<p>I see a lot of threads around here which indicate parents are depending on financial aid and loans for college.</p>
<p>Now that I am getting ready to pay my first tuition bill, I tell anyone who is going to have a kid, “Save $500 a month for college for each kid. Treat it like it is a debt you must pay.”</p>
<p>We saved enough to pay 4 years of tuition. It was in stocks, and was moved to bonds when our kids started high school (which was very fortunate). The downside is, we got no financial aid.</p>
<p>However, didn’t anyone else save for college?</p>
<p>Nope. Not a penny. We had lower-paying jobs and two kids, and then we used our money to buy a piece of land, and then to build a house, and then - it was time to pay for college!!! Somehow it worked out - and we are managing. 5 years down, two to go!</p>
<p>We saved. But we put our money in our state’s 529 plan in the “age banded” option that is supposed to have an appropriate mix of stocks & bonds based on the student’s age. With that fund and the merit aid D got (by picking the school that admiitted her with 1/3 aid, not picking the highest priced schools with no aid), we had enough to cover 4 years when she started college last year. Then with the economic downturn her 529 got pasted, and we now have a gap of $12K a year unless her account recovers… D2’s 529 was not as well funded (thanks to divorce), and it took a hit as well. We have a few years yet before she needs it, but I am certainly concerned.</p>
<p>S1 is a high school senior, S2 is a high school junior.</p>
<p>I invested over about 16 years for S1, 95% in UTMA accounts that did very well, 5% in 529s. Two years ago I took the capital gain hit and shifted most of the UTMA money into a UTMA/529 account. There’s enough there for 4 years at his chosen CSU (public). If he goes for 5 years, there probably won’t be enough, depending on what the growth rate is over the next 3 years of the funds that remain. </p>
<p>S2’s accounts weren’t as well-funded over the years as S1’s, so he has barely enough for 2 years at a UC or CSU, or 1 year at a private. I’m very concerned about paying his tution and am not expecting any financial aid. The cost will be split with ex-H, and we’ll probably be paying from other savings and current income.</p>
<p>The good news and bad news about the age-based 529s is that they avoid most of the downside in equities when the market is in a correction, but don’t benefit from the upside quite as much as a 100% equity fund would.</p>
<p>Do not put aside any significant amount of money for college. There are better ways to qualify for financial aid and to maximize the amount of aid. Most important have all of your kids within a few years to gain as much overlap as possible. Next, be very careful about your “savings.” Do not put any money in your kid’s names. Do not put money in any sort of savings account. Put your money into your house and retirement accounts. It is often not practical to move, but if you have a reasonable opportunity, do not under any circumstances live in a high cost of living part of the country. You will be screwed by high taxes and the high cost of living and your relative income will be much less than if you live in a modest cost of living area. When it comes to college costs, you will lose big time. You might be struggling to get by with the cost of living but you will be expected to pay the same EFC as someone else with the same income living in rural Iowa.</p>
<p>To add to Edad. While you’re at it, buy more house than you can afford and generally live beyond your means. Take vacations, redo the kitchen! Do NOT save!! Spend now and the financial aid gods will reward you!</p>
<p>Grandparents funded a 529 for us. It has taken a significant hit due to the market downturn. S#1 is in college and we have decided not to tap into the 529 but are trying to eck out our EFC as best we can. We have a high EFC, but he does get some need based aid from his school and he has taken out an unsubsidized Stafford.
