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Started By
Message
What is the expectation for saving for kids college nowadays?
Posted on 2/1/23 at 10:12 am
Posted on 2/1/23 at 10:12 am
My parents weren't able to set anything aside for me. I went the scholarship student loan route.
Obviously we felt we were in position to start a 529 for our kids. We have two, both under 2.
Currently the plan is that the first year we contribute $250 a month per child and every year increase by $25-50 a month.
I was concerned we were saving too much, but also heard somewhere that the money can now be rolled into a IRA if the kids don't use all the money? So in theory- this could set them up for long term wealth or savings?
I'm just concerned I'm going to put too much money in and we end up eating a whole bunch in penalties trying to get it out 22 years from now.
Obviously we felt we were in position to start a 529 for our kids. We have two, both under 2.
Currently the plan is that the first year we contribute $250 a month per child and every year increase by $25-50 a month.
I was concerned we were saving too much, but also heard somewhere that the money can now be rolled into a IRA if the kids don't use all the money? So in theory- this could set them up for long term wealth or savings?
I'm just concerned I'm going to put too much money in and we end up eating a whole bunch in penalties trying to get it out 22 years from now.
13
Posted on 2/1/23 at 10:24 am to DiamondDog
School of hard knocks is free baw
ETA: assuming you’re asking about 529’s, if the money doesn’t get spent on school it’s so much trouble and the tax hit is big enough that the sensible thing is to leave it in there for the grandkids
I’m not kidding and I’m not gonna explain how I know
ETA: assuming you’re asking about 529’s, if the money doesn’t get spent on school it’s so much trouble and the tax hit is big enough that the sensible thing is to leave it in there for the grandkids
I’m not kidding and I’m not gonna explain how I know
This post was edited on 2/1/23 at 10:58 am
Posted on 2/1/23 at 10:32 am to DiamondDog
quote:
I'm just concerned I'm going to put too much money in and we end up eating a whole bunch in penalties trying to get it out 22 years from now.
You could just stop adding to the account once the balance hits a certain threshold.
Posted on 2/1/23 at 10:32 am to DiamondDog
Just remember you can only do 4800 a year if you file your taxes jointly. So that’s 400 a month. You can do an UTMA as well if you want to spread it across two different types of accounts.
Posted on 2/1/23 at 10:43 am to MrJimBeam
quote:
Just remember you can only do 4800 a year if you file your taxes jointly. So that’s 400 a month. You can do an UTMA as well if you want to spread it across two different types of accounts.
In a 529? This is wrong if you are talking across the board. You can only get a deduction in LA up to $4800, but you can get a deduction up to $20k per year in some states. In most plans you can deposit up to the maximum allowable account balance at any time, though.
Posted on 2/1/23 at 10:44 am to DiamondDog
I'm shooting for $100,000 for each kid at college time but I just pulled that out of the air. In 12 years that may only buy 2 books.
Posted on 2/1/23 at 10:52 am to DiamondDog
no plans to give my kids any $ for college. The best thing I can do is secure my retirement to guarantee I dont become a financial burden for them as me and my wife get old.
Also, if they want to go to college they need to be wise about what major they want, how much the school costs that they choose and have full responsibility for all debt that occurs from that process. I have seen way too many kids who didn't take education seriously when it wasn't on their dime.
Also, I'm probably going to push for them to go to a trade school at this point and just avoid college completely. Unless there is a bubble burst with colleges, it just doesn't make much sense. Lots of well paying careers out there for anyone who can show up on time and just be halfway intelligent.
Also, if they want to go to college they need to be wise about what major they want, how much the school costs that they choose and have full responsibility for all debt that occurs from that process. I have seen way too many kids who didn't take education seriously when it wasn't on their dime.
Also, I'm probably going to push for them to go to a trade school at this point and just avoid college completely. Unless there is a bubble burst with colleges, it just doesn't make much sense. Lots of well paying careers out there for anyone who can show up on time and just be halfway intelligent.
Posted on 2/1/23 at 11:00 am to DiamondDog
I saved very little toward my childrens college (couldn’t save for it and retirement at the same time). I had 20k saved total when my oldest started this year. My youngest starts in two years.
