Some family friends told me how they funded their child's college education...
They saved money for a down payment on a home. As their child got closer to choosing a university, they investigated homes near the universities that they would buy and rent out. Once the kid decided on a location, they offered him the option - they'd pay his room and boarding expense if he lived in their house and acted as the "land lord" for other students. Son would pay tuition and costs.
In the end, their son paid no room and board - as the other students ultimately paid for the mortgage and the son's food with their rent.
After he graduated, the plan was to sell the home to pay off the rest of the tuition bill with the equity. Either way, the son owned the tuition bill and the parents paid their part by providing room and board at little to no cost (as they expected to make their down payment back).
The point is that they saved a lot less than 100k to make it possible.
I wish I would have known about this approach as my step-son was in grade-school and high school. It would have been better than what we ended up with - a student who could only qualify for loans to cover tuition, meaning that mom had to take a parent loan for the room and board.
I find that the ones that have small basketballs and other types of balls are easiest to win at. Also, older machines have a set claw strength instead of pick it it up and drop it sort of thing. The cheaper the prize, the easier it is to win.
i'm an avid couponer and I love pom. They have a coupon out right now for $2 off 48 oz and you can almost always find $1 off the smaller bottles. They also have pom light which is 50% juice and 50% water....or 48% pom juice and 2% blackberry and 50% water and that is my favorite. I don't consider it a bad deal at all, even though it may cost me 6.99 after the coupon if I cannot find it in the reduced section - because I spend a hundred dollars a week on white bread, cereal and bad processed food. Any money I'm spending on something that is actually good for me AND tasty is a bonus. The Pom Lite is healther even though it has "added water" (it does cost less) since there is too much sugar in 100% juice. I could drink three 48 oz a day if I could afford it. And Pom WON their lawsuit by the way - the judge said that there IS heath benefits to it, besides it being one of the tastiest drinks around.
Isn't it hypocritical to say "maybe you shouldn't save for your child's college education" when in fact you are? I know it isn't as catchy, but maybe the title of this article should have been "Why You Shouldn't Save 100% of Your Child's Education Fund".
Furthermore, the "tax penalty" on the 529 plans that you indicated in your article is a bit misleading.
All taxes and penalties incurred are on earnings only, not on principal. Since the money has been sitting there earning interest TAX FREE for the whole time it's in the account, of course you'll have to pay taxes on it when you take it out. The bonus "tax" for unqualified withdrawals is 10%, on earnings only. That's really not that much.
Example: You put $100 per month into a 529 plan for your son for 15 years. That's $18,000 of contributions.
Earnings based on
3% interest - 4988.26
4% interest - 6989.44
5% interest - 9188.99
Since you would have paid the taxes on this money at the time you had earned it if you hadn't put it in the 529, I'm not including it here - it's a wash (unless you've moved into a higher tax bracket). So the "cost" of putting the money into the 529 is the 10% penalty:
3% interest - 498.83 on around 22,000 of savings + earnings
4% interest - 698.94 on nearly 25,000 of savings + earnings
5% interest - 918.90 on 27,000 of savings + earnings
Whether that "cost" is a risk you want to take on your own child is a decision only you can make. I consider that a pretty good bet in my case, and well worth the potential loss.
I also consider my college education one of the best gifts that my family could have given me. Finishing not only undergraduate but also graduate school with almost no debt allowed me to follow my dreams and not just a paycheck. And passing on that gift is something that I'm happy to provide to my daughter. Financial aid is not guaranteed, and financial aid rules can change, so I don't think it can be counted on. The only way to know that the funds will be there for my daughter's education is to save for them myself.
So we live simply, max our our own retirements AND save for our daughter's education. Anyone who managed to save $20,000 while in college could probably do the same.
#4. Wait my son didn't start college until he was 24 at that point the parents income is no longer counted in FASFA. Along with a part time job and getting the core courses in junior college the only cost have been a couple of summer semisters. He is starting his senior year this fall debt free.
This is a great guide for changing a WOMAN's name after marriage. If the husband wants to change his name after marriage, there is a key step at the beginning of the process that has to occur... you have to legally get your name changed in a court of law.
When my wife and I got married we wanted both of us to share a hyphenated name. The practice of a woman changing her name at marriage has roots in the medieval practice of the woman becoming the "property" of the husband. We felt that there were other socially acceptable ways to do this now, we did't want her to be the only one to change her name. We also wanted to start our marriage off in a "sharing place" rather than in the thought that she had to take my name.
