Kids, College, and 529s

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  • Lordosis Lordosis 
    Status: Physician
    Posts: 793
    Joined: 02/11/2019
    Earnest refinancing bonus

    Those of you with kids what are your thoughts of funding their college?

    There are a lot of variables.  It is hard to predict what college will cost in 15 years.  Hard to know if my kids will go to a state vs private school.  Scholarships?

    Right now I am putting into my 529 what I think will fully cover tuition at our state schools.  I figure if I am too low I can cash flow a little.  If I am too high (fat chance) I can put less in as we get closer.  My wife and I would like to cover a 4 year degree at the in-state rate.  If my kid decides to go to a private school that costs twice as much I feel it is up to them to make up the difference.  Loans, work, scholarship.  Maybe our opinions will change but that is where they are right now.  I still have a long road ahead.

    Do you plan to fund your kids college?  Higher education?  To what extent?

    How are you predicting how much to save for this moving target?

    “Never let your sense of morals prevent you from doing what is right.”

    #197923 Reply
    Avatar JBME 
    Status: Spouse
    Posts: 413
    Joined: 03/26/2018

    my parents and my wife’s parents paid for fancy-pants private 4 year college for each of us. Both our parents (perhaps because of that) would not pay for any school beyond undergrad. We’re both strongly inclined to do the same for our kids, because it was done for us. That said, now that I personally see what I get with my fancy-pants private 4-year undergrad degree is the same as if I went to in-state or at least much cheaper 4-year school, based on my learnings I would impress this story on my own kids to tell them not to expect a better outcome with a 4-year degree from a private school vs a public school. If he/she still wants the private school and really feels it’s a good fit for him/her to thrive, then I’m inclined to support them since I’ll feel they are well educated enough to make an informed decision.

    For the funding, right now we’re contributing the max to get the state tax deduction. My parents put $1k in each kids’ 529 when there’s a birthday. It’s not nearly enough. Our local in-state public school is actually quite good, and we neighbor a state with a very well-renowned public state school that we’d get in-state tuition rates for due to reciprocity. My wife works at the in-state public U so she’d also get a faculty discount for our kids. So you can see how this is very much a moving target. Minimally I’d want to have each 529 take care of in-state tuition and room and board for each kid. If they choose 4-year private, that extra cost comes out of a taxable account (which hardly exists now but I can plan that better in 5-10 years as my oldest isn’t even in kindergarten yet)

    #197933 Reply
    Liked by Lordosis, q-school
    mkintx mkintx 
    Status: Physician
    Posts: 35
    Joined: 01/08/2016

    I would like to be able to pay for my kids’ undergrad education.  I save into 529s, and am on track to fund in-state tuition at least, and perhaps more.  I worked during college, and expect them to do the same, but would like them to graduate without debt, unlike me. My parents have generously offered to fund their fourth year of college at an in-state rate as well, but I don’t like to count on things like that.  My in-law has also vaguely said she’d like to help with college, but who knows what that means.  My older son is a sophomore in high school, so it’s right around the corner for us.  Now we are focused on figuring out where he wants to go!

    #197938 Reply
    Liked by Tim
    Avatar DCdoc 
    Status: Physician
    Posts: 405
    Joined: 06/14/2016

    With 3 under 3, who knows what college. It’s will be in 15 years. We’re aiming for 4 years public tuition per kid. Not sure what that number will be. Depending on returns and cost inflation it could be more or less. It’s a moving target. It’s easier for those with older kids to predict, than it is for us at this point. So we’re putting in money ever month and will forgetting about it for a decade, when we’ll have a better sense of costs, family finances, academic inclination, and other factors going into the decision.

