Just curious what everyone else is doing to save for their kids college, my son is 2 so we have plenty of time but I know it's not gonna be cheap so might as well get the most out of it with low risk. As soon as my wife got pregnant we started another savings account online earning .75% and got a few K in there already, I got a small inheritance and put that in a 5 year CD earning 1.99% last year. I've looked into the 529 and Coverdell plans and they seem to pay less even though the interest would be tax free. I really want to avoid stocks if possible due to uncertainty, also Merrill Lynch burned my family bad on a mutual fund for my college in the early 2000's by insisting we not pull anything out and they lost us about $40K so it still stings since I didn't have that money for school. Really any input is appreciated, I'm thinking about buying another CD unless something seems like a better bet.

 

I'm sure 529 plans vary from state to state but it worked out very well for us. We enrolled both of our kids at a young age along with a decent downpayment. Here in Maryland, not only are the earnings tax free, but we also get to deduct $2500 in contributions each year per kid from our state taxes. The other major advantage (at least in the MD plan, others are probably similar) is that you lock in at whatever the average in-state public tuition+fees rate is for the year you start. When we started it was around $5000/year. Even with four years of tuition freezes, the average rate is now around $9000/year so that's the minimum amount we'll receive back from the plan for each beneficiary per year, assuming tuition doesn't decline. Also, the money can be used for any public or private in-state or out-of-state college or university. One of our kids finishes up his freshman year tomorrow and between the 529 plan payout and a scholarship, his tuition + room/board were essentially covered and will be for his entire undergrad degree (he gets to deal with grad/post-grad himself). Our other kid will be off to college next year.

 

That's a good option, I looked at the PA 529 again and they have a guaranteed savings plan so you pick a semester rate now and it'll match as long as you put in that amount. Seems safer than a stock based one even if it could potentially be a lower return. Thanks I'm gonna read into it a little more than maybe put at least part of it in there.

 

Am I the only one who had to pay for their own college and thought that was a pretty good life lesson? I dont have kids yet but the fact that I make good money and will have to set aside money in the stock market to pay for their college education is backwards to me.

 

I did have some help from family but worked the entire time I was in school and paid a lot of the expenses myself and was able to graduate debt free and buy a house in my early 20's. Most of my friends that went to college are saddled in debt and live with their parents, jobs aren't like they used to be either. I don't feel entitled to anything but I see nothing wrong with giving your kids the best head start you can, life is challenging enough why leave them broke that early if you can help it? I only want my son to have a better life/better head start than I did. I have a bachelors and my wife has a masters, pretty sure neither of are gonna make as much as my dad made off his GED in the 90's (can't find work now). Times are rough and not looking any better so anything I can afford to save for my son I will.

 

I'm using mutual funds right now. Reason is for whatever reason my kids decide not to go to college, they can use the money to get a house or car because I'll disown them. J/k. We're putting away $250 a month for each of my kids' college accounts. They have about $10K in there now, and one is 12 years away from needing the money and one is 16 years away. We thought about the 529 plans, but they're too restrictive.

 

I forget exactly what it's called but I pay $100 a month up until my daughter is 18 and at that point she will have $50k in cash for school or whatever she wants. We set it up specifically not to be tied with school. I will have control of the money just incase she's a nut or is with some A hole I don't like. Life insurance is also wrapped up in this that started at 160k and increases each year. I believe that the life insurance continues at no cost after 18 but I'd have to check my paper work again.

 

I did wind up signing up for a PA529 Guaranteed Savings Program, basically I paid one semester of a state school up front so it'll match whatever the rate is in 16 years from now which will probably be significantly higher. I also still have a few K in a CD that I might as well let sit there til it's done, then maybe put it in the 529 or something else. I'm still open to other options.