College Savings: Thoughts?

[Jer]

re: quality of education - depends a lot on the student.

A highly motivated, intelligent student can get a lot out of a third-string college. Such a student will often be quite a bit brighter than his teachers. The student will learn the basics of their field, but without much depth or insight; and they probably won't get an up-to-date education unless they can connect to additional resources. I'd avoid these schools if possible - but I wouldn't turn up my nose at them or their graduates. The internet may be levelling this playing field a bit.

Ivy League professors generally won't have time (let alone interest) for any but the brightest and most persistent students. Unless your kid is (a) a certifiable genius with an ego to match or (b) planning to take it easy and just get the Ivy League name so he/she can be President - don't do it.

Well-funded large public or private Universities are the best bet for most kids, and the local state school is probably the best value. Especially if it has a decent research program (read: doctorate granting graduate school) in the student's area of interest, because that means a motivated student can work in their field with an advisor, which means they get some personal attention. Also, the teachers will be more up-to-date with their material, since they or their colleagues are still doing research.

Those two points - attention and up-to-date research experience - are the key combination. Aim for those.

[kchri]

Buy real estate now. Sell or refi when needed at much later date...

[DJMingus]

One thing everyone that is out of their twenties needs to know is that school has gotten a lot more expensive AND financial aid has not kept pace at all... in short it's tougher than it used to be and is likely to continue getting worse.

529s are great but it is also true that it will count as an asset for purposes of determining your financial need. Remember, financial aid is meant for kids that need it 'cause their parents don't have the money. Personally if I had small kids I'd be putting a few grand a year into an educational account so that by the time they need it they'll have a nice chunk. I would recommend looking into one comment above about 401s - I seem to remember that person is right - that you can spend from a 401 for educational expenses without penalty. I'm thinking you would have to pay tax on your withdrawals since the money going into the 401 is pre-tax, though? Still, it may be the best way to go. If you can invest tax free for 15 years before withdrawing AND not have it count as an asset that is a damned good deal.

As for the way financial aid need is calculated, many people fall into the trap of thinking it has something to do with how much disposable income the parents have. Not so - it has to do with how much they make and how big the family is. You don't get to buy a big house and drive nice cars and spend lots of money on various things and then expect aid for your kids. The expectation of the rules is that you will put the educational needs of your kids first, so don't be surprised if you don't get enough aid even though 'you can't afford college'. Not a value judgment on my part, just the way it is.

[fez]

both my parents are the grand children of immigrants, both my parents were the first members of their family to go to college. both also hold PhDs. they think education is rather important.

when it came time to go to college, i knew i wasnt ready. i didnt want to go. i was a very smart kid and a really poor student. no direction, no goals. i knew going to college would be a waste of time and money. i had been working in restaurants and wanted to travel and ski bum out west. i also didnt have the easiest time getting in either, turns out schools are wary of kids with 1500 SAT scores and C averages.

my mom freaked out, she was sure if i didnt go to college right out of high school i would never go and would be a 'sanitation engineer' the rest of my life. finally after much arguing the point, i realized that my mom had done just about anything i asked for the first 18 yrs of my life. i could go drink for four years if it would make her happy.

growing up, my folks were very frugal. but come time for college, my dad sat me down, said he had been investing since before i was born for me to go to college and he had $100k (this was 1986) for me to go anywhere i wanted to go. did the same thing with my brother. we both chose to go to UMass (or the schools we liked better didnt let us in). that was the first time i ever saw my dad blow money. new truck, new boat, remodeled the kitchen, etc.

so after 5 years of drinking and rowing i graduated with a philosophy degree and embarked on a slightly delayed career of being an itinerant chef and ski bum. my brother really took the bull by the horns and flunked out in three years. moved to maine and started selling shoes for LL Bean.

after 10+ years of travelling around, working all over the rockies and the maine coast, i got tired of working in restaurants and went back to school. this time on my dime. got better grades (even though i was working while in school) and finished a computer science degree. my brother after 10 years of working for LL Bean had topped out for as far as he could advance without a degree. he went back to school nights for a marketing degree and on the day he graduated got promoted to managing editor for a couple of their biggest catalogs.

i really wish i had waited to go to college until after i had figured out what i wanted to do. i also wish i had not wasted the money my parents had saved for me when i knew i wasnt ready. and i wish i had gotten out of new england sooner. and i wish i wasnt making a student loan payment every month.

so i guess after all that, my vote is make sure you are spending the money wisely. make sure the kid is focused and knows what they want to do before you pay for it.

and the public v private thing, when i was at UMass i took advantage of the five college program. basically you had to take one class at your home school, then you could take the rest at any of the other 4 colleges around UMass (Smith, Mt Holyoke, Amherst, and Hampshire). it was interesting seeing the different cultures at the different schools. and it was always fun being the only guy in a class at Mt Holyoke or Smith. but overall, the teachers were better, the facilities were better, the students were better prepared and the classes were small enough that there was good debate and interactive learning. plus, as a UMass student, i got an extra credit. UMass gave 3 credits for non-lab classes, the other schools gave 4.

[Dromond]

Those two points - attention and up-to-date research experience - are the key combination. Aim for those.