After talking with various officials at the city and county, they informed me that I had to get a legal name change. I wouldn't be able to just bring in my marriage certificate to the sicual security and driver's license offices and they would change my name. My wife could do that but not a male. So I retained a lawyer and for about $700, I had my name changed.
It may have changed now (I did this in 2000) and this was in Texas as well. It proves how our society is structured to our traditional practices.
As someone who just graduated with two bachelor's degrees while working full-time and receiving zero contribution from my parents I would have to say the trend of stating that kids need to start "taking responsibility" for their education by paying their own way is often repeated by those in a generation who had their education heavily subsidized by tax payers. My tuition increased $4,000.00 from freshman year until I graduated (this does not include fee increases that cost an additional $1000.00 per year).
My parents had nothing socked away for my education, and due to debts were unable to help me. Their incomes were still high enough for me to not qualify for a Pell grant or additional need-based grants, or really any grants at all (especially when you included my full-time wages which are required to be reported in the FAFSA). I left school until I was over the age of 24 (the magical age where the federal government decides that you are financially independent...the only other exceptions to that rule are if you were a ward of the state, emancipated, or married) because my financial aid was so bad that it was impossible to pay tuition and living expenses with my meager wages (remember I didn't have a college diploma yet and was lucky to make more than $10.00/hour), even with heavy use of student loans.
I went to a state university (one of the least expensive large universities in the country) and even turned down going to a better school because I could not afford it. At the end I owe about $40,000.00 in student loans.
A part-time job to help pay for books and extra school expenses is one thing to promote responsibility, but I urge people not to screw your own children over if you are able to afford to save for college. Afraid your child may not go to college, then don't invest in 529 plans. There are multiple mutual funds that would do just as well or better which would allow you to access that money when your child is of age or sooner if necessary. If they don't go then you have a very large savings which you can begin transferring to retirement savings.
The idea that saving now will make financial aid worse later is like saying don't make more than X a month or you won't get your food stamps anymore. Why allow yourself to be in the situation where you are at the mercy of the financial aid office at your child's school? You have no idea what your income or finances will look like later (even if you take great pains to plan and save), or how much more expensive a college (or technical school) education will be. You also don't know how you will stack up against other parents when financial aid is being awarded (every school determines what a "needy" student is).
There were some valid points on here, but the approach of the article could have been improved. I've seen a lot of articles about the types and tricks on how to get the most out of financial aid and I don't like the idea of trying to game a system so I can get more money from taxpayers and government debt. If you are in a position to help your children pay for college it can give them a huge leg up. If you aren't don't cost your own retirement to save for your children's college education, but to present it like it is in this article isn't very responsible to the general public.
As someone who makes a profession working with students who are preparing to go to college or who are already in college, I can say that #1 and #2 are ridiculous statements. *However,* I strongly support #3. There are way too many students going to a university underprepared and who really have no business being there. Having a higher education is not the answer, having skills, experience, AND education is the answer. Unfortunately, too many students put all their eggs in one basket - a basket they're not good at holding.
One very important detail that was left out. Make sure to file your claim AFTER the manufacturer's warranty, which is often 1 year, has expired. If you file your claim while the manufacturer's warranty is in effect, not only will the claim's handler deny your claim, but because your claim takes place before Mastercard's eligible claim period, you will effectively deny yourself from making any claim in the future! Mastercard's wording on their website can be very misleading, making one think you can make your claim the first 2 years because they "double" the warranty.
On Mastercard's site:
"Extended Warranty - Doubles the original manufacturer's or store brand warranty for up to one year when you pay with your eligible MasterCard card"
One more thing, as of July 2012 the claims handler is NOT Mastercard, but some shady 3rd party called Sedgwick, that will not predisclose this information, and will for any minor excuse to deny you out of a claim.
The tax penalty mentioned in the unused funds only applies to the profits, not the original savings principal. The only thing I agree with is that retirement and emergency savings should take priority over a 529 account.
Something to think about for y'all that wash your cars at home .... not very environmentally friendly. Commercial car washes are required by law to dispose of the car wash fluids properly. What happens to yours?
I'm all for a parent's retirement being a higher priority than the kid's college fund (up to a reasonable point). But to not put money in some kind of savings account that is earmarked for college just to improve the chances of qualifying for financial aid is "gaming the system" and, in my mind, is unethical. This is not unlike giving all your money away just to qualify for Medicaid.
