How much do you target for a 529 plan?

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dred pirate
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How much do you target for a 529 plan?

Post by dred pirate »

Curious as to what your target goal is for your 529 plans? I have a two year old, and currently have 21k in her 529. Obviously a million and one things can change between now and HS graduation, but I currently have decided from here on out to put $500 a month into her plan (basically it was what my student loan payments were that were recently paid off-so my cash flow stays the same). Obviously I don't want to put so much in that I pay a penalty/tax to get my money back, and heck, we never know if she will even go to college this far out. But I also want to balance the tax savings with that risk.
Using a calculator (6% annual growth) - I get an account balance of 216k - which seems like a lot, but at the current rate of tuition increases, it is nearly impossible to predict what college will costs. To me that seems like a very well off starting point - likely will cover in state tuition for 4 years plus leave some left over to cover a healthy part of room and board (UNC tuition + fees = ~$9k a year currently).

I currently max out our 403b and Roth, as well as HSA, so I am not sacrificing other tax advantaged savings - do you think this seems reasonable, or should I back off? If I did back off, I would pay more towards mortgage (3% rate) or put more into taxable index funds.

Thanks
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1789
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Re: How much do you target for a 529 plan?

Post by 1789 »

One data point. We have 4 year old and 11 months old. Our goal is to put 30/40k total contribution before they are 5 years old and let the money grow to whatever. Then use the taxable account or paycheck to support the rest if we have a job at that time frame. I think you plan sounds ok, just don't over do it
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Re: How much do you target for a 529 plan?

Post by RickBoglehead »

No penalty for having leftover monies for the next generation.

We are using leftover monies from our kids for our grandchildren. Based on how much we have in 529s in total, unless the 2nd son starts reproducing quickly, this will find at least one more generation.
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stoptothink
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Re: How much do you target for a 529 plan?

Post by stoptothink »

Multiple threads on this. Current cost of tuition + fees at local U (that is ~5 miles from our home and that wife just graduated from) is ~$6,700/yr. On January 1st of this year we contributed state deduction max for both our kids (9 and 6); they're at ~$28k each and we are done. If kids are HYPMS bound we'll figure it out, otherwise local U is covered.

Completely depends on your expectations and your local options.
FishTaco
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Re: How much do you target for a 529 plan?

Post by FishTaco »

We've contributed an amount equivalent to 4 years tuition and fees at our state flagship for our 2 preschool aged kids. Not adding currently to the accounts but may add some at some point in the future or just cash flow additional costs down the road. I don't think we would contribute much more than 4 years tuition/fees plus 2 years room and board to the 529 accounts.
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Re: How much do you target for a 529 plan?

Post by NiceUnparticularMan »

We're roughly trying to be able to cover four years of private college for both kids.

That's very hard to nail with precision, and if it is a bit more or less, that will be fine. Even if one or the other doesn't use it all for college, there are so many other possible uses, including graduate/professional school, future generations, and so on, that we are not too concerned about overfunding.

But if it was some big sacrifice, including with respect to using our own tax-advantage retirement savings accounts, that would be different.
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fetch5482
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Re: How much do you target for a 529 plan?

Post by fetch5482 »

We plan to have a balance between 150-200K by the time my kid is college age.
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Re: How much do you target for a 529 plan?

Post by Grt2bOutdoors »

Why limit choices to UNC? But if UNC is the only choice, then save up $40k to cover 4 years current cost and reevaluate each year going forward.
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Re: How much do you target for a 529 plan?

Post by vineviz »

dred pirate wrote: Mon May 10, 2021 3:36 pm Curious as to what your target goal is for your 529 plans? I have a two year old, and currently have 21k in her 529. Obviously a million and one things can change between now and HS graduation, but I currently have decided from here on out to put $500 a month into her plan (basically it was what my student loan payments were that were recently paid off-so my cash flow stays the same). Obviouslye I don't want to put so much in that I pay a penalty/tax to get my money back, and heck, we never know if she will even go to college this far out. But I also want to balance the tax savings with that risk.
Have you read this thread: viewtopic.php?t=346351

It covers a simple strategy for determining the contribution rate and asset allocation, plus a method for maximizing the tax efficiency of 529s.
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runner3081
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Re: How much do you target for a 529 plan?