I’m in Georgia, he’s at a state school, it’s easy to qualify for and retain the Hope scholarship. This covers almost all tuition, but not fees. That’s about 7 grand a year. My child got no other scholarships or aid.
That leaves the following per year costs we’ve paid out:
Fees ~2500
Housing ~7500 (on campus required first year)
Meal Plan ~4000 (on campus required )
Books ~700
Misc ~1000
Grand total: 15700.
Of that we (wife and I paid 10K). Son paid the rest thru a combo of work and fed student loans (unsubsidized).
So we had year one and two covered and have been saving 1000 per month (have more ability for this now) and will keep doing so for 4 years. Essentially cash flowing 4 years for each of them. They will each be responsible for about 20k of their own college costs (or more if they lose the HOPE).
So long story short, it costs about 22k a year for state u in Georgia.
I’m in Georgia, he’s at a state school, it’s easy to qualify for and retain the Hope scholarship. This covers almost all tuition, but not fees. That’s about 7 grand a year. My child got no other scholarships or aid.
That leaves the following per year costs we’ve paid out:
Fees ~2500
Housing ~7500 (on campus required first year)
Meal Plan ~4000 (on campus required )
Books ~700
Misc ~1000
Grand total: 15700.
Of that we (wife and I paid 10K). Son paid the rest thru a combo of work and fed student loans (unsubsidized).
So we had year one and two covered and have been saving 1000 per month (have more ability for this now) and will keep doing so for 4 years. Essentially cash flowing 4 years for each of them. They will each be responsible for about 20k of their own college costs (or more if they lose the HOPE).
So long story short, it costs about 22k a year for state u in Georgia.
This post was edited on 2/1/23 at 11:03 am
Posted on 2/1/23 at 11:07 am to DiamondDog
I would do the opposite and start large and taper off depending on needs/growth. As others have said you should at least (if able) take advantage of the state tax deduction.
I believe it is $35k that they are going to allow to be rolled into a Roth IRA. That would be an ENORMOUS leg up for any kid.
Our plan is to hold out that sum (or whatever they are allowing in the future) and do the roll over for each of our kids.
I believe it is $35k that they are going to allow to be rolled into a Roth IRA. That would be an ENORMOUS leg up for any kid.
Our plan is to hold out that sum (or whatever they are allowing in the future) and do the roll over for each of our kids.
Posted on 2/1/23 at 11:34 am to DiamondDog
I dont have lofty goals of private school or out of state tuition for my kids.
My first graduated from La Tech. She kept her tops honors throughout and the Tech scholarship. Tops pays over half of the tuition, plus stipend of a couple hundred a quarter if you just do pretty fair.
Her four years cost me about 20k out of pocket. SHe worked about 12 hours a week on campus for a little pocket money.
I pay about 200 a month for feeding them here at home, so that is removed and transferred over, so that is about 10k of the amount I paid.
Long and short, maybe I was lucky, but I easily paid for her needs and most of her wants (sorority dues, etc) out of pocket as we went.
We have a nice nest egg for the remaining two, but I am blindly just not that worried about it. Now, if TOPS goes away, my plan is shot.
My first graduated from La Tech. She kept her tops honors throughout and the Tech scholarship. Tops pays over half of the tuition, plus stipend of a couple hundred a quarter if you just do pretty fair.
Her four years cost me about 20k out of pocket. SHe worked about 12 hours a week on campus for a little pocket money.
I pay about 200 a month for feeding them here at home, so that is removed and transferred over, so that is about 10k of the amount I paid.
Long and short, maybe I was lucky, but I easily paid for her needs and most of her wants (sorority dues, etc) out of pocket as we went.
We have a nice nest egg for the remaining two, but I am blindly just not that worried about it. Now, if TOPS goes away, my plan is shot.
Posted on 2/1/23 at 11:37 am to Dawgfanman
quote:This is similar to what I described, maybe a little more than La Tech, but my daughter had a pretty nice Tech sponsored scholarship to add in. I previously stated it cost me 20k total, probably more like 25k the more I remember. Like 350 a month for rent and utilities for the house she shared with 2 friends. another 150 or so for some groceries. She did carry a gas card, but rarely used it .