Around a year and a half ago I decided to cancel cable due to a financial set back, and found myself overwhelmed by the amount of information on the topic. The problem is that most of the sites, services, and products out there only offer partial solutions or no solution at all. Hence the birth of KilltheCableBill. I am now saving around $100 a month and have more shows and movies than i have time to watch.
Ebay for small stuff (clothes, jewelry, books, etc), Craigslist for larger (guitar, bookshelves), My single mom neighbor if she wants anything, and Goodwill for what doesn't sell or I don't give away... in that order! So good to 'recycle' and make money too sometimes. One person's trash, another's treasure...
Of course, you can also have a movie mockery night where you purposely watch a terrible movie and enjoy a sort of MST 3000 with your snarkiest friends. The other rules still apply (food, beverage, comfort), but you can talk loudly through the film or live-blog it. :)
I recommend the movie Alexander, which is The Worst Movie Ever Made(TM).
Changing my name to my husband's after the wedding was easy. After having to change my name back after divorce, I'd recommend never changing your name in the first place. Besides the HUGE hassle, it's really hard to get rid of that other name. Since I was married for almost 15 years and met lots of people during that time, many people don't recognize MY name, so I have to add "formerly ___" so they know who I am. Also, I still receive mail addressed to the old name - mostly credit card applications - at my new address (no forwarding). IF I were ever to marry again, I wouldn't change my name legally. Maybe I'd hyphenate, but that would be it.
I should TOTALLY have waited to go to college. I would have saved my parents so much money and probably ended up with a much more useful degree. At the time, though, it didn't seem like an option. It was pretty much "You will graduate from high school and then college and then get a job."
I was so relieved to get the chance to change my name when I got married. Although I just moved my last name to the middle and tacked on a married name, I got to drop my old middle name in the process (at the Social Security office), which was nice.
I love this post. It is so true sometimes we say we want things but we don't move in the direction of getting them we just sit still or spin our wheels.
Some family friends told me how they funded their child's college education...
They saved money for a down payment on a home. As their child got closer to choosing a university, they investigated homes near the universities that they would buy and rent out. Once the kid decided on a location, they offered him the option - they'd pay his room and boarding expense if he lived in their house and acted as the "land lord" for other students. Son would pay tuition and costs.
In the end, their son paid no room and board - as the other students ultimately paid for the mortgage and the son's food with their rent.
After he graduated, the plan was to sell the home to pay off the rest of the tuition bill with the equity. Either way, the son owned the tuition bill and the parents paid their part by providing room and board at little to no cost (as they expected to make their down payment back).
The point is that they saved a lot less than 100k to make it possible.
I wish I would have known about this approach as my step-son was in grade-school and high school. It would have been better than what we ended up with - a student who could only qualify for loans to cover tuition, meaning that mom had to take a parent loan for the room and board.
I find that the ones that have small basketballs and other types of balls are easiest to win at. Also, older machines have a set claw strength instead of pick it it up and drop it sort of thing. The cheaper the prize, the easier it is to win.
i'm an avid couponer and I love pom. They have a coupon out right now for $2 off 48 oz and you can almost always find $1 off the smaller bottles. They also have pom light which is 50% juice and 50% water....or 48% pom juice and 2% blackberry and 50% water and that is my favorite. I don't consider it a bad deal at all, even though it may cost me 6.99 after the coupon if I cannot find it in the reduced section - because I spend a hundred dollars a week on white bread, cereal and bad processed food. Any money I'm spending on something that is actually good for me AND tasty is a bonus. The Pom Lite is healther even though it has "added water" (it does cost less) since there is too much sugar in 100% juice. I could drink three 48 oz a day if I could afford it. And Pom WON their lawsuit by the way - the judge said that there IS heath benefits to it, besides it being one of the tastiest drinks around.
Isn't it hypocritical to say "maybe you shouldn't save for your child's college education" when in fact you are? I know it isn't as catchy, but maybe the title of this article should have been "Why You Shouldn't Save 100% of Your Child's Education Fund".
Furthermore, the "tax penalty" on the 529 plans that you indicated in your article is a bit misleading.
All taxes and penalties incurred are on earnings only, not on principal. Since the money has been sitting there earning interest TAX FREE for the whole time it's in the account, of course you'll have to pay taxes on it when you take it out. The bonus "tax" for unqualified withdrawals is 10%, on earnings only. That's really not that much.
