How much is enough in a 529?

[calico]

We started to contribute when my oldest was a baby with the idea we would pay for most if not all of a 4-yr state school college. There is more than 50k in there now and she has like 11 more years of school and our youngest is almost 4. We are older parents who will be retiring about the time she goes to college (hopefully) and have healthy diversified investments and retirement now. I don’t want to tie up too much money in the 529 for education in case it grows to more than we need and we have to take tax hit to redirect those funds for normal expenses. But at what point is it enough in there that we can stop adding money and just let it grow? Should we put more in other accounts to later fund that? My husband is just following what he thought he heard the FA say but we disagree on what he said. Any advice is appreciated, thanks!

[flygirl]

My DS has 9 yrs until college and our FA told us we’d need 100K to fund 90% of the cost of a public 4 yr university so we’ll keep contributing to get there. If you have 11 yrs left, at 7% rate of return, 50K would be $105k roughly. If you think that is enough, then you could stop. Do you have money for your other children or is the 50K supposed to cover all of their school? I don’t think 50k will cover multiple children.

[lust2hart]

I work at a 4-year university and can give some figures for in-state and out-of-state costs now, and 10 years ago. I know this doesn't directly answer your question and may not be super helpful since the sample size is 1, lol, but here ya go, nonetheless -

Now:
IS $15-20k per year
OOS $35-40k per year

2010/11:
IS $12-15k per year
OOS $25-30k per year

ETA: These figures are, according to the university website, inclusive of tuition, fees, housing, dining, and books.

[mommin]

I will start by noting that we have four children and there will be a couple of times during their college experience that we will have three in college at the same time. So, while we love them dearly, we will not be paying for all the things at any college they choose to attend. I think it is important to identify what you want to pay for and what you may be able to cash flow.

We have a religiously affiliated university with several campuses (different states but same tuition fees) that we have identified as the starting point for our savings. DH and I are saving to cover the cost of four years of tuition to any of these universities which is about $25k total (currently $5970/yr). Our kids will be responsible for living expenses and possibly books.

If our children choose to attend another university they will still be given this same $25k toward their tuition but they will be responsible for the rest. This is a fluid thing and we may increase amounts or cover more when they get to college but it is important to us to try to keep it as equal as possible. Our oldest is in high school and our youngest is in 1st grade so it will be interesting to see how this evolves.

[whitemerlot]

I'm pretty interested in this topic. My kids are 8 and 10 and the calculator on saving for college says if their accounts were at 77k and 71k now, we could stop saving for in state tuition at a 4 year university. This assumes a default of 7% return on the money and 2.5% annual tuition increase. It's projecting my 8 year old's tuition to be $141k and my 10 year old's to be $134k. The vanguard calculator project a 5% increase and say we should have $86,500 for my 10 year old and about $83,000 for my 8 year old. 


Our kids will not get need based scholarships. We have been saving in the Utah Age Based Aggressive Global 529.

[wildrice]

Aug 20, 2020 18:56:35 GMT -5 mommin said:

I will start by noting that we have four children and there will be a couple of times during their college experience that we will have three in college at the same time. So, while we love them dearly, we will not be paying for all the things at any college they choose to attend. I think it is important to identify what you want to pay for and what you may be able to cash flow.

We have a religiously affiliated university with several campuses (different states but same tuition fees) that we have identified as the starting point for our savings. DH and I are saving to cover the cost of four years of tuition to any of these universities which is about $25k total (currently $5970/yr). Our kids will be responsible for living expenses and possibly books.

If our children choose to attend another university they will still be given this same $25k toward their tuition but they will be responsible for the rest. This is a fluid thing and we may increase amounts or cover more when they get to college but it is important to us to try to keep it as equal as possible. Our oldest is in high school and our youngest is in 1st grade so it will be interesting to see how this evolves.

Do you get some kind of tuition break there? I find it really unbelievable that you could pay tuition for 4 years at ANY college or university for 25k. Even when I started college at a public state university 20 years ago, that barely would have covered it. The public college where I work, which is considered affordable (in comparison to others), is just over 5k per semester for tuition and fees.

