Need advice on how to save for college - financially dumb parents and tricky situation

[Anonymous]

OP, your plan to send your kids to university in the UK (or elsewhere in the EU) is flawed.

Just because they have EU citizenship does not mean that they will be eligible for lower fees. Unless you move to the EU (at least couple of years, I believe) prior to them attending college they will have to pay fees at the "overseas student" rate. Those fees are comparable to US colleges (public ones) and the cost of living may well be higher.

When I went to college in Britain I had to get a letter from my British high school to prove my residency before I was accepted to my course. Your kids will DEFINITELY have to pay full overseas fees if they are US residents.

Here's a helpful list of those fees (remember they are in pounds):

http://www.thecompleteuniversityguide.co.uk/university-tuition-fees/reddin-survey-of-university-tuition-fees/foundation-undergraduate-tuition-fees-2014–15-overseas/

[Anonymous]

Anonymous wrote:

Anonymous wrote:Re. college overseas - not sure how it works in the UK, but in Ireland, where I'm from, you have to be resident in the EU for at least 3 of the 5 years immediately preceding college entry before you're eligible for a free college education there. Non-EU-resident tuition is about $15k/year.

I doubt anyone Americans are looking at colleges in Ireland. More like Canada, France, and the UK.

1) there are some great -- world class -- colleges in Dublin
2) OP said she was looking at EU, not Canada
3) the situation is the same for both France and the UK -- you need to be a resident to get the lower rates, otherwise you'll pay overseas student rates which are $15-20k or more per year, plus living expenses.

[Anonymous]

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Anonymous wrote:NP here. I am using the 401K to save for DD. I will be become 59.5 in her soph. year. When DD was a baby and I came up with a strategy, I realized that 401K is not considered an asset from a financial aid perspective...Plus, 401K is tax deferred on State and Fed, but not the 529.

This is only an option for those that had kids late...

But won't ou need the money in the 401k to retire? Not to be snark, but if in the future you need money to live during your retirement, is not like you can borrow it… So, how are you going to make up for this money you are taking out of your retirement plan to pay for college?

Unless you have other funds? Such as investment properties, inheritance, etc? But wouldn't those defeat the purpose of nothing having assists to qualify for financial aid?

Instead of 10K in retirement and 5K in a 529, I put 15K in retirement. Is it that hard to figure out?

You are a complete idiot.

There are no federal tax advantages to a 529. My DD will go to college, and I will retire. As for me being an idiot, you do not know me. So, I must assume you are insecure in your own decisions. Mine is planned out. Oh, the other thing is Company matches 401k Contribution...

No - there is a HUGE federal tax advantage of a 529 plan - the money is TAX FREE. So if you have 100K in a 401K or IRA vs. 100K in a 529, you really have $60K in the 401k/IRA versus the $100K in the 529 to spend for school.

Is this correct? Does it mean that you 529 saving is always tax free. Or is it because you save for 529 from your after tax income while you save for 401K from your pre-tax income?

In order to put $100K in a 401k you needed to earn 100K
In order to put $100K in a 529, you needed to earn 125K (assuming federal tax rate of 25% for illustrative purposes only!)

When you withdraw from the 401K, you pay tax at your current rate.
When you withdraw from your 529, you do not pay taxes - because you already did.

If you put your college savings into a Roth IRA it is functionally the same as a 529 except you have more flexibility and therefore can use it for retirement as well as college. Tax is already paid.

[Anonymous]

One other thing to consider it should both of your kids go to college? College is extremely expensive now and investing that money should be thought out carefully. You can always have them attend the community college for first 2 yrs and then enroll in local state school. Unless your kid is showing some truly great potential, trying to ship them off to an Ivy league school for the "college experience" is not a good financial move. And whatever you do don't jeopardize your retirement or home to fund their school. You have to have a place to live and a means to live after retirement and no guarantee that your kids will take care of you in your old age. It sounds selfish but you will be thinking about the money spent when you are clipping coupons and shopping at a food pantry for the poor when your 70. Unfortunately there are to many elderly out there now barely making it and can't get their Ivy League educated child to pick up the phone.