Example: You put $100 per month into a 529 plan for your son for 15 years. That's $18,000 of contributions.
Earnings based on
3% interest - 4988.26
4% interest - 6989.44
5% interest - 9188.99
Since you would have paid the taxes on this money at the time you had earned it if you hadn't put it in the 529, I'm not including it here - it's a wash (unless you've moved into a higher tax bracket). So the "cost" of putting the money into the 529 is the 10% penalty:
3% interest - 498.83 on around 22,000 of savings + earnings
4% interest - 698.94 on nearly 25,000 of savings + earnings
5% interest - 918.90 on 27,000 of savings + earnings
Whether that "cost" is a risk you want to take on your own child is a decision only you can make. I consider that a pretty good bet in my case, and well worth the potential loss.
I also consider my college education one of the best gifts that my family could have given me. Finishing not only undergraduate but also graduate school with almost no debt allowed me to follow my dreams and not just a paycheck. And passing on that gift is something that I'm happy to provide to my daughter. Financial aid is not guaranteed, and financial aid rules can change, so I don't think it can be counted on. The only way to know that the funds will be there for my daughter's education is to save for them myself.
So we live simply, max our our own retirements AND save for our daughter's education. Anyone who managed to save $20,000 while in college could probably do the same.
#4. Wait my son didn't start college until he was 24 at that point the parents income is no longer counted in FASFA. Along with a part time job and getting the core courses in junior college the only cost have been a couple of summer semisters. He is starting his senior year this fall debt free.
This is a great guide for changing a WOMAN's name after marriage. If the husband wants to change his name after marriage, there is a key step at the beginning of the process that has to occur... you have to legally get your name changed in a court of law.
When my wife and I got married we wanted both of us to share a hyphenated name. The practice of a woman changing her name at marriage has roots in the medieval practice of the woman becoming the "property" of the husband. We felt that there were other socially acceptable ways to do this now, we did't want her to be the only one to change her name. We also wanted to start our marriage off in a "sharing place" rather than in the thought that she had to take my name.
After talking with various officials at the city and county, they informed me that I had to get a legal name change. I wouldn't be able to just bring in my marriage certificate to the sicual security and driver's license offices and they would change my name. My wife could do that but not a male. So I retained a lawyer and for about $700, I had my name changed.
It may have changed now (I did this in 2000) and this was in Texas as well. It proves how our society is structured to our traditional practices.
As someone who just graduated with two bachelor's degrees while working full-time and receiving zero contribution from my parents I would have to say the trend of stating that kids need to start "taking responsibility" for their education by paying their own way is often repeated by those in a generation who had their education heavily subsidized by tax payers. My tuition increased $4,000.00 from freshman year until I graduated (this does not include fee increases that cost an additional $1000.00 per year).
My parents had nothing socked away for my education, and due to debts were unable to help me. Their incomes were still high enough for me to not qualify for a Pell grant or additional need-based grants, or really any grants at all (especially when you included my full-time wages which are required to be reported in the FAFSA). I left school until I was over the age of 24 (the magical age where the federal government decides that you are financially independent...the only other exceptions to that rule are if you were a ward of the state, emancipated, or married) because my financial aid was so bad that it was impossible to pay tuition and living expenses with my meager wages (remember I didn't have a college diploma yet and was lucky to make more than $10.00/hour), even with heavy use of student loans.
I went to a state university (one of the least expensive large universities in the country) and even turned down going to a better school because I could not afford it. At the end I owe about $40,000.00 in student loans.
A part-time job to help pay for books and extra school expenses is one thing to promote responsibility, but I urge people not to screw your own children over if you are able to afford to save for college. Afraid your child may not go to college, then don't invest in 529 plans. There are multiple mutual funds that would do just as well or better which would allow you to access that money when your child is of age or sooner if necessary. If they don't go then you have a very large savings which you can begin transferring to retirement savings.
The idea that saving now will make financial aid worse later is like saying don't make more than X a month or you won't get your food stamps anymore. Why allow yourself to be in the situation where you are at the mercy of the financial aid office at your child's school? You have no idea what your income or finances will look like later (even if you take great pains to plan and save), or how much more expensive a college (or technical school) education will be. You also don't know how you will stack up against other parents when financial aid is being awarded (every school determines what a "needy" student is).
