PDA

View Full Version : College saving ****** *******s.



skycat
8/1/2006, 01:47 PM
So I'm looking into 529 plans. But with 50 states and multiple plans per state, well that's a lot of plans.

Anybody on here look at these lately? Any recommendations?

ousoonerfan
8/1/2006, 01:56 PM
The Oklahoma plan is pretty good. You can deduct contributions up to $20,000 on your Oklahoma tax return (If you live in Oklahoma)

www.ok4saving.com

skycat
8/1/2006, 02:00 PM
I live in Texas, so state income tax isn't a concern.

Specifically, I'm interested in the age based plans that shift money automatically from more aggressive to more conservative as your kid gets closer to college age. I can do all this research myself, but wouldn't mind taking advice from people that may have gone through this process already.

BeetDigger
8/1/2006, 02:02 PM
Great question.

Mjcpr
8/1/2006, 02:04 PM
I live in Texas, so state income tax isn't a concern.

In your case, you can't deduct it from your property taxes.

:D

ousoonerfan
8/1/2006, 02:06 PM
My kids are both on the Oklahoma plan. The boy is five and the girl is two. I've got them both on the plan that shifts as they get older. The money comes out of my checking account automatically each month. It works really well. Relative's can even contribute to their 529's. No complaints here.

Hamhock
8/1/2006, 02:11 PM
My kids are both on the Oklahoma plan. The boy is five and the girl is two. I've got them both on the plan that shifts as they get older. The money comes out of my checking account automatically each month. It works really well. Relative's can even contribute to their 529's. No complaints here.


i'm doing the same thing, except with my kids, not ousoonerfans'.

if you have any rich relatives, they can do some creative estate planning with 529s.

dave ramsey doesn't like 529s. he likes education savings account better. hey says to put the first $2k into an ESA and the rest into 529.

you can go to www.savingforcollege.com and compare 529s. i use oklahoma's.

skycat
8/1/2006, 02:21 PM
In your case, you can't deduct it from your property taxes.

:D

:mad:

If I ever start a list, you're going straight to the top.

:mad:

skycat
8/1/2006, 02:23 PM
dave ramsey doesn't like 529s. he likes education savings account better. hey says to put the first $2k into an ESA and the rest into 529.

you can go to www.savingforcollege.com and compare 529s. i use oklahoma's.

I don't think that Dave Ramsey's ideas square very well with mine.:texan:

Thanks for the link.

Hamhock
8/1/2006, 02:24 PM
I don't think that Dave Ramsey's ideas square very well with mine.:texan:




why do you hate money?

;)

Okla-homey
8/1/2006, 02:39 PM
This is gonna sound old and archaic to you people, but we started buying $100 savings bonds each payday when the kid was born. Her college was paid for by the time she was a sophomore in high school. No muss, no fuss.

Just saying.

BeetDigger
8/1/2006, 02:42 PM
why do you hate money?

;)


And education?

;)

1stTimeCaller
8/1/2006, 02:43 PM
And education?

;)

And America?

;)

skycat
8/1/2006, 02:51 PM
This is gonna sound old and archaic to you people, but we started buying $100 savings bonds each payday when the kid was born. Her college was paid for by the time she was a sophomore in high school. No muss, no fuss.

Just saying.


I'm glad that worked for you, but 529's have a number of advantages that make them worthwhile. Even if an investor doesn't pick the optimum plan, they'll almost certainly be better off using one.

Beef
8/1/2006, 02:59 PM
:dean: Make your kids save their own damn money in their own damn jars under the bed. :dean:

Okla-homey
8/1/2006, 03:03 PM
I'm glad that worked for you, but 529's have a number of advantages that make them worthwhile. Even if an investor doesn't pick the optimum plan, they'll almost certainly be better off using one.

But if you buy the bonds by payroll allotment its pretty painless. You don't miss money you don't see. No matter what, just do something systematic. If becomes a matter of contributing to the kids college fund "when you can afford it" you're probably doomed to fail.

ousoonerfan
8/1/2006, 03:10 PM
But if you buy the bonds by payroll allotment its pretty painless. You don't miss money you don't see. No matter what, just do something systematic. If becomes a matter of contributing to the kids college fund "when you can afford it" you're probably doomed to fail.


The money comes out automatically from the checking account on the same day as the direct deposit from the wife's paycheck. Never even miss it.

Hamhock
8/1/2006, 03:14 PM
But if you buy the bonds by payroll allotment its pretty painless. You don't miss money you don't see. No matter what, just do something systematic. If becomes a matter of contributing to the kids college fund "when you can afford it" you're probably doomed to fail.


ditto that.

kinda like tithing and vacations. if you wait until you have the extra money, it'll never happen. which is way an autodraft into a 529 is a great idear.

skycat
8/1/2006, 03:51 PM
But if you buy the bonds by payroll allotment its pretty painless. You don't miss money you don't see. No matter what, just do something systematic. If becomes a matter of contributing to the kids college fund "when you can afford it" you're probably doomed to fail.

