Savings account for your kid’s future

We did a combo of cd's and mutual funds. I too thought it was to difficult to predict the future so was not 100% on board with a 529. I know the interest rates are not all that great right now, and you might want to wait until after the election a bit as they could tank even more. 15 years ago, interest on a Cd was 4.5-5.0%. Now you're lucky if you get 1%. Son has an average of 5.6% return on his mutual funds he's had right at 3 years.

We have ROTH IRAs for our kids’ college funds. I forget exactly why we chose them, but we took them out years before we had kids (infertility issues). We didn’t want them tied to just education because we didn’t know 100% that we would have kids or that our kids would actually go to college. So they are in our names, not the kids’ names. I’m glad we did that, because both kids ended up with huge merit scholarships and used DH’s Post 9-11 GI Bill for their undergrad degrees. DD actually makes about $2,000 a year with her scholarships.

We opened a 529 when our daughter was born. We didn’t fund it aggressively because it is hard to plan for. She ended up with scholarships that made a huge 529 fund unnecessary, but of course we didn’t know that either. It’s funny to think back to then. She’s a freshman in college this year (attending remotely because her campus is opened to only specific programs right now) and I remember sitting with her in her rocking chair wondering what college would look like in 2020. And we all know how that turned out!

We never specifically earmarked money for our kids education. My husband is a saver by nature (unlike me) so he was never tempted to dip into our savings and he kept me accountable. We didn’t move our savings around often, but we did when it made sense. We always worked with a financial advisor, but did a lot of research on our own. As the kids got close to college age, we made sure that our entire savings were not tied up in long term investments. We made sure that at least some of our savings were readily available to pay college tuition.

Nothing to add - it's a completely different situation in the Netherlands and much less applicable given the standard annual college tuition here but I just wanted to say that I love your avatar!

Do more research but I'm thinking the 529 would be the most tax beneficial.

Ticks me off to no end that there are essentially no tax breaks for parent's paying for their children's college tuition plus if you have the money invested and have earnings, you can pay capital gains tax on top of it I swear we could have done something way better if we had the right advisors at the right time.

Yes, although it phases out. If we don't claim them as dependents that the child can claim it, though. Either way, I can't say enough about good advisors early on to run through potential scenarios.

This is exactly how we did it.

DD1 completed undergrad and two years of grad school with no loans. She had several small scholarships, and since she was paying in-state tuition, the bill wasn't that bad. She lived on campus or in an apartment for undergrad but moved home for grad school since we made her ante up a little for that. For both undergrad and grad school, she worked as a server/bar tender for a local hotel, and she made excellent money that covered all of her personal expenses. She also had a GA position that paid a good portion of grad school tuition and a $13,500 annual stipend. We told her she could could live at home for free or pay her own rent during grad school. She opted to live at home and finished with a sizeable savings account to cover expenses when she moved to Virginia for her new job.


DD3 is in community college and has only paid a total of about $5000 in tuition plus $7000 last year for room and board (after her refund for the COVID closing). She had some tuition her first year as a part-time student when she was finishing the Pro-Start program through our county's technical school. This year and last she has benefitted from a grant program that covers tuition for certain professions that are a need in our state (Culinary counts as we rely heavily on tourism). That tuition grant ends after next semester, so we will be back on the hook for tuition when she finishes her double major next fall (culinary and nutrition).


After she is done with all of her CC requirements, she might finish her bachelor's in Hospitality or General Business, depending on whether or not she gets the job she wants. We will cover the cost of finishing the four to five semesters she will need for a bachelor's. She likes living at home and having access to a car, so I doubt we will have any room and board expenses for her bachelor's degree.


