Saving for your children's college

Iris - posted on 07/29/2010 ( 17 moms have responded )




College is expensive in USA. I've had this talk with some of my friends. Some started putting aside money for a college education from the day our babies were born. Some started later and rely on the stock market. Others have saved up for about a year and a half and say their children should be able to pay the rest. And then there are parents who haven't saved money and trust that their children manage to get full scholarship.

I'm sure I haven't covered all the areas but where do you fit in? And what is the reason behind your method?


Ez - posted on 07/30/2010




$200k????? Seriously?? God damn...

We have a different system here in Aus. It was called HECS (Higher Education Contribution Scheme) when I was a uni student, but is now known as HELP (Higher Education Loan Programme). It's basically an interest-free loan from the government to cover tuition fees, with repayments deferred until after the student has graduated and is earning a decent amount (currently is just under $40k). Voluntary repayments can be made before this, but otherwise the Tax Office automatically deducts the payments after the threshold has been reached.

I love our system. It allows people from all backgrounds to attend university, not just the rich. In my case, I paid my own way through uni. I worked two jobs, I paid my rent and my bills, and took on a HECS debt for fees (which for my Communications degree was just over $18,000 - not even close to 200k!!!). My father has money, and did help me out from time to time with large one-off expenses (bought me a computer etc). But he did not pay my way, nor did I want him to. Now obviously if our fees were anywhere near the amounts you guys are talking about then things would probably have been different. But for me, it was important that I do things on my own. It made me grow up.

In the case of my daughter, she has a Rapid Saver account that I transfer money to each week. It may be used for university, or she may want to buy a car or go travelling. I will allow her that option as long as I'm sure she's mature enough to make the decision.

I feel the same way as Krista about going to university just for the sake of it. It's what I did, and I have never used my degree for work. I actually wanted to take a year off and work full-time, save some money, and be free from studying, but my father put his foot down and insisted I go straight on. Well, turns out he was wrong and now I have a degree I don't use, and no desire to go back to study anything else. Which is why if my daughter wants a gap year, I will support her all the way.

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Danielle - posted on 07/30/2010




We plan on telling our children when they join high school that whatever they save we'll match dollar for dollar. But we'll really give them double whatever they save from their part time jobs. We also would be willing to co-sign for any student loans. This is our way of doing things because our parents couldn't afford to pay for us to go to college, we had to find our own ways...I think it's a good life lesson

Jocelyn - posted on 07/30/2010




I opened up an RESP for Conner when he was born (I'm in the process of getting one for Brooklynn, but I think I am going to switch who we are working/saving with...)
Anyways, I am also in Alberta and if you have an RESP then the gov't gives you huge amounts of money (but if they don't go on to college they take it all back, those bastards lol). There are three (I think) different grants you can get (federal and provincial) Conner got $500 right off the back (and then he gets $100 more when he reaches certain ages) and then the other grants are portioned to your income bracket and what you yourself are contributing.
I don't have any crazy ideas that we'll be able to cover everything for their education, but I hope to be able to cover at least tuition (ie books and res would be up to them). I didn't go to university right after high school(because my parents couldn't afford it, had nothing saved, and I wasn't quite smart enough to get a scholarship of any substantial worth) so I took a year off to work and save money, but then I got preg (amongst other life changing events) and never go to go back to school :( I want my kids to have the opportunities that I never got.
But the RESP carrier that I'm thinking of switching to would let ME to use the money for school if my kids don't go to university! Bonus!

Ez - posted on 07/30/2010




Very scary Kelly!! That figure will surely put college out of reach for many families :(

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Erin & Emma, that is an awesome student loan!! I wish the US had something like it. We do have student loans for college, some have payments differed until you graduate, but you have to start paying them back no more than a year after graduation, whether you have a job or not, and they always have interest, but the interest is lower than traditional loans.

Right now, you can get an education in the US for about $25k for state schools and $40k for private schools, but we must factor in inflation. Many people here assume that they will be able to put their kids through college for the same amount their parents paid for them, but tuition inflation is not controlled here, and recently we have seen huge spikes in tuition, especially at state colleges where funding has been cut. So that is why the $40k education of today, will cost upwards of $200k 15 years from now--it's kind of scary....

Stifler's - posted on 07/30/2010




I live in Australia and we get HECS (the government pays until we finish uni and make over a certain amount then it gets taken back through tax). Kids should pay for their own college if you ask me.

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We are going to save to pay for college. I plan to have the amount to pay for tuition at our state university which is a 30 minute drive. If she wants to move out, or go somewhere more expensive, she'll be responsible. My reasoning is I want to provide her with the means necessary to start her adult life with no debt.

My parents did that for me, and I am so grateful, especially now that I'm married to someone with student loans. But I did want to move out of my parent's house. I managed to get a scholarship which covered tuition. My parents used the money they had saved for my tuition to help me with rent. I got a job and paid for living expenses. I felt it was a good combination of them helping me start my life, and me taking and learning responsibility.

Sharon - posted on 07/29/2010




We put money away every payday and large chunks of cash - get divvied up (inheritance, lottery, tax refunds) and invested in various vehicles in their names.

My mother opened accounts for the kids, college only. I have no idea what happens to the cash if they should (god forbid) die before college, opt to not go to college, etc. I was pretty pissed off about it. She should be able to get the money back if something goes wrong but I'm not sure she can because of the nature of this investment.

Anyway - we should be able to fully fund their college educations.