I'm pretty good at savings. That's not a problem. A pretty hefty chunk (well hefty for a non-Bruce like me) is socked away already.

A couple of the major benefits of the 529 are the fact that any earnings made in the account are exempt from federal income tax; anyone (read "grandparents") can contribute if they feel like it; and while it's specifically set up in Biggun's name, I have full control of the money, so he can't blow it all on a car or whatever. There are a number of other cool things about them too.

So in other words, I've already decided that I want a 529 for Biggun. Right now it's just a matter of which 529.

GottaHavePride
8/1/2006, 03:55 PM
Step 1: Make kid smart.

Step 2: Have kid do well on PSAT.

Step 3: Kid becomes National Merit Scholar.

Step 4: OU pays your kid to go to college.

;)

1stTimeCaller
8/1/2006, 03:56 PM
I'm pretty good at savings. That's not a problem. A pretty hefty chunk (well hefty for a non-Bruce like me) is socked away already.

A couple of the major benefits of the 529 are the fact that any earnings made in the account are exempt from federal income tax; anyone (read "grandparents") can contribute if they feel like it; and while it's specifically set up in Biggun's name, I have full control of the money, so he can't blow it all on a car or whatever. There are a number of other cool things about them too.

So in other words, I've already decided that I want a 529 for Biggun. Right now it's just a matter of which 529.

get the one that will make the most money.

Dave Ramsey and I say, YWIA. ;)

skycat
8/1/2006, 03:57 PM
Step 1: Make kid smart.

Step 2: Have kid do well on PSAT.

Step 3: Kid becomes National Merit Scholar.

Step 4: OU pays your kid to go to college.

;)

You have any options a little more palatable than that? ;)

ousoonerfan
8/1/2006, 04:22 PM
You have any options a little more palatable than that? ;)


Go with what GHP said and spend all the money you saved on pr... nevermind!!1:D

Hamhock
8/1/2006, 04:35 PM
they pay you well for scoring high on the ACT also.

olevetonahill
8/1/2006, 06:15 PM
I got drafted served 2 yrs went to school on the GI bill
So make kid do 2 or 3 yrs in the service. nuff said ;)

Okla-homey
8/1/2006, 06:26 PM
I got drafted served 2 yrs went to school on the GI bill
So make kid do 2 or 3 yrs in the service. nuff said ;)

good point. I got $36,000 dollars worth of GI Bill eductaional benefits which I'm using now without contributing a cent while I was in the air farce. Even a two-year hitch will net that.

olevetonahill
8/1/2006, 06:30 PM
good point. I got $36,000 dollars worth of GI Bill eductaional benefits which I'm using now without contributing a cent while I was in the air farce. Even a two-year hitch will net that.
I may be way off . But I think it should be Mandatory for a kid to do 2 yrs when they turn 18 or Grad, High school

skycat
8/1/2006, 07:14 PM
You guys aren't very helpful.

;)

Okla-homey
8/2/2006, 06:56 AM
I may be way off . But I think it should be Mandatory for a kid to do 2 yrs when they turn 18 or Grad, High school

Noooo. Please noooo. So many boys are being raised as wuss's these days (you know, pink shirts, popped collars, shell necklaces, worn flip-flops, hair-gel, soccer, etc.) they would a liability far exceeding their intrinsic worth if the military had to take them.

Okla-homey
8/2/2006, 06:57 AM
You guys aren't very helpful.

;)

I told you bro. Two 100.00 savings bonds per month starting NOW. If the kid gets a scholly, joins the military or ends up in jail, you can blow the money on world travel and hookers without suffering pesky 529 issues. Done.

skycat
8/2/2006, 08:43 AM
I told you bro. Two 100.00 savings bonds per month starting NOW. If the kid gets a scholly, joins the military or ends up in jail, you can blow the money on world travel and hookers without suffering pesky 529 issues. Done.

First, I already have a percentage of my employee stock plan earmarked for the kid. So like I said before, immediate savings is not a problem.

If any of that stuff happens with a 529 you could either: a) roll it over to a family member (sibling, parent, cousin, whatever) with no penalty, or b) (for many of the scenarios anyway) pull it out and use it however I like, but have to pay taxes on it like any other investment.

BeetDigger
8/2/2006, 10:57 AM
I may be way off . But I think it should be Mandatory for a kid to do 2 yrs when they turn 18 or Grad, High school


Actually, I think you are on target. Two years of public service of some sort at least. Would have been good for all of us.

1stTimeCaller
8/2/2006, 11:00 AM
Actually, I think you are on target. Two years of public service of some sort at least. Would have been good for all of us.

I served one weekend a month for 6 years, 11months and 9 days. Look what it's done for me! ;)

That's how I got my college paid for. Free tuition, and about $500/month from drill pay and GI Bill. If I had joined the Guard before I joined the Reserve I would have made an extra $500/month due to the Guard unit I was in.

mdklatt
8/2/2006, 11:10 AM
So I'm looking into 529 plans. But with 50 states and multiple plans per state, well that's a lot of plans.



