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Discussion Starter #1
Before we start, I know I am not SUPPOSED to risk my retirement and help pay for college, but having been there and having a wife who graduated with an absolutely heinous amount of debt(which she has done an amazing job of paying off as fast as possible btw,) we want to help out a bit so they aren't graduating and looking at 10-20 years of financial burden like we did. Our plan is to set a cap on what we will provide, or possibly tell them they can go to an in-state school and we will pay, whatever they spend above and beyond that is on them. My son is currently 2 and I am 30 to give you an idea of where we are at.

Now with that out of the way, what are the best approaches to take? I have already started a 529 plan and am contributing a little each month as well as putting in any gifts from family and friends.

One thing that came up recently when talking to a coworker, whose kids are just starting college, was that the financial aid people were looking at anything and everything from savings accounts to 401k's as potential "income" that could be put towards college. WTF, my 401k would count against my child's financial aid? Anyways, he had suggested that I look into "unconventional" methods of saving because of this which got me thinking, is it worth putting my extra income into equity in my home as opposed to dumping extra into 401k's or other accounts they could look at? Not stopping payments altogether, but moving money into other places that are less detrimental.

Just thinking out loud here and looking for feedback from those that might in the middle of dealing with it now.
 

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This may not be what you're looking for but heres a thought from someone whose getting ready to graduate college debt free.

I was very lucky in that my parents were able/willing to pay for my college in its entirety but that was based on a few ground rules.

I was expected to go to class and get good grades obviously.
I went to an instate school and busted my ass for scholarships
I work when I can to cover my own expenses

The biggest thing i can recommend is when they're old enough push them to take AP classes in high school. I am graduating A semester early because of the opportunity to go into school with no general education left to complete requirements. By doing this I am cutting a semester worth of tuition out and beyond that was able to get a 6 month lease so just rent alone (not including utilities) I am saving around $3,000. Add in $70 a month of utilities and a semester of tuition I am able to save thousands of dollars.

Again this may not help but just a thought
 

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I have 5 kids. Unless someone plants a money tree in my backyard, my kids will get the same deal I got. You can live at home with zero expenses so long as you're enrolled in school but I'm not paying for your school. And I'd prefer you take summer and winter classes too!

I did community college for a 2 year degree (something like 25% the cost of a state school) and then went to a state school to finish my Architecture degree. It took a while considering I was working most of the time I was in school, but it worked out for me in the end.
I worked enough to pay for my tuition and graduated without taking one single student loan.

I believe college tuition and student loan lending practices are in need of major reform, but that's not the topic at hand.
 

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I recently went through this with a Financial Adviser. I'm almost in the same situation in the fact that I'm 36, and have a 3 year old that were trying to save for. We were advised to set up a general Brokerage account for his education and just put into what we can now and encourage friends and family to contribute on birthdays and holidays etc. The plan we have is to get ourselves set up with a good budget, and on a good/realistic track for our retirement goal before we start consistently put into our sons education, and as more money gets free'd up by paying off our school loans, cars, and our son out of Daycare and into public school, we can start to contribute to his on a monthly basis. Although honestly I don't know how much we will be able to actually help our son out, b/c my wife went to school late, and I myself am in school now, so we will be paying off our loans for quite some time...sigh...
 

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Just wait until your children reach college age and they have to fill out the FAFSA Financial Aid paperwork (mandatory). The Gov't counts any income, investments, retirement, disability payments and 529s for the potential student AND THE PARENTS...so 99% of the time the student is denied for financial aid. It's a racket.

The only ones that get free education are illegal immigrants and people on welfare.

SAD.

AK4wheeler
 

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Discussion Starter #7
This may not be what you're looking for but heres a thought from someone whose getting ready to graduate college debt free.

I was very lucky in that my parents were able/willing to pay for my college in its entirety but that was based on a few ground rules.

I was expected to go to class and get good grades obviously.
I went to an instate school and busted my ass for scholarships
I work when I can to cover my own expenses

The biggest thing i can recommend is when they're old enough push them to take AP classes in high school. I am graduating A semester early because of the opportunity to go into school with no general education left to complete requirements. By doing this I am cutting a semester worth of tuition out and beyond that was able to get a 6 month lease so just rent alone (not including utilities) I am saving around $3,000. Add in $70 a month of utilities and a semester of tuition I am able to save thousands of dollars.