Great tips. I especially liked the one on leaving the lights and TV on. We actually do that at home, but never thought of doing it in a hotel.
There were some valid points on here, but the approach of the article could have been improved. I've seen a lot of articles about the types and tricks on how to get the most out of financial aid and I don't like the idea of trying to game a system so I can get more money from taxpayers and government debt. If you are in a position to help your children pay for college it can give them a huge leg up. If you aren't don't cost your own retirement to save for your children's college education, but to present it like it is in this article isn't very responsible to the general public.
As someone who makes a profession working with students who are preparing to go to college or who are already in college, I can say that #1 and #2 are ridiculous statements. *However,* I strongly support #3. There are way too many students going to a university underprepared and who really have no business being there. Having a higher education is not the answer, having skills, experience, AND education is the answer. Unfortunately, too many students put all their eggs in one basket - a basket they're not good at holding.
One very important detail that was left out. Make sure to file your claim AFTER the manufacturer's warranty, which is often 1 year, has expired. If you file your claim while the manufacturer's warranty is in effect, not only will the claim's handler deny your claim, but because your claim takes place before Mastercard's eligible claim period, you will effectively deny yourself from making any claim in the future! Mastercard's wording on their website can be very misleading, making one think you can make your claim the first 2 years because they "double" the warranty.
On Mastercard's site:
"Extended Warranty - Doubles the original manufacturer's or store brand warranty for up to one year when you pay with your eligible MasterCard card"
One more thing, as of July 2012 the claims handler is NOT Mastercard, but some shady 3rd party called Sedgwick, that will not predisclose this information, and will for any minor excuse to deny you out of a claim.
Or you can order 60 Button cell batteries from china for 6 dollars like i did, they work perfectly!
The tax penalty mentioned in the unused funds only applies to the profits, not the original savings principal. The only thing I agree with is that retirement and emergency savings should take priority over a 529 account.
Something to think about for y'all that wash your cars at home .... not very environmentally friendly. Commercial car washes are required by law to dispose of the car wash fluids properly. What happens to yours?
I'm all for a parent's retirement being a higher priority than the kid's college fund (up to a reasonable point). But to not put money in some kind of savings account that is earmarked for college just to improve the chances of qualifying for financial aid is "gaming the system" and, in my mind, is unethical. This is not unlike giving all your money away just to qualify for Medicaid.
Around a year and a half ago I decided to cancel cable due to a financial set back, and found myself overwhelmed by the amount of information on the topic. The problem is that most of the sites, services, and products out there only offer partial solutions or no solution at all. Hence the birth of KilltheCableBill. I am now saving around $100 a month and have more shows and movies than i have time to watch.
Ebay for small stuff (clothes, jewelry, books, etc), Craigslist for larger (guitar, bookshelves), My single mom neighbor if she wants anything, and Goodwill for what doesn't sell or I don't give away... in that order! So good to 'recycle' and make money too sometimes. One person's trash, another's treasure...
LOL. That's a great idea, Andrea!
You can rent DVD's for free at the public library
Of course, you can also have a movie mockery night where you purposely watch a terrible movie and enjoy a sort of MST 3000 with your snarkiest friends. The other rules still apply (food, beverage, comfort), but you can talk loudly through the film or live-blog it. :)
I recommend the movie Alexander, which is The Worst Movie Ever Made(TM).
Changing my name to my husband's after the wedding was easy. After having to change my name back after divorce, I'd recommend never changing your name in the first place. Besides the HUGE hassle, it's really hard to get rid of that other name. Since I was married for almost 15 years and met lots of people during that time, many people don't recognize MY name, so I have to add "formerly ___" so they know who I am. Also, I still receive mail addressed to the old name - mostly credit card applications - at my new address (no forwarding). IF I were ever to marry again, I wouldn't change my name legally. Maybe I'd hyphenate, but that would be it.
I should TOTALLY have waited to go to college. I would have saved my parents so much money and probably ended up with a much more useful degree. At the time, though, it didn't seem like an option. It was pretty much "You will graduate from high school and then college and then get a job."
I was so relieved to get the chance to change my name when I got married. Although I just moved my last name to the middle and tacked on a married name, I got to drop my old middle name in the process (at the Social Security office), which was nice.
I love this post. It is so true sometimes we say we want things but we don't move in the direction of getting them we just sit still or spin our wheels.
Oops. Found the date. Need newer review, please include Drop Box.