Post by runner3081 »

We plan to have about 50K there for our daughter.

We will cover 2-years of community college (inc books) and 2-years of local university, living at home.
alderan
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Re: How much do you target for a 529 plan?

Post by alderan »

We contributed the annual maximum for 16 years and used Vanguard Nevada 529 plan. We benefited big time due to the bull market during the past decade. For one of the kids, we ended up over 300k+; this should cover 4 years of private school. :D
Last edited by alderan on Mon May 10, 2021 5:12 pm, edited 1 time in total.
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dogagility
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Re: How much do you target for a 529 plan?

Post by dogagility »

Target? Maybe the cost of an in-state flagship + 4% inflation. Adjust as the years go by and things come into focus.
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beserker
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Re: How much do you target for a 529 plan?

Post by beserker »

Maybe zero so I won't get pissed when I sacrifice many things to save enough to send my kids through college and then having government forgive all the student loans. Ugh...
:annoyed

Currently, our state, va, has somewhat of prepaid credits that you can buy at today's price for average in state tuition. I say average, because if my kids want to attend colleges in state that cost more than the average, I'll have to either make up the difference when they attend college or buy more credits now. I am thinking of going through this route, but my job is not stable as it is government contract based which ends this year. So my current priorities is my retirement/savings, once my job stabilizes, I will start buying 1/2 annual credits which should be around 12-15k for both kids per year. I will have to withdraw from my savings/401k for room/board/fees if my situation allows when they start attending.
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Re: How much do you target for a 529 plan?

Post by forkhorn »

We put roughly the cost of 4 years of tuition, fees, and room & board at the state flagship for each kid. Once that was reached, we stopped except for a token $20/month so the account isn't too inactive or forgotten.

If they don't use it, I'll re-examine options at that time (1-2 decades from now).
wootwoot
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Re: How much do you target for a 529 plan?

Post by wootwoot »

We fill up the 529s to the state deduction limit which is 4k per family per year.
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Re: How much do you target for a 529 plan?

Post by humblecoder »

dred pirate wrote: Mon May 10, 2021 3:36 pm Obviously I don't want to put so much in that I pay a penalty/tax to get my money back, and heck, we never know if she will even go to college this far out. But I also want to balance the tax savings with that risk.
Honestly, people fear this "penalty" (in air quotes) as if it is some end-of-the-world terrible event. It isn't. Yes, you have to pay taxes + 10% penalty on the earnings portion, but you did get tax deferred growth on that money. Yes, you may have been better off putting that money in a taxable account and nobody wants to pay more taxes than they have to, but it isn't something that will put you in the poor house either. So yes, it is a risk that you end up overfunding but it is a low impact risk should it come to pass.

But to answer your question, I would only contribute to a 529 if you are already maxing out your tax-advantaged accounts (401k, IRA, HSA, etc). Then I would consider starting by putting at least enough to get a state tax deduction, if your state provides one.
spth
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Re: How much do you target for a 529 plan?

Post by spth »

4 kids and $500/month each. It’s all invested in 10 year treasuries, so it makes up our bond position along with iBonds. Assuming zero growth after inflation, should be $100,000 per child.
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TierArtz
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Re: How much do you target for a 529 plan?

Post by TierArtz »

I'm 3-5 years from retirement with 3 kids (15, 14, and 11) @ $250 each per month. Basically, that's my non-painful max beyond retirement savings and deferred comp. Each kid is on-track to have about $100K at the start of college. The pattern I foresee is local community college followed by 2-4 years at a state university.
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Re: How much do you target for a 529 plan?

Post by devopscoder »

I did the 529 plan for about five years after my first child was born. I think we put about $200/month in each account. Did this from 2000-2005 when I stopped so we could afford our new house (wife was stay at home Mom). Then when my income increased, I never resumed the contributions.

