Miss Gioia

Tuesday, June 24, 2008

College Savings: How much is too much?

We started saving for Miss G's college education in 2005, before we moved to China. I signed up for a Upromise account, a 529 account, and a credit card* which allocated a percentage of spending back into the kitty.

So we have been regularly making deposits and that little 529 account has grown. But I wonder - how much is enough? How much is right? There is an easy way to start thinking about the answer - plenty of calculators exist to help people work through the time value of money problem.

But solving math equations is not my issue. I really am struck by the question of how much we as parents should be contributing to her education. Do we save enough to pay for all of a four year Ivy league degree in 2025? Or do we save enough for half of in-state tuition at a public school? What if she wants to do a gap year hiking in the mountains of Peru? How does that affect our estimated outlays?

Here is the thing: I opted for an in-state school over an expensive private school for undergrad. I chose free tuition and a monthly stipend over a fancy name. I also became an RA after my first year because it came with free housing. Am I worse off in life because I didn't go to Duke? Or am I better off because I chose the in-state school and paid my own way? Perhaps I am innately a practical person who works hard, someone who would have succeeded** regardless of the school?

Riddle me this - If I had had a bank account in my name ready for the spending, would that have impacted my school choice? If so, would I have been better or worse off by going a different route? Would it have impacted my character, my work ethic, my drive?

How much should we save? Not an easy thing to decide.

*Although spending to save is kind of stupid, but makes sense somehow. I guess.

**Have I even succeeded? Defining success is a whole other discussion.



Blogger Johnny said...

We started a 529 fund when we got married. We also had to consider the same things. The one thing we've agreed is not to reveal the existence of the 529 until the kids have decided upon college. And if they decide to backpack in Europe, no 529 goes towards that. It's not a trust fund to party, it's a dull, boring investment in their future. And no, a pitcher of beer is not considered "experience".

June 24, 2008 8:08 AM  
Blogger Jeremy & Jacquelyn Carman said...

Tough questions indeed. I guess the important thing is that you are doing something.

By the way, yours and beuk's blog are blocked here in China, while the normal blogspot servers are open! Craziness... Can't ever seem to win.
(I've viewing this via a proxy.)

June 24, 2008 8:21 AM  
Blogger John & Michelle said...

I agree with Johnny! We don't have our daughter yet (LID 3/8/07 for Raegan Adele), but I have always believed that along with all the fun stuff that being a mom will bring...it is our job to teach her to be a strong, confident, and independant young lady. With that comes lessons about money, charity, faith, and being an all around good citizen. We also will not reveal our savings for her until she has selected a college.

June 24, 2008 8:28 AM  
Blogger BevS97 said...

Interesting dilemma. I am British but lived in the USA for 10 years which happened to include the college years. My parents & I were incredibly niave about how much it would all cost, and the message from the universities and my high school was, choose the one you want to go to and you will get Financial Aid to get there.

So I went to a fairly pricey private Uni, and scoffed at friends heading off to Penn State. Only they had the last laugh when I left University with massive massive student loans and have spent most of my adult life in debt. If you start Adult life with a massive debt over your head then it makes life so much more difficult, especially as for various reasons I didn't end up going into an amazing high powered job, so I had the debts but not the salary to match.

So, I am waffling... but it is something I feel pretty strongly about. I am pleased I went to Lehigh, I had an amazing time and met some wonderful people, but as a financial investment, Penn State would have made much more sense.

June 24, 2008 5:34 PM  
Blogger Jonah Keegan said...

It's a tough balance to weigh teaching your children financial security against providing them with every opportunity. One trend in your favor is that the wealthiest private schools are eliminating tuition for middle and upper-middle class families, making their educations more accessible, IF you can get accepted! More private schools will adopt these policies by the time your children go to school, but it is only a minority that can afford to offer so much aid. My own goal is to save enough so that my children can pay off their student loan debt in ten years or less without spending more than 5% of their income each year servicing the loans.

If you are interested in still more ways to help you save for college, check out Freshman Fund. I am one of the company's founders.

Freshman Fund is a free college savings gift registry that lets friends and family gift directly into your child’s college fund. It can help you supplement your college savings when birthdays and holidays roll around for your children, or for you!

June 24, 2008 11:51 PM  
Anonymous Tom said...

So does the UPromise actually pay off. I remember the ads running on TV all the time. Then they just stopped. Hmmm I wonder why? Oh well. I'm thinking of getting a 529 when I have kids. Still don't, but I saw how my parents struggled to put me through school, and I would just hate to go through that. I love my parents for what they did, but it would have been much easier if they would have known to save early on. I'm first generation college student.

Oh hey, did you guys hear about the Jack In The Box FREE TACOS? hahaha it just came to me. If you take a gas fill-up receipt you will get TWO FREE TACOS. I am sooooo making a day out of it. It's tomorrow. Woo, thank goodness for days off. There are like 7 JITB around my area. Hahaha and I have tons of receipts laying around. oh, yea. TACO TIME.


Check it out here.

June 26, 2008 6:57 AM  

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