    #197941 Reply
    Liked by Lordosis
    Avatar MnSaver 
    Status: Other Professional
    Posts: 57
    Joined: 01/04/2018

    We are a bit farther down the path so I will share our perspective. We have twins that are sophomores in high school and our target was, and is, funding in-state tuition/room/board/books. Since it’s a moving target, we benchmarked annually to ensure that we were at or above the required trajectory and then adjusted as-needed. Currently, 529’s are over-funded but I’m expecting inflation to make that a moot point over the next 6 years. They know they can go public for free, or if they go private they need to get discounts/scholarships to cover the balance. About 95% of their 529 is from us, less than 5% from grandparents.

    Since they have no chance of need-based aid, any private school targets will have to be places where their ACT scores are at or above the 75th percentile. For example, if my daughter gets a 26 ACT and is targeting School A where the 75th percentile is 28 and School B where it is 24, she will at least have a shot at discounts/scholarships from School B. Since the money is “theirs” in our minds, anything left over (due to going to less expensive school, scholarships, etc) goes to them for graduate school or their own kids some day. (I can see my daughter getting a graduate degree but not my son). I can say that it’s very nice to not be in a panic about how to fund college, and my kids tell me that a number of their peers are starting to feel the “how will I ever afford it” stress in 10th grade.

    #197942 Reply
    Liked by q-school
    portlandia portlandia 
    Status: Physician
    Posts: 366
    Joined: 07/07/2017

    My thoughts on this have evolved over the years. Here’s where they’re at currently:

    1. 529 being funded to cover undergrad tuition at state schools. Should be fully funded based on conservative investment assumptions within next 1-2 years, then will contribute as necessary to meet funding goals if poor returns/high tuition inflation.

    2. They will be expected to work to cover living expenses, but when the time comes, we might go soft and help them depending on the circumstances.

    3. Parents retain veto rights on any ridiculous major choices/pricey schools with very poor return on investment. No money for an underwater basket weaving degree from Columbia.

    #197951 Reply
    Avatar ZZZ 
    Status: Spouse
    Posts: 425
    Joined: 06/18/2018

    Do you plan to fund your kids college?

    Sure. As long as they go somewhere I approve of, are making progress towards being an independent adult, and aren’t squandering their skills and opportunities.

    Higher education?

    I presume you mean post-graduate work? Sure, same as above. If it’s within my means and they’re doing something I’m supportive of, I’d rather help fund their future than buy another fast car or room remodel.

    To what extent?

    To the extent that I think they’re pursuing something valuable given their disposition, skills, and opportunities and I can afford to contribute. If I’m at 8 figures by the time my kids hit college, I’m not going to worry about trying to save $20k going to a 2nd tier whatever grad program vs. going to the pinnacle or whatever and paying a little more. If my financial situation is tenuous, well, that changes the math.

    How are you predicting how much to save for this moving target?

    Too many variables over too long a time frame to predict with any degree of certitude. So, I’m taking full advantage of my state’s fairly generous tax break for 529 contributions and have already hit the statutory max for one 529 and well on the way with another. Coupled with more than a decade of tax free growth, that should cover full freight pretty much anywhere. Hopefully they score scholarships and don’t need to use a dime of it — then it just turned into a generational educational endowment that can grow for another two decades or more before the grandkids might need it.

    Nice to think that my kids and future generations could be freed from worry about the cost of their future opportunities (doesn’t mean they don’t need to consider the value for the price), wouldn’t need to sign up for indentured servitude to pay their way, nor spend their twenties (or longer) burdened with massive student loan debts…all for putting a small fraction of my disposable income into a tax advantaged account.

    #197957 Reply
    Liked by Vagabond MD
    ENT Doc ENT Doc 
    Status: Physician
    Posts: 3019
    Joined: 01/14/2017

    Well, now that my plan to pay $6.5M to get my kid into USC just got upended I’m all out of ideas.

    Avatar StarTrekDoc 
    Status: Physician
    Posts: 1718
    Joined: 01/15/2017

    Our plan from start was to fund 529 for 4 year private college undergrad.  Put that into play and right on track for that.

    If they go for state undergrad, then grad school is theirs for free, as we plan little tuition support for grad school.  Either they pay it or get their employer or post school employer to fund that cause.   We’ll assist in housing, room/board as our parents did.