Sounds like good advice. i wouldn't count out smaller institutions though. Especially if you have an oddball/emerging technology/new media type focus. I went to a quirky, small school and lucked out with an incredible mentor/advisor who had lots of experience and connections in the industry of my choice. It couldn't have been a better match.

[fez]

I went to a quirky, small school

hampshire?

[jbach]

Well, I would agree if we're talking about Colby, Rice, etc.. But, I'm thinking about places like Daniel Webster College, St. Edwards University, etc.. There is no way (generalization) that those folks got a better education value than I did at the largest university in the country.

We probably went to the same school, and for proponents of small liberal arts colleges, most large universities take the best aspects of these and put them into special programs, so you get the small classes, tight social circles, and attention of a small liberal arts college coupled with the resources, research, and sheer diversity of offerings with large universities. I'm not too sure about other schools but at the University of Texas, there was Plan II and various other honors programs. I think the best thing about doing one of these programs was having the same group of people in most of your classes, so you get to know them a lot better. Some people say the only point of college is networking, and if so, more than superficial relationships help.

[tonghands]

he wants to learn Japanese and move to Japan and living there for a few years after HS.

However, kiddo is spending time here @ the technology dept this summer (as he did last summer) helping the interns repair computers...and he has a real propensity for computers and designing cool gadgets.

Chinese would be the better choice careerwise if he's into tech, a computer guy who's fluent in English and Chinese is gold, both here and in China. My company would hire a guy with poor tech skills if he could speak both well in a heatbeat, if he had good tech skills he'd be making bank. We wouldn't much care about a degree either, it's the same all over Sillicon Valley. Hook him with Kung Fu movies.

If he's got the interest in tech get him an old crappy PC, have him install Linux on it, and get him a book on C (The C Programming Language by Kernighan and Ritchie is the one to get, don't even think about anything with Dummies in the title). If he likes making gadgets get him Lego Mindstorms, it's basically a robot contruction kit that you can hook to the Linux box and do amazing stuff with. If he's got the interest he'll learn more on that setup than in college. And if he's good he might be getting job offers before he goes to college. Good Luck!

[snowsprite]

Tonghands,
The kid's got full out Asian fever...has for years. He also mentioned China in his ramblings (it was Japan OR China). He has his black belt in karate (has been practicing Shotokan for seven years now), eats sushi as his "favorite meal," and I'm starting to wonder if I'm the real mother (except that he does love to ski).

We got him the Lego mindstorms last Christmas. He has done some amazing things w/ it. That thing is cool!

He has the crappy PC, which he upgraded himself and is constantly nagging me to buy him more RAM, a see-thru casing, a better fan, etc.

I like the Linux idea, I do not think he's been exposed to that at all. I know nothing about it though, so he'd be completely on his own there...

Sprite

[tonghands]

I like the Linux idea, I do not think he's been exposed to that at all. I know nothing about it though, so he'd be completely on his own there...

Perfect, he needs to be out on his own techwise. Once he gets the satisfaction of figuring out stuff on his own he'll be hooked.

[Odin]

I like the Linux idea, I do not think he's been exposed to that at all.

Well if you are trying to delay his advance into adolescence and the whole dating/sports scene than by all means get him a linux box.

[snowsprite]

Hahahah!

Duly noted.

Sprite

[jbach]

Well if you are trying to delay his advance into adolescence and the whole dating/sports scene than by all means get him a linux box.

Kids these days have it so easy with Ubuntu

[Odin]

Kids these days have it so easy with Ubuntu

Yes, this is true.

Buy him a 8086 load windows for workgroups on it and get him a hayes 2400 baud modem with a compuserve dialup account.

thatll learn him.

[dn4989]

I plan to let my kids live in my Yurt when they go to college.

If I'm lucky, they will help me split wood for gas money.

[Flexon Phil]

we are footing the bill for our son next year. We were able to get grants...FWIW, they are negotable! we went from 5K/yr to 8500 with jsut one phone call and a letter. So basicly we are getting 25% off his tuition. We are fortunate, that he is ready to go. There are so many kids who go that have no desire or direstion, that is a waste of everyones time and money.

Oh, and save...save...save! Then save some more, it will never be enough.

[utsnowgirl]

So, I paid for my own school - all of it. And I'm about to finish my MBA.

Sure, it took me a bit longer to finish my undergrad, but not because I didn't have the money, but because I truly didn't know what I wanted to do with my life.

Often times, I think people are way too focused on finishing in 4 years than really thinking about what they want to do. I learned more about life by spending a few independant years traveling and working on the mountain, than in did in my first 4 years in college.

Do I have any student loans? $5000 - but that's it. I worked my way through school & feel that I'm a better person today because of it.

Every kid is different, though. I do my best work when I'm busy - I'm a great multi-tasker and manage my time much better when I have a full schedule. Some kids need to focus all their energy on school, just to get passing grades. School always came easy to me.

Working through school, because I had to pay for it on my own, took me longer, but allowed me to do more, see more places, and learn more than I ever would if my parents simply wrote a tuition check every semester.

