a career.
This100%, plan for your retirement first then fund kid’s college with what’s left. There will be a number of possibilities to pay for college when that time comes. but not for your retirement.
Posted on 5/29/20 at 8:58 pm to dewster
quote:
I am expecting tuition and fees to cost a draw dropping $200,000-$250,000 for 4 years by 2038
Posted on 5/30/20 at 8:15 am to dewster
Our kids have already finished college. I started a 529 plan when they were very young. I would suggest jump starting the account with larger contributions. Contributions in their high school years really won’t grow much at all. This would be a great time to contribute.
We had enough to get both kids through college. It took a lot of stress away. Who knows what college will look like in 15-20 years. If you think your kids will attend college I would highly recommend setting up something when they are young and contributing early and often.
We used the Virginia 529 plan.
We had enough to get both kids through college. It took a lot of stress away. Who knows what college will look like in 15-20 years. If you think your kids will attend college I would highly recommend setting up something when they are young and contributing early and often.
We used the Virginia 529 plan.
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