• http://madsaver.com Mac

    Heard of prepaid tuition plans, but there seems to be a lack of information out there about it. With how fast tuition rates are spiking, it would be a huge savings to pay when the kid is very young rather than waiting until the day they enter college. Kind of out of luck if they really want an out-of-state school though!

  • http://www.castocreationsjewelry.blogspot.com megscole64

    My SIL started a 529 for my son. It’s the only one he will have and it will obviously only work if he actually goes to college. We don’t plan to force him to go to college. And if he does go, he will be paying for it himself, just like my husband and I did. Going to college isn’t a right and it isn’t the be all, end all to success.

    I love school, don’t get me wrong…I’d be a professional student if I could. But I don’t think school teaches life lessons or how to get along in the real world. I will support my son but not to the detriment of our own retirement. I’d rather invest carefully and earn a better return on my money than a 529 account can offer. I think it’s kind of a lazy way to “invest” for future college funds. On the other hand I don’t exactly trust these funds any more than any other funds.

  • http://www.yourfinances101.com/blog David/Yourfinances101

    I am a contributor to a 529 here in Georgia, but my only concern is (and I guess it will be a great problerm to have) is what if my son gets a full ride somewhere and doesn’t need the money?

    Then, where are you at?

    Maybe another reader could comment?

    Thanks

    • http://madsaver.com Mac

      That would be awesome if it happened. I’m trying to get a baseball scholarship for my kid so I too will have this problem in oh, 15 years or so.

      However, here’s your answer (via Kiplingers): If one of your children is fortunate enough to win a scholarship, you’d be eligible to take a penalty-free withdrawal from her 529 account up to the amount of the award. You would, however, have to pay federal and state income tax on the earnings portion of the withdrawal. To avoid those taxes, you could name another family member as beneficiary of the plan.

      • Mark Riddix

        Great answer Mac. That is correct.

  • gina

    I wish that I could get my act together and begin 520 contributions for my kids. Unfortunately, still trying to get out of debt–so these are on hold until I am a bit more financially stable.

  • Winston

    Good to know that there are many methods people can use to save money to help pay for their kids’ education. Sadly, my dad told me years ago that I would be on my own when it comes to college expenses. Fortunately, I managed to earn enough scholarships that I literally attend my college for free. In the future, I will probably not save any money for my kids’ education because I trust in their ability to win enough scholarships that the only thing they have to pay is their living expenses.

  • Nate Hall

    Good explanation on saving for a 529 plan. If you are sure the child will go to college, a 529 is a great way to save that money.

    I thought it was important that you pointed out the rising cost of college. Some don’t think about this, but costs will rise every year and it’s important to implement this fact into the savings plan.

    Thanks!

    • Hank Coleman

      Nate,

      You make a great point. The cost of college tuition, room, and board is rising faster than inflation. One thing that my wife and I did to combat that was to purchase a pre-paid 529 Plan for one of our sons. The other has a traditional 529 College Savings Plan invested in mutual funds, but we are pre-paying tuition for the other one locking in today’s low rates. While we do not receive interest per say, we are essentially earning the rate of inflation of tuition which is much greater than regular CPI.

  • Ron Hallmark

    I have an 18 year-old about to enter college in the fall and I have a 6 year-old entering first grade. I am saving for both kid’s college through a 529 plan established at work. Can I switch funds in my daughter’s account to my son’s account to help with the immediate costs associated with my son’s education? Both accounts are through John Hancock and I receive only one statement, but each has its own individual account number.

    • Kira Botkin

      Yes, that should be doable. Contact John Hancock – they should be able to transfer them without much of a problem.

  • http://newamsterdamlife.com/college_first.php James

    It’s a problem we would like to have, but parents concerned with “over-saving” should consider juvenile life insurance. Whether it be from their child earning a scholarship, their child not attending college, or simply high annual contributions, paying income tax rates and a 10% penalty with a 529 is an unappealing prospect.

    The College First Plan, an indexed universal juvenile life insurance contract exemplifies some of the key benefits of using juvenile life insurance for college. Withdrawals and loans from the account are accessible at any time, can be used for any purpose, and are not subject to penalty or income tax if structured correctly. The plan provides a minimum growth guarantee of 2%, funds do not negatively affect federal financial aid awards, the entire account value is protected from creditors in the majority of states, and the child will have permanent fully paid insurance for life.

    The obvious downside is that the Insurance isn’t free and will therefore reduce performance. The ‘drag’ is however minimal because the insurance is secured on the child – costs are the lowest they will ever be. The minimum growth, flexible access to funds, no penalty for non-qualified expenses, and the fact that it will not reduce a federal financial aid award, may still make juvenile life insurance an attractive alternative for parents or grandparents looking to save for college. If you include lifetime insurance that the child will never have to pay for then juvenile life insurance is certainly worth consideration.

    James Garfinkel
    CEO, New Amsterdam Life

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  • American Guy

    Is it possible to have a single savings plan for multiple kids? I have four kids and am looking into a 529 but I really think having individual accounts for all four of my kids unnecessarily complicates the savings plan. Me and my wife make a low 6 figure income between us and there is no way that I could ever save enough for all four of my kids for all four years of school, but I would like to set up a fund and attempt to pay at least 1 to 2 years of junior college for each. I just think it would make more sense to have a single plan for all four that could be dispersed as needed. If anybody has any suggestions feel free to advise and it doesn’t need to be limited to a 529.

  • Farah

    I am a Massachusetts resident, if I open a 529 account for my grand son and when he turn 18 can he go to college in other states?

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