The accounts ended up with $31K for the first child in 2018. For the second child, it currently has $24K today which we will use for a semester of expenses.

The rest will come out of our taxable accounts which is about $450K.

Part of the reason why I never resumed contributions is that I thought colleges would consider the amount as owned by the child and reduce financial aid. Was this a correct assumption?
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Re: How much do you target for a 529 plan?

Post by dogagility »

devopscoder wrote: Tue May 11, 2021 3:43 am Part of the reason why I never resumed contributions is that I thought colleges would consider the amount as owned by the child and reduce financial aid. Was this a correct assumption?
That's a red herring... especially in BogleheadLand.
https://www.savingforcollege.com/articl ... ancial-aid
viewtopic.php?f=10&t=336445&p=5736384&h ... 9#p5736384
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Harry Livermore
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Re: How much do you target for a 529 plan?

Post by Harry Livermore »

dred pirate wrote: Mon May 10, 2021 3:36 pm
Using a calculator (6% annual growth) - I get an account balance of 216k - which seems like a lot, but at the current rate of tuition increases, it is nearly impossible to predict what college will costs. To me that seems like a very well off starting point - likely will cover in state tuition for 4 years plus leave some left over to cover a healthy part of room and board (UNC tuition + fees = ~$9k a year currently).
When our first child was born in 1999, we started saving, first in a Coverdell, and then in a 529 after they removed income and contribution limits (can't remember the details but we could put more in the Coverdell at first) We continued with #2 and #3, contributing in both Coverdells and 529s; at some point we stopped the Coverdell contributions altogether. When #1 was born, I looked at the rate of inflation of higher education over the last 30 years. I predicted the sticker price of tuition and room & board could top $80K per year at a private by the year 2028 (I set that as an end year, assuming we'd have 3 or 4 kids, with 2006 as a realistic last birth year) Friends and colleagues looked at me like I had three heads. But you know what? I was not far off. And we only had three kids as it turns out.
So I think your prediction of $216K for public is probably in the ballpark, and kudos for facing up to it.
Of course, I was not able to save $320K for each kid in cash- life gets in the way. And not all schools cost exactly my rigidly set max number. And my kids are luckily pretty good students and test takers and have received very nice merit aid awards. So a lot goes into the mix.
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devopscoder wrote: Tue May 11, 2021 3:43 am
Part of the reason why I never resumed contributions is that I thought colleges would consider the amount as owned by the child and reduce financial aid. Was this a correct assumption?
If the account is owned by the parent, it's only assessed at 5.64% of its value. Parental assets count but nowhere near as much as student assets. FinAid is determined individually by each institution, using the FAFSA and/ or the CSS, or their own proprietary formula, or all three. I'd rather have more money (tax advantaged) in the kitty... but taxable is a perfectly sensible alternative. We also saved some in taxable as a general "slush fund" for college... so far have not needed it. Some folks also cashflow large chunks of college costs. Whatever works!
I had always operated under the assumption that I will pay full freight for college, and have been pleased that my kids were able to find schools that are "best fits" for them and not at the top of the cost scale.
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Mathew675
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Re: How much do you target for a 529 plan?

Post by Mathew675 »

I decided to essentially pre-fund the 529 in the year my kids are born. I looked at in-state tuition with living expenses and funded one year. With 18-20 years of growth I figure it should almost double twice, and then I have almost 4 years worth of tuition when they need it. If the expense grows much higher than inflation I will have to use other means but I do think the bulk will be covered.

One thing I did not do which I regret now is I didn't use my state 529 as the tax advantage is not that great in each year. But when you compound it over so many years with a carry over and I have a lot of kids it actually added up to a lot I left on the table. Oh well. :oops:
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Re: How much do you target for a 529 plan?

Post by dukeblue219 »

We are intending to accumulate enough to pay for a basic 4 year in state education assuming normal inflation from here on out. I'm doing so with target date funds set for their first year of college.