[13]

if you're financially well off and you really want to be a fucking asshole to your kid(s), tell them you won't help them one iota with their college, and further sabotage them by claiming them as a dependent on your tax return because you want a larger refund.

by claiming your child as a dependent, their chances of receiving financial aid is shot to hell if your net worth is large enough.

i have a coworker whose parents continue to do exactly that.

[Jer]

... isn't the tax break - and food stamps - the main reason people have kids?
I mean, it's not like they're good for anything else, are they?

[RootSkier]

wFWIW, they are negotable! we went from 5K/yr to 8500 with jsut one phone call and a letter.

Are you in sales? Because I want to buy some.

[bagtagley]

Here's a theory a coke-head "friend" of mine shared on parents paying for college:

"Either your parents give you enough money to buy the drugs, or they short change you and you gotta sell drugs. Which is worse, man!?"

I'm probably paraphrasing.

[4matic]

My son has started talking about instead of going straight to college upon graduation, that he wants to learn Japanese and move to Japan and living there for a few years after HS. I'm actually excited about this possibility, and I support him in it. Moreover, it will give me more time to save up some $$ to help him!

My mom wanted me out when I was 17. She raised me right because I was ready. I moved 3000 miles to Oregon for college and never looked back; right out high school. Japan would rock.

If they aren't "a" students community college is a good choice too.

[mc_roon]

my mom worked through college and vowed to ensure that my brother and I wouldn't have to do the same thing. My dad's parents paid for his college. My parents cover housing, tuition, and flights home for holidays. Everything else is on us. Its working well because we are working to have pocket money, gas, insurance, etc; but when we graduate we will be without loans.

Also, they stop paying for school after the first 4 years; grad school and additional years are on us.

[fez]

just saw this article this morning:

http://money.cnn.com/2007/06/12/pf/c...ex.htm?cnn=yes

Hey, kid ... the tax man wants to see you
A new twist in the 'kiddie tax' erases any advantage of saving for college in your child's name, making 529s shine even brighter.
By Jeanne Sahadi, CNNMoney.com senior writer
June 12 2007: 11:56 AM EDT


NEW YORK (CNNMoney.com) -- Kids these days, they never seem to grow up ... at least in the eyes of the tax man.

The latest amendment to the so-called 'kiddie tax' now makes it officially a bad idea to save money for college in your child's name. The amendment will wipe out any remaining tax advantage of doing so.

And it doesn't cancel out - nor did the kiddie tax ever cancel out - the fact that assets in a child's name count more heavily than parents' assets in financial aid formulas, potentially reducing the amount a family gets.

The kiddie tax governs how a child's capital gains, dividends and interest are taxed. A portion (currently the first $850) is tax free, another portion (currently the next $850) is taxed at the child's tax rate (typically 5% to 10%), and anything beyond that threshold is taxed at the parents' rate.

The kiddie tax used to apply only to those under 14. Then it was changed to those under 18. And now, thanks to a law passed last month, they will be defined as those under 19 or full-time students under 24 who don't earn enough to pay for at least half their support.

In other words, the tax man will be getting a piece of more young adults' assets because the definition of child has now been expanded to include many under 24.

The whole point of the tax was to prevent high-income parents from sheltering their investments under the guise of giving it to their kids. But, of course, kids get money from other sources, too, said enrolled agent David Mellem, who is certified to represent taxpayers before the IRS.

Those sources include grandparents, wages from summer jobs, an inheritance or money from legal or insurance settlements intended to provide for a child's support. No matter. Under the kiddie tax, if it's in the kid's name, it's subject to the three-tier tax structure.

The new rule doesn't go into effect until 2008, which leaves about six months for those with custodial accounts or other accounts in their childrens' names to decide whether it makes sense to sell the assets.

Doing so will mean a bigger tax break: If your child is going to be 18 before the end of the year, under current law upon reaching 18 any assets sold in his name will be taxed entirely at his tax rates (which may be as low as 5% for capital gains and 10% for income). If you wait until next year, and your child will be under 19 or under 24 and a full-time student, a portion of his proceeds may be taxed at your income and investment tax rates.

Money earmarked for college may be put to better use in a 529 plan for three reasons:

If you or your child invest it in your state's plan you may get a deduction for your contribution
The money grows tax free and may be withdrawn tax free if it's used to pay for qualified education expenses
A 529 plan is treated as a parental asset if the parent is the custodian or owner of the account and the child the beneficiary, which can mean greater eligibility for financial aid. If the 529 is an account owned by the child's grandparents, that's even better since it won't count against the child at all when applying for financial aid, according to SavingforCollege.com, a 529 information source.
Mellem cautions, however, if you use proceeds from the sale of assets to fund a 529 and you, the parent, are made the custodian of the 529 and your child is a minor, you may have to prove moving the money from a child's account to a 529 is in the best interests of your child. That's because as custodian, the money is moved into your name and even though your child may be the beneficiary, his use of the money is now restricted to pay for education.

So to be safe, Mellem advises only putting new money for college savings in a 529.

[Tye 1on]

I paid my own way and turned out fine.

Turned out....what????????????

I'd be curious on BeanDip's opinion here on Spritely's question...