With 4 kids I can't blame you for not being able to do more than that! But it's probably not an accurate target for those who are able to or want to pay for a larger portion of college for their kids.

[farmvillelover]

Aug 20, 2020 19:15:11 GMT -5 whitemerlot said:

I'm pretty interested in this topic. My kids are 8 and 10 *** This assumes a default of 7% return on the money and 2.5% annual tuition increase. ***


Our kids will not get need based scholarships. We have been saving in the Utah Age Based Aggressive Global 529.

My kids are 4 and 8 and we're also with the Utah plan (one child is global and one is domestic). I have to say, I don't use a 7% assumption, usually I go with 4-5% max. That's the pessimist in me I guess.

I like this calculator: www.savingforcollege.com/calculators/college-savings-calculator 

If my kids go to an in state public university, we'd have more than enough bc we have tuition waivers and only need to pay for room and board. If they go private, I don't know where we'll fall since I'm assuming a private would cost about $250k for an undergrad degree (in today's dollars) including room and board.  I also don't expect they'll get any need based aid/grants.  
I'm going to make it crystal clear that unless it's an amazing private university (ex Caltech, Stanford...maybe USC for other reasons), they need to seriously consider the public option because of cost. That is a lot of money.

[whitemerlot]

@farmville that’s the calculator I used. It does put a 7% default in for growth. I know when the time comes we will be able to cash flow a lot of tuition for our kids so I don’t want to over save either.

[Cappy]

If anyone has the good fortune of over-saving 529 plans can be used to pay for study abroad.

Our average semester abroad is anywhere from 15k to 25k but can go up to 30k if you pick a pricey destination/program. Summer programs are usually 6-8k but have fewer credits (3-6) and fewer scholarships (more competition since about 70% of enrollment is for summer) plus financial aid is bundled for the year so summer generally comes out of that same pot and there is rarely "leftover".

I'm always happy to share cost saving tips if any of you think study abroad is in your kid's future. I see students make poor choices that increase the cost of their experience all the time due to lack of financial literacy.

[goldengirlz]

We have about $55k in a 529 with about a decade to go. We contribute $500/month for one kid.

Based on that calculator, and using a 5% annual return, we’d over-save by $95k if she goes to in-state public but be $48k behind if she goes to a private school. That tells me that after a certain point, we should stop funding the 529 but keep saving in an IRA for more flexibility since any extra could be used for retirement.

[biscoffcookies]

Aug 20, 2020 19:20:26 GMT -5 wildrice said:

Aug 20, 2020 18:56:35 GMT -5 mommin said:

I will start by noting that we have four children and there will be a couple of times during their college experience that we will have three in college at the same time. So, while we love them dearly, we will not be paying for all the things at any college they choose to attend. I think it is important to identify what you want to pay for and what you may be able to cash flow.

We have a religiously affiliated university with several campuses (different states but same tuition fees) that we have identified as the starting point for our savings. DH and I are saving to cover the cost of four years of tuition to any of these universities which is about $25k total (currently $5970/yr). Our kids will be responsible for living expenses and possibly books.

If our children choose to attend another university they will still be given this same $25k toward their tuition but they will be responsible for the rest. This is a fluid thing and we may increase amounts or cover more when they get to college but it is important to us to try to keep it as equal as possible. Our oldest is in high school and our youngest is in 1st grade so it will be interesting to see how this evolves.

Do you get some kind of tuition break there? I find it really unbelievable that you could pay tuition for 4 years at ANY college or university for 25k. Even when I started college at a public state university 20 years ago, that barely would have covered it. The public college where I work, which is considered affordable (in comparison to others), is just over 5k per semester for tuition and fees.

With 4 kids I can't blame you for not being able to do more than that! But it's probably not an accurate target for those who are able to or want to pay for a larger portion of college for their kids.