DD2 is in her third year of undergrad, and so far she has cost us a total of about $10,000 for her first year room and board. She has had enough scholarships to cover her tuition every year, plus about $1000 refundable to cover books and other expenses. She has been an RA this year and last, so no room and board charges, plus she gets a very small stipend of about $80 per month, I think, which covers her on-campus parking pass. If she decides to go for a masters, she will of course go for a GA position, but even if she doesn't get one, we will help her cover her expenses. I'm not going to cover a $100,000 or higher bill for out-of-state tuition, but if she can reduce that cost with a GA position, we will be happy to help her with the rest. Otherwise, she can do an in-state program or look for funding options to cover the difference between the in-state and out-of-state costs. I think she will probably be able to get a GA position, even if it is as an RA. I know that some schools will cover tuition for graduate RAs, but do not offer the stipend. She currently has a 4.0 in Finance and three minors (and is on track to keep the 4.0 this term!). Based on my experience working with graduate business students, those skills are often in demand in university foundations and administrative units who need students with business experience to help with budgets. Her B.S. Finance plus Accounting minor should at least get her an interview for GA positions. She wants a masters in sports management, and I have put her to work researching the programs she wants to visit next summer when travel hopefully opens back up. I have helped her find some contacts at other schools that she is talking to now about what they need for the application and what GA opportunities are available. I know that my school sometimes has GA positions for business students in the athletic department, and this would be perfect for her. I also have contacts at Ohio State and Auburn, so she has been reaching out there to see what opportunities they might have. She will get at least as much out of us as DD1 did.

My best recommendation is to have your college student research the funding that might be available at the undergrad and grad level to cut the overall bill. I have never seen scholarships tied to a job for undergrads, but GA waivers are available for grad students. We have to recruit hard for RAs because most freshmen want an apartment for sophomore year, so that is a good opportunity for just about anyone who wants it on my campus--no rent, utilities, or grocery bill for RAs. Also, check out the student employment office. It amazes me how many student worker positions go unfilled each year for departments who are desperate for the help. These are not work-study, which is a federal aid program for which you have to qualify. These are actual jobs that pay anywhere from minimum wage to $18 per hour, depending on your qualifications and classification as grad or undergrad. They can also cover up to 10 hours per week for undergrads or 20 for grads, I think, but they do not pay for any tuition.

I'm curious about people who use ROTHs for college. While I know it is allowed ours is intended for our retirement. Is that what you will do with it now? Cuz it is in your name not theirs.

Also I believe that if kids get a scholarship there is some way the 529s accommodate for that (less or no fees for an equal amount withdrawal). We are still a few year off from college but it is getting closer. Thanks for sharing your situations! Helps me ask better questions when meeting with our financial advisor.

We're doing both. I have some in a 529 for the state tax break, and the rest in a savings/investment account. Some money market some investments.

I do a set contribution to the 529 and the savings is just extras here and there, birthday money etc. He's 4, so he doesn't know the difference right now. I have the "save up" feature where it sends $1 every time I use my debit card to the account. It's not millions, but I'm surprised on how fast it adds up.

My mom put money into a "College Saver" account at our credit union. It was a lump sum, we never really had the means to contribute to it, but the rate of return, esp for our younger daughter (since she started college a couple of years after her sister), was great. I don't recall the details of when the accounts were originally set up - but I am a fan of credit unions, so if that is an option for you, you may want to check in on it.

We started a 529 for each of my kids waaay too late (they were 10 & 12). We have been aggressively saving for them since. I went back to work and all income is put in their 529s. They are now 17 & 20 and things didn't end up how we thought they would.

My 20 yo decided to get a DTA (direct transfer associates) from a local college and live at home. His tuition is about $6,000/year, we had budgeted $25,000/year. My daughter decided to do Running Start, so at the end of this school year she'll have her diploma and an AA.

They have saved us a tremendous amount of money by making these choices. We have told them they can get a Master's degree with the leftover money. If they don't do that, I guess we'll have to figure out how to withdraw it.

[quote I have helped her find some contacts at other schools that she is talking to now about what they need for the application and what GA opportunities are available. I know that my school sometimes has GA positions for business students in the athletic department, and this would be perfect for her. I also have contacts at Ohio State and Auburn, so she has been reaching out there to see what opportunities they might have. She will get at least as much out of us as DD1 did.[/quote]


She may also want to consider Ohio University if she is looking at Ohio schools. It’s substantially smaller than Ohio State but has a good sports admin program. Their Masters of Sports Admin is run jointly with the College of Business and I think, but am not sure, that they come out of the program with a MBA as well. They definitely have GA positions as part of their program which generally include tuition and a stipend.