My husband and I discussed this subject quite a lot since we started having children 6 years ago. What we have ultimately decided to do is save for retirement, rather than for college funds. Our boys will have to learn that good grades and hard work will take them where they want to go, not Mom and Dad's money. That being said, we will certainly pony up cash for trips home, and even transportation and living expenses (to an extent) especially while they live in the dorms. By the same token, we don't expect them to take care of us in our old age.
Call us harsh, but this is what we have decided to do. We can't get academic scholarships to fund our retirement, and by the time we retire, SS benefits will only be a fond memory.
I couldn't agree with your plan more. It is my plan also.
Guess you don't live in a state that forces you to contribute to your kids' college education, whether you can afford it or not.
My kids can have a car if they get a full ride scholarship. If they don't get one, I will only pay for community college for 2 years. So far, 75% of my kids are on track for the car.
We are doing the same for our grandson....you might want to look into Paul Merriman's "Crummy Trust".....he's got a plan with annuities for his grandchild that takes $10,000 does what you are planning....we've debated whether to do this or stocks, but this way the grandson cannot get his hands on the money until later, unlike other methods, AND, you don't have to MANAGE, or pay OTHERS to manage it. Just a suggestion.
I am doing something similar. While I am putting some money aside that I have sort of earmarked as a college fund, it's not in a 529 plan or anything that would prevent me from using it for another purpose.
If you should decide to change your mind later and contribute to their college tuition, you can make early withdrawls from an IRA for education expenses. The withdrawls are not subject to the 10% penalty, although they will be taxed as income.
Good thinking, it worked for my six brothers and sisters and I and we all have 13 college and post-grad degrees now.
Dear exnavychick,
Sensible policy.
When your children apply to college, the standard financial aid calculation will take into account using a percentage of their savings, and the savings you've earmarked for them to use for college.
However, that same calculation may not take into account your retirement savings.
Thus, if by the time your children have reached age 18, and are ready to ship off for college, if you have, say, $100,000 saved for college education, then the folks who compute financial aid eligibility will expect you to use a percentage of that $100,000 each year while your children are in college.
But if the $100,000 is all in 401(K)s and IRAs, then the folks who compute financial aid eligibility cannot factor those savings into the calculations.
As a result, your children will be eligible for more financial aid, and your children will be eligible for better student loan programs.
sitetest
Oh hell yeah, right on, the more you save for college the more college expects you to pay. The kids will be fine, and you can always help them pay off loans when they're out of college.
"Harsh"?? Far from it. Let me tell you how this dad of seven is approaching it......
You want a car? Buy it. I'll put you on my insurance policy, but you pay for it. You WILL go to college.....and you WILL pay for it. You WILL get at least a B.S. degree....preferrably a masters.
Number one graduated with a B.S. and a commission in the U.S. Army. He's now married to a lovely, brilliant young lady and they're now at their first duty station at Ft. Lewis, WA. No college debts for him whatsoever.
Number two......oldest daughter........just graduated with a B.S. in Zoology, magna cum laude, with minors in Botany and Spanish.....not a dime in student loans, graduated totally debt free. She worked as many as three jobs at once, but SHE did it. She is now going to go straight through to her doctorate.....bypassing her masters completely.
Number three........second daughter.......halfway through her second year of college. She wouldn't let me pay for it if I offered; takes it as a point of pride.
The rest will follow the same pattern.
Kids are amazing; they rise to what is expected of them. I want them to APPRECIATE their degrees and their accomplishments. They do. If that makes me a throwback or a dinosaur, so be it.