Brigham Young University, affiliated with the Church of Jesus Christ of Latter Day Saints, has that tuition rate. I believe the church heavily subsidizes it’s operating costs.

[gt7301b]

I am a bag of mixed feelings on college costs. On one hand I feel like the rate that college costs are growing is unsustainable and the bubble has to break.

The estimated cost in-state per year for my DS who is 4 is 166k, but the college calculator assumes that we will get receive 2/3 of the cost of tuition in scholarships and grants and that seems optimistic based on our current income. In this scenario we would have excess savings.

If he goes to an out-of-state school we won't have nearly enough of the estimated $270k, but I can't imagine a scenario we we pay that much for undergrad.

I don't really see a situation where we will actually end up with too much money as he can use excess funds for grad school. If we do end up with excess funds cause of a plethora of scholarships I will gladly pay the taxes.  If you are disagreeing on what the FA said why not just reach back out to them and get clarity?

[ohgillian]

Aug 21, 2020 11:36:49 GMT -5 goldengirlz said:

We have about $55k in a 529 with about a decade to go. We contribute $500/month for one kid.

Based on that calculator, and using a 5% annual return, we’d over-save by $95k if she goes to in-state public but be $48k behind if she goes to a private school. That tells me that after a certain point, we should stop funding the 529 but keep saving in an IRA for more flexibility since any extra could be used for retirement.

The bolded is what our Vanguard advisor had us switch to about a year ago. I have a 7YO and 10YO and we have about $130k in each of their 529s. I wasn't comfortable putting any more into the 529s, so our FA had us start contributing more to our IRAs instead. 

{goldengirlz Lately I feel like half of my GBCN posts are just me agreeing with you and I promise I"m not a crazy stalker. }

[formerlyak]

farmvillelover I’m curious about the tuition waivers you mention. We live in the same state and I work for the state university system, and I only get a tuition discount if it’s for me and it’s only a partial. Is this through one of your employers?

[imojoebunny]

It seems like there is a wide variety of payments, within a given school. My nephews go to top colleges, and get a great deal of assistance, but they are very good testing students who are top of class, whose parents are public servants with Phds. My kids, with our assets, I do not anticipating getting much of anything. We won't have regular income at that time, when my DD starts, so maybe she might get some help or scholarship, if she digs hard to find it, but it would be unfair to expect her to "figure it out" with our financial situations. I still get pissed when I think about my friend who had to drop out of school because her parents bought matching Jags when she went to school, instead of helping her with college. It is virtually impossible to "put yourself through school" now, unless you are a 95% or above student, who goes to a lesser school to get the money, and has some good work/study opportunities. We have enough saved to fully pay for state school now. If they want private or out of state, we will consider the options, but my kids are pretty pragmatic, so I don't see them picking Sewanee or Colby, unless they are being paid to play.

[farmvillelover]

Aug 23, 2020 10:41:47 GMT -5 formerlyak said:

farmvillelover I’m curious about the tuition waivers you mention. We live in the same state and I work for the state university system, and I only get a tuition discount if it’s for me and it’s only a partial. Is this through one of your employers?

Sorry, it's a VA tuition waiver for children of qualifying military veterans with at least a zero disability rating (my H is). It covers tuition for any in state public university up to a PhD so it's a great value so long as my kids can get into one of the schools. There are so many, so hopefully one of them fits for them. But I don't want to tell them those are their only choices.

[farmvillelover]

Aug 22, 2020 13:48:09 GMT -5 gt7301b said:

The estimated cost in-state per year for my DS who is 4 is 166k, but the college calculator assumes that we will get receive 2/3 of the cost of tuition in scholarships and grants and that seems optimistic based on our current income. In this scenario we would have excess savings.

I cannot stand how they assume a student/family will get scholarships and/or grants. I'm helping a cousin of mine navigate this road for her high school daughter and son, and that aid is more in the form of student loans and not much of free money like scholarships or grants. Unfortunately, they don't take into account your COL so someone making $150k in the bay area of CA, while they make decent money, isn't similarly situated as someone living in somewhere like Lansing, MI or other LCOL.  

