Is anyone not saving to pay for all of their kids' college?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Same. I have graduate school debt and it's awful to have. It's basically paying a second mortgage that lasts through the daycare years and affects your debt to income ratio when buying a house. Terrible to stick your children with that burden when you have the means to save.

Sounds you may a bad investment to go to grad school for a degree that doesn't pay you enough to pay off your debt. You should have picked a better major in college to get you a good job, without having to go to grad school. That decision is on you, not your parents

My parents provided me with enough poverty to get Pell grants through undergrad. Grad school was all on me but luckily I worked for state government for 10 years and my loans are in the process of being forgiven. Not a bad investment even though it was painful at times making low, negative amortization payments and having to move into a smaller house. Great investment for my grad school since they inhaled unlimited federal student loans just to enroll me but too bad for the tax payer I suppose.

[Anonymous]

We're not saving at all towards it but we'll be able to cover it no problem when the time comes.

[Anonymous]

Anonymous wrote:We're not saving at all towards it but we'll be able to cover it no problem when the time comes.

And what if your income drastically changes just before college? Go from $500K to $150K (no clue what your income is now) and you might not be able to afford it. However, your kid won't be eligible for aid. So I hope you are saving for it somehow. If you can cash flow it when time comes, it makes sense to just set some aside now

[Anonymous]

Always only fans and sugar daddies to pay your daughters education.

Although your son might find that approach painful

[Anonymous]

Anonymous wrote:We're not saving at all towards it but we'll be able to cover it no problem when the time comes.

Make sure you fully understand what that cash flow looks like. (Look at the Vanguard calculator!)

We will be full pay. We have two kids and are planning on private for each. There will two years of overlap. There will be two years of around $180,000 in college expenses. We make $500K a year and that would be huge hit to our post-tax cash flow if we had to just absorb it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We're not saving at all towards it but we'll be able to cover it no problem when the time comes.

Make sure you fully understand what that cash flow looks like. (Look at the Vanguard calculator!)

We will be full pay. We have two kids and are planning on private for each. There will two years of overlap. There will be two years of around $180,000 in college expenses. We make $500K a year and that would be huge hit to our post-tax cash flow if we had to just absorb it.

Adding to this.

The tax advantages of 529s are substantial. Our kids have had huge gains the past 10 years and were not hit during the past few
Months due to being in age adjusted accounts. We also get a Virginia State tax break on the first $4,000 per account. (Each kid has multiple accounts)

In my mind, why would you not save for college given the tax breaks? Even if you could absorb $80K per kid per year (or $35K for instate), setting up a 529 is easy and saves so much over the long term.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We're not saving at all towards it but we'll be able to cover it no problem when the time comes.

Make sure you fully understand what that cash flow looks like. (Look at the Vanguard calculator!)

We will be full pay. We have two kids and are planning on private for each. There will two years of overlap. There will be two years of around $180,000 in college expenses. We make $500K a year and that would be huge hit to our post-tax cash flow if we had to just absorb it.

The issue is someone making 1-5 you do. You can save. They cannot.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We're not saving at all towards it but we'll be able to cover it no problem when the time comes.

Make sure you fully understand what that cash flow looks like. (Look at the Vanguard calculator!)

We will be full pay. We have two kids and are planning on private for each. There will two years of overlap. There will be two years of around $180,000 in college expenses. We make $500K a year and that would be huge hit to our post-tax cash flow if we had to just absorb it.

The issue is someone making 1-5 you do. You can save. They cannot.

Assuming you mean someone making much less than I do? I absolutely see that. 100% agree that this level of saving is not what the vast majority of parents can do. I fully support means-tested programs for students of low-income and middle-income families.

However, for parents that are high income and planning to fund out of cash flow, I worry that 1) they do not fully realize how expensive college has become and 2) they are not taking advantages of substantial tax savings from 529.

Every parent should visit the Vanguard College Calculator to get an idea of how much they should be saving each month to prepare to fund whatever percentage of college. (Ideally should start to plan while expecting.) Don’t be caught surprised! It’s totally fine if you prefer to go in-state or only find a portion of undergrad. The key is INFORMATION so that you can make a well-considered choice for your family and your values.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We're not saving at all towards it but we'll be able to cover it no problem when the time comes.

Make sure you fully understand what that cash flow looks like. (Look at the Vanguard calculator!)