I remembered reading an online article about these awhile ago: http://www.slate.com/id/2070062/


The long-run potential of the plans has been seriously compromised by excessive "management" fees that states have added to these plans. In addition, all but a few of the plans limit investors to a single financial firm that offers only two or three investment options. The reality of 529 plans is that much of the tax subsidy is merely going to pay these higher fees to states and financial companies. Under some plans, families would actually do worse investing in 529 plans than in traditional savings instruments.



Of the 45 states that have established plans, 27 of them charge expenses of more than 1 percent per year, and 10 of those take additional sales loads. Even the best 529 plans, the ones run by states that chose low-expense investment companies—notably TIAA-CREF and Vanguard—are still charging more than they would for similar, non-529 investments.

Okla-homey
8/2/2006, 11:20 AM
Actually, I think you are on target. Two years of public service of some sort at least. Would have been good for all of us.

WTF would administer it? There would have to be a federal adminstration set-up with vast policies and regulations. Then, the size of the needed bureaucracy to evaluate service options, monitor kids' service, credit their service (or not) and consider waivers and requests for exceptions is mind boggling. Of course, the states would have to get into the act too. We'd end up with an office in every town (maybe several in big places) staffed by civil servants moving paper from stack to stack and a bunch of p1ssed-off kids and parents. No thanks.

skycat
8/2/2006, 11:31 AM
I remembered reading an online article about these awhile ago: http://www.slate.com/id/2070062/

Thanks, that's interesting.

skycat
8/2/2006, 11:40 AM
Just finished reading the article. Clearly choosing the wrong 529 would be a bad idea.

Mostly the article says, "Don't use Arizona's plan!"

It also listed Tennessee, Minnesota, Michigan, and Utah as having relatively low fees. Now I'll have to figure out if the still relatively high fees on those plans outweighs the tax and other benefits.

Thanks for giving me another starting place on plans to look at.

skycat
8/2/2006, 11:45 AM
Of course I just notice the article is 4 years old.

Now I need to figure out if it still applies.

skycat
8/2/2006, 12:23 PM
I don't know if anyone else cares, but since there have been a whole gaggle of rugrats either born or conceived around here lately, I'll keep posting stuff here as I come across it.

It seems that while fees are still something that an investor needs to keep an eye on, competition has pushed them down below the comparable fees payed on regular mutual funds in many states. link (http://articles.moneycentral.msn.com/Investing/MutualFunds/CollegeSavingsPlansCutTheCosts.aspx?page=all)

I've been digging around in Hamhock's link, and it looks to me like Oklahoma's plan would be a very good option for all of you Oklahoma residents.

I've read in several links that TIAA-CREF and Vangaurd have fees lower than most other plan managers so I'm searching for them and comparing plans that way.

skycat
8/13/2006, 02:25 PM
Okay, for anyone out there that may be thinking about this stuff in the near future, and might be interested in what someone else has done, I've decided to go with the Ohio Direct-sold plan.

Very low fees, an excellent plan manager who has done a good job with the investments so far (Vanguard), and a decent selection of investment options.

From my research it looks like seeking out low fees is the most important thing to do. Of course, because you can gain state tax advantages, you should check out your home state's plan first (OK's is pretty good). Unless you live in Texas. No joking around, the texas plan succs.

Minnesota, Michigan, Oregon, and Utah all have plans that are also worth checking out for out of state residents.

rebmus
8/13/2006, 02:49 PM
MS has a couple of programs... texas may have the same.

basically, i can sign a contract and buy a college education for my kids at "todays" price at any junior/senior college. i can do 4 years at a senior, 2 years at a junior, or 2 junior/2 senior college.

with the rising costs of colleges,,, that's likely a better return than most "investments" and most importantly,,, it's guaranteed (something the stock market wouldn't do).

imo, that's the best route to take IF texas offers something like that. (i didn't click links, so maybe the do).

skycat
8/13/2006, 02:54 PM
MS has a couple of programs... texas may have the same.

basically, i can sign a contract and buy a college education for my kids at "todays" price at any junior/senior college. i can do 4 years at a senior, 2 years at a junior, or 2 junior/2 senior college.

with the rising costs of colleges,,, that's likely a better return than most "investments" and most importantly,,, it's guaranteed (something the stock market wouldn't do).

imo, that's the best route to take IF texas offers something like that. (i didn't click links, so maybe the do).

Those can be a good deal, but then they lock you into going to school in that state. Or at least I think they do. That's not something that I want to do.

rebmus
8/13/2006, 03:04 PM
Those can be a good deal, but then they lock you into going to school in that state. Or at least I think they do. That's not something that I want to do.
true... it depends on how your state sets it up.

some states allow only a % of the money to apply to "out of state" colleges. definitely another consideration.

my suggestion, enroll in MPACT and send your kid to ole miss. :D j/k.

seriously, great question and i'm glad to see you're planning ahead for your kids. this world needs more parents like you.

i'd like to see a "national program" like the state programs... a program that allows parents to buy a 4 year college education (at ANY public university in the US) at "today's price". although, our congress would blow the money and not be able to "pay up" when the time came... that's another subject tho.