Learn me: Saving for College.

Obviously since I've been laid off and have yet to land another job, we're not in the best place financially. My kids will be 6 and 7 this fall and I'm feeling a big push to put SOMETHING in place for their future education. Obviously I won't be able to save enough to offer them a free ride but I need to help somehow.

I was reading Iggy's...I mean FBC's thread on Seattle and I had to google Montessori... Sadly that is well out of our grasp.

I'm woefully under-educated myself (probably obvious to anyone who has read my posts) and I don't want my children to be saddled with the same anchor that I drag around.

I've been looking into different savings plans but I'm not sure which one is the best fit. I remember MTN making a reference to his parents having a 529 set up for him and that fund obviously served it's purpose. Does anyone else have similar experiences or any recommendations?

I've been reading these:

http://grassrootsmotorsports.com/forum/off-topic-discussion/ventingkids-and-college/62541/page1/

http://grassrootsmotorsports.com/forum/off-topic-discussion/paying-for-kids-college/58910/page1/

College is important, but what you go to school for is even more important.

I think many "better off" folks say "I've got an excellent college fund for my kids, so they can go where-ever for what-ever."

The kid goes for fine art and works at a coffee shop for 6 years after college.

I think the best college savings fund is instilling in your kids the reality of a job/career vs an interest or hobby.

You're in Illinois, I know they offer a state based investment program. It can only be used at in-state colleges, but it might be worth looking into. Unfortunately, I don't remember the name.

lots of good information here. www.savingforcollege.com

no joke. goes through the ins and outs of 529 plans, state specific plans, etc.

Wish I could put something away for the kids, but 1 income and three masters degrees between one working person is crazy expensive.

Student loans suck, but are better in the long run than a lot of other debt.

I once had a college savings that my Dad started for me.

He spent it on a Jeep. I couldn't be happier he did that. FAFSA/Pell Grant saves me. I'll have to repay it, but MEH, who cares.

In reply to beans:

Why would you have to repay a grant?

Advantage of the 529 plan if I understand it correctly is that you can change the beneficiary if one of your kids decides not to go to college, I think even to the extent that you can use it for your own education.

As to the prepaid plans in one's to lock in today's rates, I see two potential issues with them:

• What happens if you have to move out of state, say, for work or for family reasons?
• I'm not sure they're transferable like a 529 is, and I would expect the penalty for withdrawal for non-educational use to be pretty steep

We worked with a financial advisor a couple years before the big day. We had some money socked away, but not to the tune of a year at a private university.

He asked us if we had a 529 plan. We looked guilty and said no. He said, "That's great! The first thing colleges do is look for a 529, and deduct that amount right off the top of whatever aid they were going to give you."

He also advised us to put most of our investments into a variety of annuities with a 10-year lock, which will keep them financial-aid-invisible until DD#2 is out of college.

The best financial aid advice I can give is to raise smart kids who are good students. What they will get in grants far outweighs anything the average couple could put away. Also, even if you can afford it, have them borrow some portion of the tuition. That gives them a personal stake in the outcome of their schooling.

Yep. Sock away money hard for years, doing without, making all the sacrifices. At best, you've got 1 year tuition.

We looked at our state's (Washington) programs and they weren't very "clear". They transferred the money into "credits" and did a lot of funny math, so we passed on those. The 529 is what we went with because as stated before, you can transfer it (so if kid #1 gets a full ride), even back to yourself. We started saving the day she was born, so the 529 should cover a complete 4-year degree, even with inflation. We plan on doing the same for a #2 if/when that happens.

Duke wrote: The best financial aid advice I can give is to raise smart kids who are good students.

+1 and I would add good people 1st, good students 2nd.

The job you do raising your kids is waaay more important than how much money you can give them for college.

Duke wrote: We worked with a financial advisor a couple years before the big day. We had some money socked away, but not to the tune of a year at a private university. He asked us if we had a 529 plan. We looked guilty and said no. He said, "That's great! The first thing colleges do is look for a 529, and deduct that amount right off the top of whatever aid they were going to give you." He also advised us to put most of our investments into a variety of annuities with a 10-year lock, which will keep them financial-aid-invisible until DD#2 is out of college. The best financial aid advice I can give is to raise smart kids who are good students. What they will get in grants *far* outweighs anything the average couple could put away. Also, even if you can afford it, have them borrow some portion of the tuition. That gives them a personal stake in the outcome of their schooling.