I do not personally plan for college tuition to continue to outpace inflation. It's simply impractical at some point.
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Re: How much do you target for a 529 plan?

Post by Paradise »

I’m planning on contributing $33,000 ($30k+3 next year) for my 3 year old and $28,000 for my 2 year old this year as a 1 time investment . That projects to get them through one of the UC schools at current rates. I understand prices will go up. I’ll either make another contribution once I have more info or pay the different when they’re in school or pick a more expensive school.

We also have an out that the kids will be going to private school k-12.
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Re: How much do you target for a 529 plan?

Post by LuckyGuy »

Our goal was to pay 80% of in state tuition and living expenses for our 2 kids. The rest was on them to get scholarships and work. That came out to be $200 per child starting the day they were born. Both our kids are in college now. DS is starting his masters degree program and DD is a junior in college. If our DD goes to grad school, we will likely be short in our 529 by one semester. If she doesn’t go to grad school, we’ll have some extra to leave for the next generation. Scholarships and smart college choices was very important.
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Re: How much do you target for a 529 plan?

Post by daheld »

I've not seen the Vanguard College Cost Calculator posted, so here it is: https://vanguard.wealthmsi.com/csp.php

It's a good resource for getting a ballpark estimate for what you can expect to pay at a given institution at the time your kid goes to college.

We are targeting trying to accumulate 50% of the projected cost of a 4 year degree, and then we'll cash flow the rest. The calculator is a handy tool because it can tell you how much to contribute over your given time frame to accumulate your target amount. Of course none of this is an exact science because it's impossible to know whether our kid will go to college, if he does where it will be and how much it will cost, or how much our contributions will grow. I am fine erring on the side of under-funding rather than over-funding.
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Re: How much do you target for a 529 plan?

Post by cshell2 »

dukeblue219 wrote: Tue May 11, 2021 7:15 am I do not personally plan for college tuition to continue to outpace inflation. It's simply impractical at some point.
In my neck of the woods a lot of schools have frozen tuition for the past several years.

I saved with the intention of paying for 4 years of in-state tuition and back when I was doing the calculators 18 years ago it was saying I would need way more than it turns out we actually will. I pushed academics and extracurriculars with scholarships at the back of my mind and DS did quite well on the ACT so that he got a lot of money from out of state and private schools, but even with all that the in-state option was still the best deal.
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Re: How much do you target for a 529 plan?

Post by smalliebigs »

I have 2 kids, and the plan is $120k each. It's not going to be enough for an ivy league, but I think if they can go to Uni Michigan, that's a pretty good standard already. Whatever leftover we can just get from taxable, or loan.
Neil289
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Re: How much do you target for a 529 plan?

Post by Neil289 »

We are targetting having $400k for each child by age 18. (currently all under age 4) If that is overshooting, it will fund grad school, or future generations.

What I wish someone told me earlier, which is obvious now... is that contributing the max for the first kid is a lot easier to do when there is only one. We have three now, and are glad we started maxing out the contributions for the second child before the third arrived. Max here is $15k from me, and $15k from my wife for $30k a year per kid, with a $10k max family tax deduction. I'd rather overshoot for a decade and then shift to something more reasonable each year so it is not a whole annual budget.
manuvns
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Re: How much do you target for a 529 plan?

Post by manuvns »

my goal is to have 150k for 2 kids , remaining can come from ROTH or cash accounts if needed , i work for a univ. and if i stay here my kids will get 50% tuition reduction .
Last edited by manuvns on Tue May 11, 2021 10:47 am, edited 1 time in total.
Thanks!
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dred pirate
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Re: How much do you target for a 529 plan?

Post by dred pirate »

Grt2bOutdoors wrote: Mon May 10, 2021 4:11 pm Why limit choices to UNC? But if UNC is the only choice, then save up $40k to cover 4 years current cost and reevaluate each year going forward.
I was just using UNC as a data point as far as in-state tuition where we currently live- as a two year old, pretty hard to tell where we will even be living in 16 years, or if she will be able to get in there!
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Re: How much do you target for a 529 plan?