Barring them owning their own businesses or staying minimum wage peons - you need college. Every job I've ever had has required a college degree for management and upper management for certain has degrees specific to the job.

Krista - posted on 07/29/2010




We'll start setting aside some savings once we get our other debts paid down. My mom opened up an RESP for my baby as soon as he was born, though, so there will always be that. I will expect him to contribute somewhat to his own education, even if it's just buying his own textbooks and providing his own spending money. But he's not allowed to go to university until he really knows what he wants to do and has a plan on how to do it. I went to university solely because it was expected of me, and got a B.A., but it was basically an utter waste.

Becky - posted on 07/29/2010




We opened RESPs for each of our boys shortly after they were born. In AB, the government will contribute to your child's RESP as well - I think it ends up being $1500.00 total. For any other Canadians (I don't think this is only in AB, but I'm not sure), we have our plans through Canadian Scholarship Trust. They get you a lot more "free" money in your kids' accounts than the banks do. I don't know whether we'll end up being able to pay their full schooling costs or not -depends on what they decide to study and how university fees go, but at least we'll be able to help out quite a bit. However, since the funds are transferrable to the next child or even to our own RRSPS, we are still going to hold our kids responsible for their education. I know at university you can often tell the kids whose parents paid for their education - they're the ones spending all their time in the bar and flunking out. If our boys start doing that, they start paying for their own education!!

September - posted on 07/29/2010




We have an account set up for our son that we deposit money into each pay period. We also deposit money into the account on his birthday and other major holidays. We decided to set up the account not long after our son was born and will continue to deposit money until our son starts college in hopes of being able to pay the full cost of his schooling. We will see! :)

LaCi - posted on 07/29/2010




* I should add, I'm lucky in that the local university is roughly $8,000 per year, if you live elsewhere. So if we're super pressed in the cash department and he doesn't want to go into mega debt with the loans, he can get pretty much any degree he'd like at a state university for a pretty small amount. I think U of L is about 15-20k per year depending on the housing preferred, so there are lower cost options available here if need be. Although I'd prefer he get out of state, only because I wish I had ;)

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This is a cool site to help you figure out how much you will need to have saved by your child's freshmen year.

We will need roughly $200k, (or a small house!) to cover 70% of his tuition for a 4 year degree at a private college. We can save a lot by letting him choose a state college....

EDIT: That is factoring in a tuition inflation rate of only 5% per year over the next 12 yrs, however, the tuition for colleges in my state has risen an average of 7% per year for the last 5 years, with most of the increase going to state schools, and private schools keeping more with the traditional 3% yearly tuition raises.

LaCi - posted on 07/29/2010




Well, I won't have anything for savings until I graduate. But after I do, I'll put at least 10% of my money away for his college fund, and I won't be telling him about it. I'll still stress the importance of scholarships and saving his own money for college, and when the times comes I'll attempt to pay the difference between what he has and what the cost is. I just want him to have as few loans as he possibly can. If he gets a full ride, fantastic, if he doesn't get anything, well, we'll do what we can.

[deleted account]

College is very important to me, but I know I will not be able to pay 100% of his tuition and living expenses. We are hoping to pay roughly 60%-70%, get 25%-30% in scholarships and grants, and allow him to use student loans to pay off the rest, which will hopefully be less than 10%.

We started a Treasury CD about a week after we started trying to conceive, then arranged for our bank to take $150 each month from our checking acct and put it into the Treasury CD. We also opened a Term CD, and at the end of it's term, we take all money above $5,000 from the Treasury CD and roll it into the Term CD and renew. The Term CD earns higher interest, but you cannot make deposits or withdrawals until the term is up. The Treasury CD allows you to deposit or withdraw anytime you wish as long as you keep a minimum balance of $5,000, and it earns more interest than a regular savings acct.

We opened a 529plan for him about 3 years ago, which we do not deposit directly to. We have a Upromise credit card that we use to pay for everything we purchase. They deposit 1% of everything we spend into our son's 529. Certain gas stations, restaurants, and brand products deposit up to 8%. But you have to pay the card off every month, you cannot carry a balance or the savings would not balance out.

He also has a small trust left to him from his grandfather for college. It is only $12,000 but it is in term CDs, so in 15 years, it should be a decent amount.

Caitlin - posted on 07/29/2010




I opened a RESP (registered education savings plan) with the bank when both my kids were born. It's safe, pays pretty regular intrest but depending on what income bracket you fall into you qualify for benfits if you open one (the government will pitch in a percentage of your contributions every year) and we qualify for those, so I think it's great. Both my daughters got a 500$ deposit about 2 months after I opened them. Since they were both only about a month old when I opened them, I will have at least 18 years of intrest on that 500$. What i'm doing is any birthday gifts they get from family that are cash get put into those accounts for now, because they are too young to start teaching about saving, and later on it will help them out. I'd love to pay for most if not all of theiur education so they wont have to take out a huge pile of student loans like I had to do because my mother was pissed off at me and spent my savings account on a new car (she didn't put it into a RESP, just a regular account. I can't actually withdraw the money from the account - and if I liquidate it for any reason the gov`t takes back their contributions)

Kimberly - posted on 07/29/2010




I started a savings account when my daughter was born. In Aus we have a baby bonus that you get paid and I figured since it was meant to go towards the cost of having a baby that I would put some of it away for her. This account will be for her when she is done high school and will hopefully go towards a house deposit, not just spent on anything. We will have money set aside for school as well. I like to have things planned for ahead of time so that it doesnt put so much pressure on things when they come up

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