School, Scholarships and Savings Plans

Are you saving for your child’s education? I was asked that question a couple of years ago while doing some banking online. The website had a calculator that would determine how much more money you needed to save to be prepared to pay for your child’s college years.

The first question was “how much money do you already have saved for your child’s college education?”

Umm… nothing?

Apparently, I didn’t require more questions, because it spit out this response:

“Your children’s college (I only had two kids then) will cost around $400,000. You can catch back up in your savings by making a quick one-time deposit of $150,000.”

Oh, yeah, let me get my checkbook.

Last year, when we applied for the pfd (for those Outsiders- the Permanent Fund Dividend is a check we eligible Alaskans receive from the state) we selected the box to have half of the kids’ pfd’s set aside for a UA College Savings Plan. Then, a few months later, we decided to get a divorce. This was not the time to be low on funds. We sent in a form and reversed our decision to save half their pfds.

Last month, when we were settling everything in court, we agreed to set aside their pfds in a savings plan. But, as of right now, that’s the only college savings plan I have for them.

I took a class last year called Financial Peace University. It’s based on the financial planning ideas/books by Dave Ramsey. One of the things he said in the class is you should not save for your child’s education until you’ve saved for your own retirement. The idea? Your kid can take out a loan or get a scholarship. But, no one is going to give you a grant to retire.

My question for you: Are you actively saving for your child’s college education? Have you set aside money with the UA College Savings Plan? AND… What if they decide they don’t want to go to college? What’s your plan for the funds then?

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4 Comments (+add yours?)

  1. Amy
    Jan 15, 2012 @ 14:14:01

    We have currently chosen not to save for the kids college, though I’m not sure if that’s the right choice or not. My parents didn’t help me with college, and neither did my husband parents. I think I valued the education more, and made more conservative choices on schools than I otherwise would have if my parents gave me a free ride. My other thought was that if we saved and were able to pay off our mortgage, we’d have extra funds from month-to-month to help out with things like their student loans. Some savings accounts, if they’re put in the kids names, can be accessed by the kids once they’re 18. I’m not sure I want to forego paying into retirement and paying off my house so that my kid can buy a fancy game system or whatever else might strike the fancy of an 18-year old! 🙂 However, I did have some help…my grandmother saved a small chunk for me for college via savings bonds, which I raided at 18 to buy a small used car instead. I don’t recall her being terribly thrilled about that at the time, but not having a car payment really set the stage for avoiding debt as an adult. I drove that car for 10-years! 🙂 I STILL fear my children might have a series of beer bong parties with money I’ve saved versus something semi-responsible though! Ha!

    Reply

    • Mom Land
      Jan 17, 2012 @ 12:17:10

      Amy, It does make them appreciate it more, right? I remember skipping a class in college, then sitting down and doing the math and realizing I’d just flushed $50. Didn’t skip after that.

      Reply

  2. Carrie
    Jan 16, 2012 @ 07:37:48

    I agree with Amy. My parents helped with co-signing for loans, but I am still paying on what I took 10 years later. But I was motivated to pass classes and move on. I hope to be in a position that I can help my daughter with life costs while she is in school, but not at the expense of retirement plans.

    Reply

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