Hellobee Boards

You can use it for all education related expenses (meal plans, books, equipment, etc.) DH and I could even use it. There is a hefty fee to cash it out and use it for other things.

We do have one for each of our guys but my dad set it up and maintains it so I'm not sure about the details. I think it is through Vanguard. I think it's a great idea to have one but we also have a separate savings account because I don't want them to have all their money tied up in something with rules and restrictions.

DH and I have started looking into it and it's appealing for the purposes that it is non-taxed money. However, I really don't like the restrictions and the fact that the money can only be applied towards college. I am looking into other savings and investment options so if LO wants to use the money for something like a trade school or starting his own business, there would be funds available.

Yes we have the New York plan and basically asked all our relatives to donate to that fund through UPromise in lieu of a million toys and gifts for holidays and birthdays. We are also auto-deducting each month and putting any cash gifts we receive from family into that account.

We have two and are trying to put away as much as we can in them. Utah's and Illinois' are rated the two best 529s in the country and Utah's gives us a break on state taxes, so that's what we're using. It's great because we're already starting to compound interest and in 14 years we should be in really good shape.

One drawback is that the government can change the rules on the tax treatment of withdrawals at any time and the rules about how the expenses can be used. President Obama proposed eliminating the tax-free treatment of earnings on future contributions to 529 accounts just before the State of the Union. He later withdrew that proposal under political pressure, but he made that proposal in order to pay for his other education plans, so if those happen the money has to come from somewhere. Also, it used to be that a laptop for general use at school was a qualified expense, but it's not anymore.

We have a 529 for LO (2 actually, but 1 is sufficient. We only opened a second to benefit from a state grant) and contribute monthly. My in-laws contribute yearly to them as well. It’s something we all feel strongly about, and feel is extremely important.

Higher education is an expectation in our family (and our families) and I don’t want money to be the main hindrance to LO furthering her education. That said, there is no way that we will be able to save enough to cover the full cost of college with rates raising at steady levels - people often talk like there is no in between, or that they aren't saving because they don't intend to cover the full cost of tuition. There is lots of in between.

@honeybear: His recommendation was on future contributions, so if you already had stuff in a plan that wouldn't be affected.... so if you put stuff in now it wouldn't matter if laws changed in the future, they wouldn't change something retroactively, you might just decide to not do future contributions if the law ever did change (against all odds). May as well take advantage of the benefits while they exist!!

I thought it was interesting that his plan was to cut back on the 529 benefits because some huge percentage of the people who actually use the benefits by having a 529 are people who make over 200k/year. He was saying it doesn't affect the middle class because most of the middle class (<$200k/year) doesn't use it. That seems like MORE incentive to use it, because it's out there and helpful to people who do use it, just not being utilized as well as it should. So take advantage of it while you can!!

I'm in NY and we did it - you get a break on NY state taxes. I am happy with the peace of mind in starting it... even if legislation changes down the line.

@honeybear: right, i understand what you're saying. You could also argue that it is possible the capital gains tax will be increased (gets tossed around often and is usually shot down by republicans, but the possibility is out there) and in that case you'd want to be diversified enough to have investments that aren't affected by capital gains taxes (529s and ROTH IRAs).

I think the overall point is it's hard to know what things will be like in 18 years when our kiddos go to college, but being proactive about savings in one way or another is probably wise

Yes. We put all gift money she gets into it and we put in a small amount every month. We don't expect it to cover a 4 year college tuition but we hope it will help with a 2 year technical college. Or pay for one book knowing how the prices of colleges are escalating.

Yes. I think it's very important that we sock away something for lo's higher education costs. Right now, even though things are tight with daycare payments, is the best time to put as much in as possible due to the time value of money.

We will also pay out of pocket when the time comes and help with student loan payments, but we feel very strongly about saving today.

It's also a nice place to put LO's cash gifts.

My dad set up a 529 through college invest (Colorado) for DS - we have a generic savings for DS but I want to eventually have it be solely for education purposes, esp if we decide to have more kids.
As someone who works in financial aid in higher ed, it's becoming more and more paramount to start saving for college. Right now, as middle-class income earners, we (and DS) would not qualify for any federal aid besides loans and although I think a little debt is ok (subsidized loans - while they last), students accruing thousands upon thousands before they earn their first BA makes it very difficult for them to pay it off. I'm one of those students with a lot of student loan debt (combo of undergrad and grad) and so I hope we can help our kids with their undergrad degrees (at least pay half) if we have the means to do so.