Again this may not help but just a thought
Agree'd with all of the above. We don't plan on making his life easy, and we want him to know the value of a dollar, but we know how bad it can be if not done right. Luckily my wife and I both make decent money and can not only pay our loans, but we can over pay them 5-10x the minimum payment and still live comfortably. We've been trying to knock them down for the past 8 years. It's just depressing to think of how much it has cost us and where we would be financially if we had just half of what we did.

I have 5 kids. Unless someone plants a money tree in my backyard, my kids will get the same deal I got. You can live at home with zero expenses so long as you're enrolled in school but I'm not paying for your school. And I'd prefer you take summer and winter classes too!

I did community college for a 2 year degree (something like 25% the cost of a state school) and then went to a state school to finish my Architecture degree. It took a while considering I was working most of the time I was in school, but it worked out for me in the end.
I worked enough to pay for my tuition and graduated without taking one single student loan.

I believe college tuition and student loan lending practices are in need of major reform, but that's not the topic at hand.
I went to a well ranked engineering school and a lot of kids did that. They went to the local community college and then came in Junior/Senior year and ended up with the same degree from the same school I got. The whole college thing is ****ing dumb and is absolutely a scam. Unfortunately, my parents(along with a lot of others) were of the mind set that you had to do to a good college to get by in life. I don't think this is true. If in 15 years my son told me he wanted to be an electrician, plumber, welder, etc I would be like, HELL YEAH! No loans and you make bank off all the people who can't do that **** themselves.

Just wait until your children reach college age and they have to fill out the FAFSA Financial Aid paperwork (mandatory). The Gov't counts any income, investments, retirement, disability payments and 529s for the potential student AND THE PARENTS...so 99% of the time the student is denied for financial aid. It's a racket.

The only ones that get free education are illegal immigrants and people on welfare.

SAD.

AK4wheeler
It's ridiculous.
 

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Had one graduate with Agricultural degree debt free.

Don't get the wrong idea though, mom & dad (the missus and I) pitched in to avoid student debt, but ONLY because of the amazing efforts of that fine son to do everything HE could first!

He applied for grants and scholarships continuously. It was a continuous effort and he was awarded a little here and a little there. It added up!

He waited tables.

He got D2 football money. (For those that know, you EARN every dollar)

After all that, I'd say we may have thrown in about $1000 a month for the entire 4.5 years. But much of that was also mom & dad rewarding him with fun money and lifestyle bonuses. (The new dorms, Whataburger nights, gas money......)

I'm so proud of the outcome and the team-work that went into the whole thing. But I'll always claim it was HIS dedication that we supported.

Another son attempted to follow in his footsteps. By the end of the second semester he found himself in a much different "business arrangement" with mom-dad subsidies. Lol

He knew why. And he withdrew.

I love that boy just as much. Be he wasn't all in, so neither were we.

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I enrolled in the Florida Pre-Paid program for my kids. Best thing ever for education. Paid over time and my kids get a great education without the burden of a loan. Keep in mind that any government funded student loans can get paid off, if the student elects to work for state or local governments for five years. Something to think about.
 

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I went to a well ranked engineering school and a lot of kids did that. They went to the local community college and then came in Junior/Senior year and ended up with the same degree from the same school I got. The whole college thing is ****ing dumb and is absolutely a scam. Unfortunately, my parents(along with a lot of others) were of the mind set that you had to do to a good college to get by in life. I don't think this is true. If in 15 years my son told me he wanted to be an electrician, plumber, welder, etc I would be like, HELL YEAH! No loans and you make bank off all the people who can't do that **** themselves.
Too many people are too proud to take classes at a Community College. Same credit, different name on the degree. I personally didn't give a hoot.