I have also seen that the in state public universities in my state (CA) don't really give much in the way of scholarships and grants for most people.

[mommin]

Aug 20, 2020 19:20:26 GMT -5 wildrice said:

Aug 20, 2020 18:56:35 GMT -5 mommin said:

I will start by noting that we have four children and there will be a couple of times during their college experience that we will have three in college at the same time. So, while we love them dearly, we will not be paying for all the things at any college they choose to attend. I think it is important to identify what you want to pay for and what you may be able to cash flow.

We have a religiously affiliated university with several campuses (different states but same tuition fees) that we have identified as the starting point for our savings. DH and I are saving to cover the cost of four years of tuition to any of these universities which is about $25k total (currently $5970/yr). Our kids will be responsible for living expenses and possibly books.

If our children choose to attend another university they will still be given this same $25k toward their tuition but they will be responsible for the rest. This is a fluid thing and we may increase amounts or cover more when they get to college but it is important to us to try to keep it as equal as possible. Our oldest is in high school and our youngest is in 1st grade so it will be interesting to see how this evolves.

Do you get some kind of tuition break there? I find it really unbelievable that you could pay tuition for 4 years at ANY college or university for 25k. Even when I started college at a public state university 20 years ago, that barely would have covered it. The public college where I work, which is considered affordable (in comparison to others), is just over 5k per semester for tuition and fees.

With 4 kids I can't blame you for not being able to do more than that! But it's probably not an accurate target for those who are able to or want to pay for a larger portion of college for their kids.

Yes, so long as you are a church member and have ecclesiatical endorsements you will pay $5970 per year ($2985 per semester) currently. This amount is subsidized by tithes and donations and a very large endowment. That has increased over the years, as most tuition does, but over the last five years the increase has been less that $400 total. My children are obviously not required to go to any of these universities but it is a super inexpensive, world-class education so I know that my oldest two already have hopes of attending. My younger two are elementary age so they are still wild cards. If they choose otherwise we are still happy to give them the same amount toward whatever education or training path they choose. 

I certainly don't encourage anyone who wants or has the ability to save more to avoid doing so based on my amounts. These were simply to show how we determined an amount (picked a university and totalled four years of tuition) as the OP had asked and I put specific amounts to it to not scare anyone off that can't save a bazillion dollars for college. This board often throws around really big numbers because most of the posters have above or far-above average income and I wanted to show that it's okay to not have a six-figure college savings for each child. 

[sandandsea]

The calculator shows us about $140k and $150k for our two kids respectively in 10 and 14 years. We are expecting zero help/scholarships/discounts for college and I’d like to pay for tuition, room and board for an in state college. I want the kids to pay for their own living expenses and extras like activities, clubs, gas, etc. We have used the daycare flex spending reimbursement to put $5k per year into their 529s. Once ds2 was born have done $5k each per year. We also did and may do a larger lump sum (10k one year) again to try to invest more now so it has more time to grow.

Once ds1 went to kindergarten, we saved money by changing from daycare costs to before/aftercare costs so that went towards the extra $5k college fund savings for 2 kids vs one.

[Cappy]

Aug 25, 2020 22:52:51 GMT -5 sandandsea said:

The calculator shows us about $140k and $150k for our two kids respectively in 10 and 14 years. We are expecting zero help/scholarships/discounts for college and I’d like to pay for tuition, room and board for an in state college. I want the kids to pay for their own living expenses and extras like activities, clubs, gas, etc. We have used the daycare flex spending reimbursement to put $5k per year into their 529s. Once ds2 was born have done $5k each per year. We also did and may do a larger lump sum (10k one year) again to try to invest more now so it has more time to grow.

Once ds1 went to kindergarten, we saved money by changing from daycare costs to before/aftercare costs so that went towards the extra $5k college fund savings for 2 kids vs one.

This is such a fantastic strategy!