We will likely use most of the 529 for S#2 as it is unlikely we will qualify for any need based aid for him once S#1 graduates</p>
<p>We saved. Since we only have 1 D it was easier for us. My parents put 5 through college paid for 21 years of school. We did take some small loans but they carried the majority of the cost. As they say- you do not know how but looking back you can do it.</p>
<p>Well, savings accounts is exactly where we put it. Never lost a dime of kids’ tuition in the stock market, and have no college debts. Didn’t get FA till the last couple years. Did this by living massively frugally.</p>
<p>What we bought with our saving? Peace of mind.</p>
<p>We opened UGMA accounts for both kids at birth and invested monthly for their entire lives. When they were very young, we also deposited all birthday and holiday gift money to these funds; both kids were the recipients of court settlements that also were set aside for college costs. Over the years our family also faced periods of time with extremely low income (due to being self-employed in professional services industries) and the liquidation of savings to pay for daily living expenses. However we never stopped saving for the kids’ college tuition. We’re using the same regular monthly structured savings method to fund retirement.</p>
<p>We started saving (U.S. Savings bonds) in the first month each of our two kids were born. Later on we put some savings in mutual funds. We saved up enough to pay for four yrs. at instate publics for each kid.</p>
<p>I started saving when my 2 kids were very young. They are only one school year apart. Only able to save small amounts, $50-$100 here and there for many years. It didn’t add up very quickly, but it was something. Abouut 5 years ago, I switched careers. I went into Real Estate while it was booming. I put aside $$$ from EVERY settlement I had. Sometimes it was a lot, sometimes not so much…but something. I was putting the money into accounts in my kids manes. Then I found out that this wasn’t the wise thing to do, so I moved it all over to my name.</p>
<p>The good news/bad news is that Real Estate tanked 1-2 years prior to my first child going off to college; therefore we qualified for FA. However, only a handful of colleges gave us anything other than loans. One school came through big time and fulfilled our entire need for the 4 year period (as long as my financial situation remains level), except for just about the exact amount we saved.</p>
<p>Is is good to save? I would say yes! Even if we intentionally didn’t save (which is not the case) to qualify for FA, it is still my responsibility to educate my kids. I don’t EXPECT the Govmn’t or a wealthy endowment to pick up the tab. I’m just extremely grateful my daughter worked hard and was qualified to attend a school that IS heavily endowed and willing to provide financing.</p>
<p>Oh, btw…I managed to save enough to pay for two years for two of my kids each at an instate college. However, we just picked up another kid a year and a half ago:). We are now guardians of a 17 year old boy who will be heading off to college too, next year. Sheesh, the best of planning…???</p>
<p>yes we did save for college- however, we also reasoned that if they didn’t make it through high school, ( I didn’t graduate and husband barely did) it would not matter one whit- how much money was in the college fund.
So while we saved it was also spent: for private schools, for tutoring and for " educational opportunities".</p>
<p>Petrocelli - I am SO glad you posted this question! I JUST posted the following on another thread - </p>
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<p>Saving religiously month after month, year after year for 24 years allowed us to send older D to honors program at StateU and younger D to a private college. Neither will graduate with a dime of debt.</p>
<p>Yes, we saved. Since when all 3 kids were born. Lived below our means. Drove older cars into the ground. Wanted to tell our kids that they would be able to go to the “best” college to which they were accepted. Worked out for DS#1. With #'s 2 & 3 we are dealing with funds which have tanked. We still have a little bit of time for recovery, and will not qualify for FA.</p>
<p>I hope that posts #'s 5 and 6 were made with tongue planted firmly in cheek.</p>
<p>I didn’t make over the poverty line of income until my son was about 8.
Not much saving going on.</p>
<p>Managed to save enough to pay my EFC (12K) out of savings in the next 10 years. I could NEVER have saved 200K in 20 years. The first 8 years of my son’s life, my TOTAL income was below that amount.</p>
<p>Luckily we were raised by parents who stressed being frugal and saving for the future. My father made a very good living, but always paid cash for cars, took few vacations and is very, very comfortable now. Husband’s parents lived on one spouses income after mother went back to work after kids were in school.</p>
<p>We did the same. Kid’s college funds were started with a small donation from grandparents and we contributed monthly. At the same time, we kept cars for 10 years, never redecorated, had 15 yr mortgage on house. By the time kids got to college, their savings paid for almost entire education, but the fact that we had no mortgage made it possible to pay the rest. All three graduated from college debt free.</p>
<p>Our EFC would have been very, very hard to pay out of current income. It was just about the cost of yearly attendance. From what I can see, kids have learned also. Both older ones have 15 year mortgages on their homes. Neither pays PMI because they saved for downpayment first. Their homes are well within their budget and they drive older cars. I hope when they have kids this continues.</p>
<p>started saving for college before they were born…yea, I’m kind of nuts like that…529’s have taken a slight hit, but D1’s merit scholarship balanced that out; actually looks like most of the 529 $$ will go to D2 (and thankfully, that may have a couple of years to bounce back)…</p>
<p>even with saving excessively (my accountant’s word not mine), I still HATE the idea of spending that much $$ on undergrad…maybe I can convince D2 to go public (assuming she can get in)…</p>
5 years down, two to go!</p>