We will be full pay. We have two kids and are planning on private for each. There will two years of overlap. There will be two years of around $180,000 in college expenses. We make $500K a year and that would be huge hit to our post-tax cash flow if we had to just absorb it.

Adding to this.

The tax advantages of 529s are substantial. Our kids have had huge gains the past 10 years and were not hit during the past few
Months due to being in age adjusted accounts. We also get a Virginia State tax break on the first $4,000 per account. (Each kid has multiple accounts)

In my mind, why would you not save for college given the tax breaks? Even if you could absorb $80K per kid per year (or $35K for instate), setting up a 529 is easy and saves so much over the long term.

Yes—the tax advantages are huge! Not really sure why someone wouldn’t take advantage if they have the $$ to save

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We're not saving at all towards it but we'll be able to cover it no problem when the time comes.

Make sure you fully understand what that cash flow looks like. (Look at the Vanguard calculator!)

We will be full pay. We have two kids and are planning on private for each. There will two years of overlap. There will be two years of around $180,000 in college expenses. We make $500K a year and that would be huge hit to our post-tax cash flow if we had to just absorb it.

Adding to this.

The tax advantages of 529s are substantial. Our kids have had huge gains the past 10 years and were not hit during the past few
Months due to being in age adjusted accounts. We also get a Virginia State tax break on the first $4,000 per account. (Each kid has multiple accounts)

In my mind, why would you not save for college given the tax breaks? Even if you could absorb $80K per kid per year (or $35K for instate), setting up a 529 is easy and saves so much over the long term.

My guess is that these parents are lying to themselves. It’s easier than actually saving and you get to spend more $$$ now. They think their child will get scholarships when the time comes, they will be at an entirely different income bracket. They hope that it will all work out. But Hope and wishful thinking is not a plan.

Yes—the tax advantages are huge! Not really sure why someone wouldn’t take advantage if they have the $$ to save

[Anonymous]

I'm saving for retirement. My child is the only grandchild for both sets of grandparents who are saving for her.

[Anonymous]

Anonymous wrote:I'm saving for retirement. My child is the only grandchild for both sets of grandparents who are saving for her.

So someone is saving. It doesn't matter who is. However, the grandparents can still use the 529 to save and take advantage of it growing tax free. Just dont overfund it, as you might not have anyone to transfer it to (if DC is only grandkid on both sides)

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm saving for retirement. My child is the only grandchild for both sets of grandparents who are saving for her.

So someone is saving. It doesn't matter who is. However, the grandparents can still use the 529 to save and take advantage of it growing tax free. Just dont overfund it, as you might not have anyone to transfer it to (if DC is only grandkid on both sides)

You can transfer down to future generations, use for grad school.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm saving for retirement. My child is the only grandchild for both sets of grandparents who are saving for her.

So someone is saving. It doesn't matter who is. However, the grandparents can still use the 529 to save and take advantage of it growing tax free. Just dont overfund it, as you might not have anyone to transfer it to (if DC is only grandkid on both sides)

You can transfer down to future generations, use for grad school.

yes, I just figured if only 1 Grandkid between the 2 families that their might not be anyone to transfer to in this generation But yes future generations and grad school are all good plans. My one DC has graduated and has no immediate plans for grad school, yet we are leaving the $60K+ that's in the account there: for either DC grad program or grandkids. Plan to do the same for next kid, except the next kid will likely drain the account for undergrad. However, it's an excellent way for those with generational $$ to start saving tax free for future grandkids/next generation. We won't close either kid's account just for this purpose

[Anonymous]

Anonymous wrote:Why did you gift your parents the money instead of just investing it yourself? This makes zero sense. You gifted. Indy with the expectation that it would be returned with interest? The hell you talking about Willis?

Yeah, foolish move in hindsight. We did this because we wanted to incentivize my parents to have some stake in contributing to their grandchildren’s education. Our kids were unaware that we gifted the money to make it happen. We were hoping that if we helped establish the accounts and subsidized a base contribution, my parents would leverage the tax break to throw in some additional money of their own to really supersize the account. For the last several years they’ve even been old enough to be exempt from the $4K VA tax cap. These are the same grandparents that like to host holidays and treat our extended family to vacations while asking me and my DH to foot all the bills behind the scenes. They very much insist on being acknowledged and respected as the matriarch and patriarch of the broader family.