Paying for college

Lafalum84
Fri, 18 Jul 2008 15:15:05 +0000

Our 529 plan was all in “age-based” funds that became increasingly conservative as the child approached college. I think ALL 529 plans should be invested that way, IMHO. Current downturn has not had much effect our kids’ accounts, but S is 1 year into college and D is only 2 years away, so the funds are pretty conservative at this point.

We took the approach of draining all tax-advantaged accounts first. If something weird were to happen and the kid finished college with money still in the account, we’d have to pay taxes on the earnings. So our plan is to drain 529’s and Educ Savings Accts, then drain savings bonds (gifts from grandparents, over the years they did add up!), then take out a home equity loan.

Ijmom, if you start by taking out a parent loan, then aren’t you owing interest on that amount right away? You’d have to be SURE that your other investments were going to grow at a rate higher than the interest rate you’d be paying on the loan for this strategy to make sense at all. And there’s no such thing as a sure bet right now. (Except that no loan = zero interest owed).

(edit - also to Ijmom - our money is at Fidelity too, but they have many options to choose from. It depends which option you chose as to which funds you’re invested in - do NOT assume that “they won’t gamble with 529 money.” They will do whatever the stated goals are for the fund you chose, and if you didn’t chose an age-based or conservative fund, if you chose an aggressive-growth-stock-fund instead , then your money is in stocks.)