Post by DIFAR31 »

Harry Livermore wrote: Tue May 11, 2021 5:51 am
devopscoder wrote: Tue May 11, 2021 3:43 am
Part of the reason why I never resumed contributions is that I thought colleges would consider the amount as owned by the child and reduce financial aid. Was this a correct assumption?
If the account is owned by the parent, it's only assessed at 5.64% of its value. Parental assets count but nowhere near as much as student assets. FinAid is determined individually by each institution, using the FAFSA and/ or the CSS, or their own proprietary formula, or all three. I'd rather have more money (tax advantaged) in the kitty... but taxable is a perfectly sensible alternative. We also saved some in taxable as a general "slush fund" for college... so far have not needed it. Some folks also cashflow large chunks of college costs. Whatever works!
I had always operated under the assumption that I will pay full freight for college, and have been pleased that my kids were able to find schools that are "best fits" for them and not at the top of the cost scale.
Cheers
Yes, a 529 account owned by a parent is assessed by FAFSA at the lower parent rate of 5.64% as opposed to the more onerous student-owned asset rate of 20%. But, for FAFSA purposes, a 529 account owned by a student is also treated as a parent asset, which is a good thing (assessed at 5.64% instead of 20%). So, with the benefit of hindsight, devopscoder's assumption was not correct. When a school calculates institutional financial aid awards (not government aid), how a student-owned 529 account is treated (as a parent asset or a student asset) is dependent on that school's policy; the only way to know what a particular school's policy is on this matter is to contact the financial aid office and ask.
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Re: How much do you target for a 529 plan?

Post by Broken Man 1999 »

I am funding 529 plans for our grandchildren, though I don't have a specific goal in mind. Perhaps $25,000-$30,000 each. Oldest turns 13 this year, so another 5-6 years for her. Youngest turns 8 this year, so 10-11 years for him.

The grandchildren already have four years of public university tuition paid, so the 529 plans won't have to be used for tuition unless private or OOS universities are attended.

The other sets of grandparents are also funding 529 plans and/or other accounts. No knowledge of amounts. I expect there will be lots of opportunities for expenses needing payment for all attending.

As beneficiaries of a portion of my Roth IRA, the grandchildren should be just fine, whether I am around or not. I hope to be, as I would like to be a part of their young adult life.

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Re: How much do you target for a 529 plan?

Post by bonglehead »

My target is $0 for 529.
I maximize my retirement saving opportunities and then whatever remains goes into taxable.
I will encourage my kids to take loans for their education and if they graduate with good grades, I will pay off their loans (if the loans are not forgiven by the govt. 😄)
Frank Grimes
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Re: How much do you target for a 529 plan?

Post by Frank Grimes »

dred pirate wrote: Tue May 11, 2021 10:47 am
Grt2bOutdoors wrote: Mon May 10, 2021 4:11 pm Why limit choices to UNC? But if UNC is the only choice, then save up $40k to cover 4 years current cost and reevaluate each year going forward.
I was just using UNC as a data point as far as in-state tuition where we currently live- as a two year old, pretty hard to tell where we will even be living in 16 years, or if she will be able to get in there!
I did the same for my targeting purposes, just to have a ballpark of flagship state school costs. That said, GTHCGTH.

We heavily funded our kids' 529s when they were infants/toddlers for compounding purposes so now at ages 4 and 6 they have about $250k between them. I think we're pretty much done contributing, although grandparents may continue to put a little in there for birthdays and such.
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Re: How much do you target for a 529 plan?

Post by cutterinnj »

I superfunded my kids’ accounts for the first few years of their lives (I think even before they were born) and stopped a few years ago.

The 10 year old has around 350k, and the 8 year old has around 250k.
I have no intention on giving them another penny.
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dred pirate
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Re: How much do you target for a 529 plan?

