This is what we did, YMMV.

We are in Virginia. We bought the prepaid tuition for both our children 14(?) years ago. Our children are now 17 and 15. We fully funded the 529 to cover expected R&B. For us, we decided on $12,500 per year for that- so we have saved ~$50k in each for that.

Any more funding we do in non-educational accounts.- although we have designated them ourselves as potential education accounts. We have enough in total for one to go in state and one to go to an out of state private school fully funded. We have enough fore both to go out of state to a state school fully funded. We do not have enough if both go private and get absolutely no merit aid. If they do not go in state, we will use the money we get back for the first year of tuition (I think of the prepaid as equivalent to bonds- so we have been more aggressive on the other investing).

Scenario 1) Both go to In state schools. We are golden and have extra money- to spend ourselves in retirement, gift them a ( almost clunker) car, help them with graduate school expenses, fund their IRAs until they get real jobs- whatever- excellent spot to be.

Scenario 2) One goes in State and one goes out of state (public or private). We are still golden, but have less left for above extras. Would lean toward helping in state child with grad. school.

Scenario 3) Both go out of state OR one in state and one private- golden with no $ for extras.

Scenario 4) Both go private: They will have to get some merit aid if they don't want to graduate without loans. If the schools are worth it, I go back to work to pay for it without loans, but that is not an option for most of the private schools out there- it would have to be extremely well suited or elite. Otherwise I go back to work for our (DH & my) spending/saving/donating.

Fast forward, one is a junior and one is a freshman in HS. Junior is aiming for engineering- so will be in state or at an out of state public school. So, barring any huge changes, Scenario 4 is out. For many reasons, freshman is a harder match- so we will see what happens.

So, my suggestion is to fully fund 529s (in whatever form) for in state costs and save elsewhere for the other options.

use the calculator at savingforcollege.com

you plug in kids' age, expected rate of return on investments, etc. It defaults to reflect the average annual college cost increase over the last 20 years, but you can play with all the variables.

Anonymous wrote:Thanks so much for the very helpful responses! Now.... where to find those amounts in our monthly budget

1. Cut cable.
2. Stop drinking so much, you lush.
3. Rent out your spare room.
4. $25 hand-jobs in the Harris Teeter car park.

Thanks so much for the very helpful responses! Now.... where to find those amounts in our monthly budget

It is somewhat complicated by the need to estimate the rate of inflation of college costs, and the return on your investment.

A simplifying but reasonable assumption would be that you earn the same return on your investments as the rate of appreciation of college costs.

That means for a school that costs $40k a year, you would need to invest $160K in today's money to cover tuition.

Divide that $160K over 18 years and you would need to save $8900 a year, or around $750 a month in today's money. So for the 0 year old you would start saving $750 a month now, and increase that amount by the rate of inflation every year, and that should get you there or thereabouts.

Anonymous wrote:We are trying to do a gut check on our 529/college savings rate. We have a 6 yr old whose 529 has about $40K already. We have a 0 yr old who does not yet have a 529. Obviously we need to open that and start infusing it...

How much should we be contributing per month in order to try to have enough for each child to attend a private university for 4 yrs, based on the historic rate of return?

I am trying to research on this board as well but would appreciate helpful responses other than "this has been much discussed, search previous threads" Just looking for thoughtful responses from anyone knowledgeable or in a similar situation.

Starting with an initial deposit of $5,000, if you put in $1,000 a month for 18 years and average 4 percent growth, you should end up with $325,000. THat will cover $80,000 a year (plus assume you will continue to contribute $12K a year while your kid is in college, instead of putting it in the 529). That would cover current private school tuition inflated at about 2-3 percent a year.

If you put in $500 a month you will wind up with $168,000.

If you only average 2% growth you will save $266,000, but an average of 6% growth will get you $400,000.

We are trying to do a gut check on our 529/college savings rate. We have a 6 yr old whose 529 has about $40K already. We have a 0 yr old who does not yet have a 529. Obviously we need to open that and start infusing it...

How much should we be contributing per month in order to try to have enough for each child to attend a private university for 4 yrs, based on the historic rate of return?

I am trying to research on this board as well but would appreciate helpful responses other than "this has been much discussed, search previous threads" Just looking for thoughtful responses from anyone knowledgeable or in a similar situation.