I'm from the Mike Rowe camp when it comes to college. I agree that it's a complete sham and is not 100% required to make good money, though there are obviously some fields where it's 100% required if you're going to get anywhere. I have an Architecture Degree (4 year Bachelor) and I am a licensed Architect. I worked at a very large firm for 13 years but I left architecture in 2012 to run my own small business (not architecture but still drafting) from home and I fully doubled my income the first year and have since made as much as 5x my best year as an architect. I will never dissuade my kids from college but I will give them a real world view of it all if society still has the same "go to school, go to college, get a job" mentality when they're of age.


PS It takes an act of Congress to edit a post on this forum. You'd think the software would be better than it is. What a joke.
 

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Just wait until your children reach college age and they have to fill out the FAFSA Financial Aid paperwork (mandatory). The Gov't counts any income, investments, retirement, disability payments and 529s for the potential student AND THE PARENTS...so 99% of the time the student is denied for financial aid. It's a racket.

The only ones that get free education are illegal immigrants and people on welfare.

SAD.

AK4wheeler
While this may be true, the way I read the FASFA form is that your primary house is not included in the calculation. So my plan is dump as much money into my house as I can, because if you open a 529, it counts against you. By having that money in your house, you could always get a HELOC or something, but at least your "perceived need" is not lowered because of investment income earmarked for school.

Not sure about retirement accounts counting if they are in 401k's, because that would force people into taking a penalty due to an early withdrawl. I could see something like a ROTH IRA counting, but not sure about un-taxed 401ks. A ROTH typically has a financial hardship clause where you can avoid the early withdrawl penalty.

One good piece of advice that I got from a friend who has put 3 kids through college is to weigh the money you want to contribute so you contribute MORE toward their senior year. This is incentive for your kid to finish college. If you just drop a flat amount each year, they may go one year then decide they want to quit. So say in year 1 you contribute 25% of expenses, year 2 - 35%, year 3 - 45%, and so on. This way by their senior year when you have their committment to finishing, you pay the most money.
 

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Discussion Starter #12
While this may be true, the way I read the FASFA form is that your primary house is not included in the calculation. So my plan is dump as much money into my house as I can, because if you open a 529, it counts against you. By having that money in your house, you could always get a HELOC or something, but at least your "perceived need" is not lowered because of investment income earmarked for school.

Not sure about retirement accounts counting if they are in 401k's, because that would force people into taking a penalty due to an early withdrawl. I could see something like a ROTH IRA counting, but not sure about un-taxed 401ks. A ROTH typically has a financial hardship clause where you can avoid the early withdrawl penalty.

One good piece of advice that I got from a friend who has put 3 kids through college is to weigh the money you want to contribute so you contribute MORE toward their senior year. This is incentive for your kid to finish college. If you just drop a flat amount each year, they may go one year then decide they want to quit. So say in year 1 you contribute 25% of expenses, year 2 - 35%, year 3 - 45%, and so on. This way by their senior year when you have their committment to finishing, you pay the most money.
This was my thought as well. Plus having the house paid down is just interest you don't have to pay which may offset some gains in a 529.
 

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There's always the option of buying a serious fire-proof safe, bolting it to your slab (or burying it in the back yard, or more based on your personal paranoid level), and depositing a few Benjamins every month. $250/mo. for 18 years is $54K... and it's not reflected as an asset anywhere.

But that would *definitely* be wrong, so I wouldn't. :cool:
 

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There's always the option of buying a serious fire-proof safe, bolting it to your slab (or burying it in the back yard, or more based on your personal paranoid level), and depositing a few Benjamins every month. $250/mo. for 18 years is $54K... and it's not reflected as an asset anywhere.

But that would *definitely* be wrong, so I wouldn't. :cool:
The problem is losing value due to inflation. At least in your house you'd be making whatever the interest rate is as you paid down the principle. If you're planning to just stash cash, it's better to put it into a precious metal vehicle such as gold.
 

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While this may be true, the way I read the FASFA form is that your primary house is not included in the calculation. So my plan is dump as much money into my house as I can, because if you open a 529, it counts against you. By having that money in your house, you could always get a HELOC or something, but at least your "perceived need" is not lowered because of investment income earmarked for school.

Not sure about retirement accounts counting if they are in 401k's, because that would force people into taking a penalty due to an early withdrawl. I could see something like a ROTH IRA counting, but not sure about un-taxed 401ks. A ROTH typically has a financial hardship clause where you can avoid the early withdrawl penalty.