^This^

Schools don't finance their budgets in normal ways that most of us would understand. Individual students become part of the fabric of the student body cross-section (the "intellectual capital", I guess you could call it) the school uses to attract endowments, grants, etc. They then broker these funds to the student body as they see fit to maximize their revenues.

Their cash flow comes from the families they can identify as able to pay, which means they deny your student ability to participate in the shared financial resources and borrowing clout of the student body.

Their goal is to get you to write a check (to them) in any way possible.

Financial aid opportunities for my daughter did not open up until I refused to sign a document that would have attached my personal assets as security (including my home). For me, it was a simple math problem. I have 5 kids, and want to give them each equal benefits, even if those benefits are small. They wanted to pressure me into making a bigger commitment to the oldest student, disregarding my ability to help my other children.

Eventually, they opened up significant financing opportunities for her, because they saw her as a valuable future alumnus who could have decades worth of giving opportunities and ability to influence future students to enroll. That's a fancy way of saying she was a good student.

They don't think normal.

Thanks for all the input.

I work in college admissions and there has been a lot of good advice so far which I don't have to repeat. I'll just add that a lot of colleges will offer free tuition to the children of their employees. There are a few people at the school I work for that have really taken advantage of it. If you find yourself unemployed as your kids approach high school age - you could consider taking any job available at a college and sending your kids there for completely free.

In reply to The_Jed:

I meant repay the FAFSA. The Pell Grant is a wonderful thing.

Just don't FORCE them to go to college right out of high school. I'm glad I took a semester off, tried going, realized I hated it, and went adventuring for 8-9 years. Learned a lot about myself and what I want to do with education. Now the $60,000 piece of paper I'll have in a few years will actually be applicable to something I was passionate about, rather than have no clue what I'd be able to do with it besides start a fire or wipe my ass.

cghstang wrote:

Duke wrote: The best financial aid advice I can give is to raise smart kids who are good students.

+1 and I would add good people 1st, good students 2nd. The job you do raising your kids is waaay more important than how much money you can give them for college.

x1000000000

I can't even begin to count all the E36 M3bag college kids/gradutes I've encountered over the years that are absolutely worthless at everything in life, and are placed into a position with pay they don't deserve because of their 'education.' All of them absolute morons, and I sure as hell don't want to have anything to do with ANY business they're involved in and employed by.

Don't underestimate the value of a Community college. Way cheaper than 'going away' and you can get a good degree in 2 years. Option B is to go for 2 years then transfer to a university. Plan carefully to make sure it will work.

beans wrote: The best financial aid advice I can give is to raise smart kids who are good students.

+1 and I would add good people 1st, good students 2nd.

The job you do raising your kids is waaay more important than how much money you can give them for college.

x1000000000

I can't even begin to count all the E36 M3bag college kids/gradutes I've encountered over the years that are absolutely worthless at everything in life, and are placed into a position with pay they don't deserve because of their 'education.' All of them absolute morons, and I sure as hell don't want to have anything to do with ANY business they're involved in and employed by.

X 100,000 AGAIN!

Encourage a trade.

All the guys in my neighborhood doing well are diesel mechanics, steel workers, sheet metal workers, and pipe fitters. All union guys in the Chicago area. All do a ton of side work too.

Do you know what kind of side work a sales guy can do for you? I can moderate a meeting or whip you up an awesome excel sheet.

In reply to Datsun310Guy:

I'm a former grease monkey and machinist who, at the moment, can't land a job that pays equal to what unemployment is dishing out. I could relocate to Texas or Washington or North Dakota and find a decent paying job, since everything local has dried up for the time being, but it would cost a great deal to move a family of 4. Sure I can always find work but as far as wages go it could be a major step in the wrong direction.

I have 4+ years in a diesel shop with multiple complete rebuilds and I had an interview semi-recently where I was offered $12 per hour.

No insult intended for the blue collar workers (I'm one myself) but I hope they don't follow in my footsteps and wear a uniform to work, unless it's a military or police uniform. I don't want them to be in their late 20's, when most people are settling into their career, changing a steer tire on the shoulder of the freeway or changing the clutch on a Peterbilt 379 in a gravel lot (both for the equivalent of $6.43 per hour) or developing severe swamp ass in a 120 degree machine shop. I'm not whining about my life, I'm sure we've all done E36 M3 work at E36 M3 jobs, I just want better for them. I don't have a degree of any sort so if I can help them in that regard that will be one advantage they will have over people like me.

I've never moderated a meeting or made a spreadsheet and I wouldn't have a clue how to do it.