I saved very little toward my childrens college (couldn’t save for it and retirement at the same time). I had 20k saved total when my oldest started this year. My youngest starts in two years.
I’m in Georgia, he’s at a state school, it’s easy to qualify for and retain the Hope scholarship. This covers almost all tuition, but not fees. That’s about 7 grand a year. My child got no other scholarships or aid.
That leaves the following per year costs we’ve paid out:
Fees ~2500
Housing ~7500 (on campus required first year)
Meal Plan ~4000 (on campus required )
Books ~700
Misc ~1000
Grand total: 15700.
Of that we (wife and I paid 10K). Son paid the rest thru a combo of work and fed student loans (unsubsidized).
So we had year one and two covered and have been saving 1000 per month (have more ability for this now) and will keep doing so for 4 years. Essentially cash flowing 4 years for each of them. They will each be responsible for about 20k of their own college costs (or more if they lose the HOPE).
So long story short, it costs about 22k a year for state u in Georgia.
The first year on campus and the ridiculous mandatory meal plan she never used was the most expensive.
This post was edited on 2/1/23 at 11:39 am
Posted on 2/1/23 at 12:13 pm to GEAUXT
Were in a similar situation — had to pay for college ourselves but are able to help our kids some. So, originally our plan was to put a little each month into a 529 — not enough to potentially overfund, but enough that we could use as a buffer so that we’re not having to come up with ALL of it at one time.
Now with the IRA rollover, we might start contributing more, with the idea that we’d one day roll over any excess to an IRA, but I honestly haven’t looked into it enough.
Now with the IRA rollover, we might start contributing more, with the idea that we’d one day roll over any excess to an IRA, but I honestly haven’t looked into it enough.
Posted on 2/1/23 at 12:22 pm to Dawgfanman
quote:
So long story short, it costs about 22k a year for state u in Georgia.
And that doesn't even include tuition? Goodness.
Posted on 2/1/23 at 12:41 pm to DiamondDog
Have done $200/mo for all kids since born…except during mar-apr 2020 I was throwing large chunks into 529. I plan to keep the same $200/mo and focus more on building other assets to generate cash.
Posted on 2/1/23 at 1:12 pm to DiamondDog
quote:
And that doesn't even include tuition? Goodness.
No that’s including tuition.
Posted on 2/1/23 at 2:13 pm to notsince98
quote:
no plans to give my kids any $ for college.
I understand in theory, but I think some situations warrant that investment in your child. If your child could go to an Ivy League level school that would be cost prohibitive without help from you then it severely restricts their potential. It would be worth it for me to work an extra year or two to provide that opportunity. If state school level college is likely then funding retirement over college funds for a child is certainly what I would do, though.
Posted on 2/1/23 at 2:25 pm to go ta hell ole miss
quote:
I understand in theory, but I think some situations warrant that investment in your child. If your child could go to an Ivy League level school that would be cost prohibitive without help from you then it severely restricts their potential. It would be worth it for me to work an extra year or two to provide that opportunity. If state school level college is likely then funding retirement over college funds for a child is certainly what I would do, though.
Where there is a will there is a way. If an opportunity like that came up, there will be a way for them to figure it out. That process alone will teach them an invaluable lesson in life.
Posted on 2/1/23 at 2:33 pm to go ta hell ole miss
quote:
board. You can only get a deduction in LA up to $4800, but you can get a deduction up to $20k per year in some states.
So by the quick math if I save $4800 a year and LA state income tax is 4.5%, I'm only saving $216 a year in taxes for that? Better than nothing I suppose.
Posted on 2/1/23 at 2:56 pm to go ta hell ole miss
quote:
If your child could go to an Ivy League level school that would be cost prohibitive without help from you then it severely restricts their potential. I
Not going to an ivy league school does nothing to restrict anyone's potential. That superficial crony club is nothing but a farce these days.
Posted on 2/1/23 at 3:15 pm to DiamondDog
You are also getting tax free growth if used for expenses. That is the main factor here.
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