Post by dred pirate »

Frank Grimes wrote: Tue May 11, 2021 11:53 am

I was just using UNC as a data point as far as in-state tuition where we currently live- as a two year old, pretty hard to tell where we will even be living in 16 years, or if she will be able to get in there!
I did the same for my targeting purposes, just to have a ballpark of flagship state school costs. That said, GTHCGTH.

[/quote]

Ironically we are not from here, but I work for UNC, wife works for Duke, but we live (and my hospital is) <2 miles from NC State - so Go Pack! (and I kinda feel sorry for them being in the shadow of the other two)
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Re: How much do you target for a 529 plan?

Post by FIREmeup »

When I try and model that cost of college in 15 years my head begins to spin. I plan to put 10k per kid for 18 years if my earnings allow it. Right now they are 2 and 4 and each 529 has seen substantial growth. When they become 10 I will probably try and figure out costs again and see if I should move it to safer assets. Our parents paid for our colleges and we set a goal early in our marriage to pay it forward.
Miguelito
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Re: How much do you target for a 529 plan?

Post by Miguelito »

I calculated and projected the cost for a full ride at our state university at the time they finish HS. I then worked backwards from birth to what we should have been contributing since birth to hit that number with a nominal market return of 6%. We started a few years late so we had to play catch up to funding and market returns. Once we caught up, I just kept the same contribution.

We will probably end up somewhere between private and public cost and likely enough to pay for 2-3 years of private college. I'm happy enough with that as a hedge in case one of them gets a partial or full scholarship.
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Harry Livermore
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Re: How much do you target for a 529 plan?

Post by Harry Livermore »

DIFAR31 wrote: Tue May 11, 2021 11:09 am
But, for FAFSA purposes, a 529 account owned by a student is also treated as a parent asset, which is a good thing (assessed at 5.64% instead of 20%).
Interesting tidbit! I was unaware of that.
Cheers
chenzi
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Re: How much do you target for a 529 plan?

Post by chenzi »

My kids are 5 and 9 years old - we have 100K for each in 529 at this point. The last year provided a good chunk of that growth. We still contribute $750/kid/month. The goal is to have at least $150k each. We will stop additional contributions in 3 years.
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Re: How much do you target for a 529 plan?

Post by DIFAR31 »

bonglehead wrote: Tue May 11, 2021 11:51 am My target is $0 for 529.
I maximize my retirement saving opportunities and then whatever remains goes into taxable.
I will encourage my kids to take loans for their education and if they graduate with good grades, I will pay off their loans (if the loans are not forgiven by the govt. 😄)
Are you willing to cosign any education loans for your kids for any expenses remaining after they chip in their earnings and savings and you are done cash flowing and using funds from taxable accounts? The most a student can get in education loans that are not cosigned is generally $27,000 spread out over four years ($5,500 for freshman year, $6,500 for sophomore year and $7,500 each for junior and senior years). That may be ok for a community college student living at home, but it's not going to cut it for most other situations. I don't know if this describes you, but there are a lot of parents out there who have a mindset of, "I'm not worried about saving for college for my kids, they can just take loans to pay for everything." Um, no, in most cases they can't.
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dred pirate
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Re: How much do you target for a 529 plan?

Post by dred pirate »

bonglehead wrote: Tue May 11, 2021 11:51 am My target is $0 for 529.
I maximize my retirement saving opportunities and then whatever remains goes into taxable.
I will encourage my kids to take loans for their education and if they graduate with good grades, I will pay off their loans (if the loans are not forgiven by the govt. 😄)
To each there own, where my wife and I differ is our backgrounds.
I grew up below the poverty line but had great grades. It was impossible for my parents to contribute much/any to my college fund. But I was able to get tons of aid and scholarships - so 4 years at private school (late 90's) tuition/room/board/books/study aborad = $16,000 total in student loans. Then came grad school - 4 years = 100k in loans. Luckily I had a good paying job and paid them off last year.

My wife grew up solid middle class (not rich, but decent well off). Her father paid for undergrad and grad school = 0 loans.

