Comments on: Saving With Purpose: The College Savings Fund

By: gn

gn — Thu, 11 Feb 2010 00:07:03 +0000

Given the changes in bankruptcy laws (student loans are not discharged), the best thing you can do for your kids is keep them from racking up huge debts for college. Help them understand how painful $50K or $80K in non-tax-deductible debt is going to be for them starting out. Once they are onboard, look at decisions that will mean big savings: Choice of school; starting out at a community college and transferring partway through; taking a year in the middle to work; going public for undergrad and targeting a private school for graduate studies.

Higher education is way overpriced, and they can get away with it because people (kids) make emotional decisions costings tens of thousands of dollars through the use of debt. Ugly.

By: Chase

Chase — Tue, 02 Feb 2010 01:28:28 +0000

Yet again, the earlier you can start, the better.

Yikes, I hate to see what tuition is going to cost even further down the road. No wonder so many college students are loaded with debt.

By: Todd

Todd — Mon, 25 Jan 2010 18:33:34 +0000

@Lisa
Your child needs to have earned income to open a Roth.

By: Forest

Forest — Fri, 22 Jan 2010 10:10:59 +0000

I admire you for your sensibilities… I am not planning on having kids yet but if I ever do then being in a financial grounded level and being able to provide for them, their medical expenses and their education are all MUSTS for me. I grew up reasonably poor and it’s just not fair to have kids on purpose and do that to them.

By: Lisa

Lisa — Thu, 21 Jan 2010 17:40:33 +0000

I am curious — how old does a child need to be to open their own ROTH IRA and make contribution? If that was maxed out yearly for them at a young age couldn’t they then use the funds for college or if they didn’t end up needing them, they would have a heck of a start on their own retirement acct?

By: Marie

Marie — Thu, 21 Jan 2010 15:48:29 +0000

I don’t think it has to be all or nothing. We put 12.5% toward retirement (started mid 20s) and are socking away what we hope will be 25% of the cost of college for each of our 3 kids. Its easy for us to switch the beneficiary to one of our other kids if one goes to grad school and another doesn’t.

My husband and I had nothing paid for and everyone around us was supported by their parents. It made it really difficult to compete but there were a few who used college as a giant play time because they weren’t vested. It would be nice to go back to a time when kids could cashflow college but its so expensive now thats not an option you can take without serious delays.

By: Zarah

Zarah — Thu, 21 Jan 2010 05:01:46 +0000

Another thought: use contributions from a ROTH IRA to help fund your child’s education. Granted, it is not generally a good idea to borrow from retirement, but since there is no tax penalty for taking out contributions, it may be worth considering. If your child does not need the support, the ROTH IRA would remain accessible to you for retirement.

By: Pam McCormick

Pam McCormick — Wed, 20 Jan 2010 21:04:21 +0000

I had to chime in since I have actually done this.I paid for my daughter’s undergad(18K for 4 yrs) and grad program(approx 8K a year at NY state college) she then paid for 2nd masters at University of Rochester at 30K per year because she was married she declined any more help.I got extremely lucky- she worked almost full time the entire time,got good grades,packed her lunch yada yada BUT we both agree the person going to college needs to be vested.So several ideas of other writer’s is right on track.Even if you can pay for college you might want to ponder?? the money can always be given after words to pay off the school loan or help with a house instead.I am very supportive of other types of education like the trades as we see now not every grad is finding a job must less a career.

By: maya

maya — Wed, 20 Jan 2010 20:58:25 +0000

I disagree with several of the comments above discouraging fully funding your child’s college expenses as a “free ride”. It is only a free ride if you communicate it that way. My parents funded my college expenses (except for personal expenses, they didn’t pay for stuff that had come out of my allowance in high school, for example). I consider that to be the best gift that they ever gave me and have always been extremely grateful. They communicated to me that education was very important and that they would pay once (private high school, college, or grad school; my pick). I was the one writing the actual check to the registrar, so I knew how much tuition and room and board were. I was the one writing the checks/paying the credit card so I knew how much I spent on books etc. At the end of every semester I went back through my Quicken account and determined how much had been spent from my parent’s funds and how much from my own account. I did work internships in the summer (as an engineer they were paid internships) to support my personal expenses.

As a result of not having to work during school, I had the flexibility to do a varsity sport one year, do undergraduate research another year, take summer school classes, take classes within my interests that would not contribute directly to my major, and volunteer full time one summer. Additionally, since I graduated with savings and no debt, I was able to take a couple of months off after graduation to “stuff my brain back in my head and let it solidify” before entering the work force full time.

So I don’t think that fully funding a child’s post-high school education is necessarily a “free ride”. (Although, the number of people in my grad school whose parents were still paying did put me off; for me that was the line where it became a free ride.)

By: Lisa

Lisa — Wed, 20 Jan 2010 20:37:15 +0000

@ Jen — >>hey, mom and dad will help out if it all goes wrong!<< –that was me, I didn't get my stuff together until well into my late 20's when my parents finally cut me off! Go figure!

I have sat down with my kids, even though they are only 12, and gone over what college is all about, what it costs, talked about making your time there worthwhile and have outlined that we as parents will help out as much as we can, but that we expect them to toe the line and contribute to the bulk of that. They are already designating babysitting money and monetary gifts to their own college savings account. One of my daughters can't wait until she 13 and allowed to get a summer job at one of our local tourist attractions. She keeps telling me she "needs to save" for college. They are also both sharpening their essay writing skills to apply for scholarships when it comes time. That is of their own volition after they heard about a girl on Dave Ramsey's show that got $30K in scholarships just by writing essays. I am *hoping* this kind of attitude will stick with them throughout life. It is a marked change from my own upbringing where I was handed everything on a silver platter and learned to appreciate nothing.

Another avenue would be to check out your own alma mater — a lot of colleges offer legacy children a tuition break. Other states have substantial scholarships just waiting for the taking (University of Wyoming, for example, has the Hathaway scholarship which guarantees tuition assistance to all hs graduates in Wyoming based on GPA — the higher the GPA, the more the award)I know those schools might not be your child's first choice, but whose to say you can go for a huge tuition break and get your basic credits out the way and then transfer to your U of choice in time to have the name on your diploma.

Just a few thoughts —-