    This is a very personal decision and none are right.

    As 1st world problems go, I’m happy to throw good money at my kids over shiny items.


    #197990 Reply
    Avatar G 
    Status: Physician, Small Business Owner
    Posts: 1462
    Joined: 01/08/2016
    Those of you with kids what are your thoughts of funding their college?

    Click to expand…

    Lordosis, since you arrived recently, try the search function in the top right corner.  There are many many threads about this.  Briefly: between a combination of the bull market and recent superfunding, I am stuffing a 529 for my kid.  Anything not used by said kid will be used either by parents or their grandkids.

    #197992 Reply
    Avatar wawot1 
    Status: Physician
    Posts: 47
    Joined: 10/05/2017

    When our first son was born, we decided that we wanted to fund 4 years of fancy-pants private undergraduate education.    We started with tuition at current prices at an expensive private school and then  made a bunch of very pessimistic assumptions about ongoing rapid tuition inflation coupled with “meh” returns on our investments and came up with a very high monthly contribution needed to meet the “expected” cost of college based on these assumptions.

    Each month, we put half of that contribution into the 529 and half into a separate taxable account with the thought that we would use up the 529 money and if it wasn’t enough we could dip into the taxable account.  If the 529 is enough, then that taxable account is just extra retirement money.   7 years later, and another child, and we have probably contributed too much to the 529s, so have shut off the contributions there.  But we continue contributing monthly to the taxable account earmarked for college.

    #197998 Reply
    Vagabond MD Vagabond MD 
    Status: Physician
    Posts: 3169
    Joined: 01/21/2016

    My parents took me to the limit, and I will to the same for my children. A combination of 529s, UTMAs, and cash flow is the plan. One child is a sophomore in college now (private liberal arts college, modest scholarship) and the other is a junior in HS (looking to attend a large state university).

    "Wealth is the slave of the wise man and the master of the fool.” -Seneca the Younger

    #198005 Reply
    Avatar SLC OB 
    Status: Physician
    Posts: 425
    Joined: 06/23/2018
    We have twins that are sophomores in high school and our target was, and is, funding in-state tuition/room/board/books.

    Click to expand…

    I have a set of twins one year behind yours and then a 6th grader…

    Currently, 529’s are over-funded

    Click to expand…

    Can you tell me what you have saved so far? How are you calculating? What state do you live in and what is typical cost yearly?

    #198006 Reply
    Avatar bean1970 
    Status: Physician
    Posts: 469
    Joined: 07/12/2017

    We started a 529 when my kid was born and an UTMA. That was 20 years ago. When all was said and done we had 60K contributions in the 529.  We never went crazy to fund it because we were paying roughly 25-50K annually for private school (kindergarten started at 25K, with high school running 50K). so we could totally cash flow college if we needed to.   the 529 is over funded now because my kid is on scholarship (and the growth was crazy since we started way before the bull run of the market..not too shabby for a 60K investment). we use the 529 to pay his housing (6480/year for 12 months of housing to include through the summer) He is at an out of state public school. cost of attendance is 54K.    The plan with any leftover funds in the 529 is to just let it sit. pass it along to theoretical grandkid or just cash it out before i die.

    i still have his UTMA under custodianship. he doesn’t want it at this point so i haven’t relinquished it yet.

    #198055 Reply
    Avatar Kamban 
    Status: Physician
    Posts: 2203
    Joined: 08/01/2016

    One child. I plan to fully fund her undergrad and grad school / professional school, as it was done to me. Have sufficient funds in 529 and enough savings to do that since I did not have any medical school debt. Also, she is attending public school from 6th grade onward and I am saving roughly $30K per year. I am placing that amount in a UGMA (15K gift tax free x 2 parents).

    She is intelligent and gets good grades but is not a go-getter and I am neither a Tiger Dad or Lori Laughlin, so USC is not on the cards at this time.😊

    #198061 Reply
    Liked by Vagabond MD

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