Gifted Issues Discussion homepage Forums General Discussion college plan

We started saving as soon as DS was born. I'm at home with DS, so we're a single professional income household for now, but we're targeting payment for DS' full undergraduate tuition, room and board, and an entertainment allowance at a Canadian university. The American prices are, frankly, astronomical by comparison, and I'm not convinced that they carry any more weight than a top Canadian university domestically.

If DS is anything like us, he'll have an opportunity to do a graduate degree wherever he likes, at little to no personal cost. I see that as the appropriate time for foreigners to target an American education if there is uncertainty around the family's ability to pay out of pocket, as could be the case with us if I remain a stay-at-home parent for an extended duration.

"Maximizing Your Aid Eligibility"
http://www.finaid.org/fafsa/maximize.phtml

I can't see the logic of a 529 plan for someone like me with a moderate income and only one child. I put my savings into a Roth IRA. I can use the money for DD's college expenses, but any unused portion stays there for my retirement.

Yes, one should usually put the maximum (or as much as you can) in tax-sheltered retirement accounts, i.e. 401k, 403b, 457, IRA, before putting anything into a 529 plan, or regular taxable account, since retirement account assets aren't included for the means tests. (These comments apply to USA.)

However be aware that Roth withdrawals will count as parental income for FAFSA, even though it is not taxable income.

They aren't included for the means test, but then they also aren't available to pay tuition. Even among our kids, you can't count on your kid getting into one of the top 5 or so schools that have GREAT financial aid. At almost all the rest your kid is going to have loans as part of their FA package (so they aren't just "giving" you money). Also, income counts for a whole lot more than assets -- so as mentioned above, for the calendar year before your kiddo applies (ie, 2013 tax year for 2014 fall attendance), it is a good year to show low income. But you have to keep showing low income for the next few years, or you lose the need based aid.

If there are any young parents reading, we started saving by putting our pre-tax day care "refunds" right into college savings. Even after divorce with minimal help from my ex, I have been able to put two kids through private colleges because we saved early and put in quite a bit. If you have the discipline, it is a lot safer plan than counting on Harvard or Stanford admission.

Like Portia, we've had to make some very difficult decisions re: family income and wage earners in the household.

It's had consequences-- we have neither the retirement nor college savings that we would otherwise have had. Our house is still not paid off.

We've figured for the past five to seven years that I'd simply return to work AT the time of college in order to PAY for college attendance. That is, we always figured that my income would be used for that purpose, and maybe solely for that purpose, given what costs are.

In the end, though, this wound up being a factor against elite/expensive private schools because DD was clearly feeling pressure to make that kind of cash outlay and sacrifice (splitting the household) "worth it."

I hadn't counted on her feeling like that, I guess.

What exactly are you referring to here?

We established 529s at birth for both kids. We are sending them to public school (gifted program) as long as that makes sense academically, in order to be able to put more $ away for college.

Where they go will depend on their grades, their SAT scores, their athletic achievements and how much we will be able to save.

I managed to put myself through with a combination of loans, some small help from my mom and waiting tables. I stopped and restarted and did all of this at a state school 20 years ago. I'm pretty sure tuition is still reasonable following that model.

I somehow ended up with a job at a major bank that enabled me to pay my loans off in two years...still not quite sure how it all happened, a combination of timing and luck I suppose, but I did it with a humanities degree from a state school.

My husband had undergrad and MBA paid for by his parents.

My kids will get more help from us than I did from my parents, but the details will have to be figured out as we get closer.

We planned early on BUT then I stopped working (long story..it wasn't entirely intentional) and although our lives got a lot less hectic saving for college went out the window. We have some money that is to be used for retirement & college but because of the economy have been trying not to break into it.

We currently have a daughter in private university (one that is less expensive than Harvard but more than public university), and a son who is a freshman. Luckily my parents did a better job at saving and are willing to help us. (My parents did other things to help my two brothers, and they figure it's better to help us now.) We did pay for about 1/2 of my daughters first year with money we had put in a college fund in her name.

I expect that DS14 will end up at public university. A large research university is probably a better fit for him. My daughter is not gifted but has LD's and really needed a place where class sizes were small with teacher that are in it 100% for the teaching. If my parents keep helping us through my daughters BA we should be able to afford a public university for my son.

Not included in the means test = FAFSA pretends you do not have this money, it is not considered in the calculation of your Estimated Family Contribution (EFC). Means = financial resources or assets

Not available to pay tuition = Withdrawals from 401K accounts are typically not allowed until age 59-1/2. Withdrawing from 401K accounts early typically incurs a hefty penalty. When 401K funds are withdrawn to make them available to pay tuition, the amount of the withdrawal is taxable income, and is used in calculating the EFC.