One good piece of advice that I got from a friend who has put 3 kids through college is to weigh the money you want to contribute so you contribute MORE toward their senior year. This is incentive for your kid to finish college. If you just drop a flat amount each year, they may go one year then decide they want to quit. So say in year 1 you contribute 25% of expenses, year 2 - 35%, year 3 - 45%, and so on. This way by their senior year when you have their committment to finishing, you pay the most money.
For all three of my kids, the FAFSA application took into account ALL of our holdings...investments, house, 529...what p!ssed me off the most was I had to count my disability income from my injuries that occurred during my military career and MY retirement. TOTAL BS.

The FAFSA SHOULD ONLY be filled out by the STUDENT in my opinion.

AK4wheeler
 

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The problem is losing value due to inflation. At least in your house you'd be making whatever the interest rate is as you paid down the principle. If you're planning to just stash cash, it's better to put it into a precious metal vehicle such as gold.
Quite true. Or there's always Bitcoin ;)
 

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Just went through this. The final conclusion when working with my financial advisor was the money was better off being contributed to my 401k where it can compound exponentially and borrowing from there if need be


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Too many people are too proud to take classes at a Community College. Same credit, different name on the degree. I personally didn't give a hoot.

I'm from the Mike Rowe camp when it comes to college. I agree that it's a complete sham and is not 100% required to make good money, though there are obviously some fields where it's 100% required if you're going to get anywhere. I have an Architecture Degree (4 year Bachelor) and I am a licensed Architect. I worked at a very large firm for 13 years but I left architecture in 2012 to run my own small business (not architecture but still drafting) from home and I fully doubled my income the first year and have since made as much as 5x my best year as an architect. I will never dissuade my kids from college but I will give them a real world view of it all if society still has the same "go to school, go to college, get a job" mentality when they're of age.


PS It takes an act of Congress to edit a post on this forum. You'd think the software would be better than it is. What a joke.
too proud to take classes at a community college, i'll never understand that either. both me and my wife have taken classes at a community college, I have an associates from one, and now I'm at a University getting my 4 year degree. From our experience and people we know that attended the local community college and then transferred, the community college classes were way harder then the university classes.
 

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For all three of my kids, the FAFSA application took into account ALL of our holdings...investments, house, 529...what p!ssed me off the most was I had to count my disability income from my injuries that occurred during my military career and MY retirement. TOTAL BS.

The FAFSA SHOULD ONLY be filled out by the STUDENT in my opinion.

AK4wheeler
Well if that's the case, then I am screwed. We have twin girls so it's 2X whatever the cost is, all at once. I guess I better start stockpiling gold bullion and burying it somewhere.
 

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Great discussion topic! To the OP, I sincerely hope that by the time your kid reaches college-age, this whole FAFSA / student loan racket will be a thing of the past. And to those who recommend community college? Good on ya, couldn't agree more. I told my two daughters it doesn't matter where you start, it matters where you graduate from. Oldest went straight to a 4-year private university, and between financial aid, scholarships, and some of my post-9/11 GI Bill benefits that I transferred to her, she still ended up graduating with about $24K in student loans (tuition was $35K/yr). My youngest, on the other hand, did two years at a community college, transferred to a 4-year public university as a junior, and was able to graduate with zero debt.

I'd have to say, based on what I've read so far, and my limited knowledge of current IRS rules, the best options would be to pay down the mortgage in order to build up equity that you can borrow against, or dump as much as you can into a 401K or similar retirement option, that you can borrow against. Just remember the "rule of 72"...take the interest rate, divide it into 72, and that's how long it will take a lump sum to double in value. So for planning purposes, if you took a lump sum of say $5K, invested it in something that earned an average of 8 percent, divide 72 by 8, and that $5K would double to $10K in 9 years. Leave that $10K alone, and assuming you're still getting 8 percent, you'd have $20K in 18 years, right when they're ready to start college. Ignoring the compounding value of savings, you could reach this same $20K value by putting away $93 a month over this same 18-year period. But $20k in future dollars certainly isn't going to go very far. The middle class gets screwed again...
 
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