I am all for teaching personal responsibility to my children, and feel they need some skin in the game - so we struggle at what is best - but we have time to figure it out.

With our income (combined currently at 235k) I don't see us qualifying for any financial aid out side of unsubsidized/private loans and what ever academic (or if we get lucky and our daughter gets the athletic ability others in my family got that I didn't) or athletic schollies. But obviously can't count on those.
bonglehead
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Re: How much do you target for a 529 plan?

Post by bonglehead »

DIFAR31 wrote: Tue May 11, 2021 1:20 pm
bonglehead wrote: Tue May 11, 2021 11:51 am My target is $0 for 529.
I maximize my retirement saving opportunities and then whatever remains goes into taxable.
I will encourage my kids to take loans for their education and if they graduate with good grades, I will pay off their loans (if the loans are not forgiven by the govt. 😄)
Are you willing to cosign any education loans for your kids for any expenses remaining after they chip in their earnings and savings and you are done cash flowing and using funds from taxable accounts? The most a student can get in education loans that are not cosigned is generally $27,000 spread out over four years ($5,500 for freshman year, $6,500 for sophomore year and $7,500 each for junior and senior years). That may be ok for a community college student living at home, but it's not going to cut it for most other situations. I don't know if this describes you, but there are a lot of parents out there who have a mindset of, "I'm not worried about saving for college for my kids, they can just take loans to pay for everything." Um, no, in most cases they can't.
Yes of course, if needed I will co-sign any additional loan amount but I don’t think that will be necessary.
My state (GA) has a pretty good schools and a great merit based scholarship program so unless my kids go out of state for some reason, I won’t be needing to co-sign any loans for them
30west
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Re: How much do you target for a 529 plan?

Post by 30west »

devopscoder wrote: Tue May 11, 2021 3:43 am I did the 529 plan for about five years after my first child was born. I think we put about $200/month in each account. Did this from 2000-2005 when I stopped so we could afford our new house (wife was stay at home Mom). Then when my income increased, I never resumed the contributions.

The accounts ended up with $31K for the first child in 2018. For the second child, it currently has $24K today which we will use for a semester of expenses.

The rest will come out of our taxable accounts which is about $450K.

Part of the reason why I never resumed contributions is that I thought colleges would consider the amount as owned by the child and reduce financial aid. Was this a correct assumption?

If you are a true boglehead, you probably wont get need based aid anyway. Use the tax advantage of 529 to save up for those big bills. What helped most was generous "merit aid" for DD based on her grades. The more prestigious the school, the less the aid package.
Jack Burton
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Re: How much do you target for a 529 plan?

Post by Jack Burton »

Goal is to cover roughly 1/3 for an in-state public college, so around 60k each when they turn 18 (ages 1 and 3 now). I don’t quite buy that it’ll cost me 180k in 15 years for a four year program, but even if it does, it’ll at least help.
DIFAR31
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Re: How much do you target for a 529 plan?

Post by DIFAR31 »

30west wrote: Tue May 11, 2021 1:50 pm The more prestigious the school, the less the aid package.
Can you clarify? If by a smaller aid package you are only referring to merit aid, I would say that this is generally accurate. The more "prestigious" schools don't need to dangle merit aid to attract the most sought after students. However, the more "prestigious" a school is, the more likely it will be offering a larger need-based aid package, because these schools have the endowment and the financial aid budget to do so.
mr_brightside
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Re: How much do you target for a 529 plan?

Post by mr_brightside »

not really necessary to 'over-do it'. shoot for having around 50% of an in-state school projected cost

the rest you'll likely be able to pay through cash flow at that time. a lot of variables between now and then.

has worked for us (I'm on #3 of 4...) good luck

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marti038
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Re: How much do you target for a 529 plan?

Post by marti038 »

LuckyGuy wrote: Tue May 11, 2021 7:42 am Our goal was to pay 80% of in state tuition and living expenses for our 2 kids.
We have roughly the same goal. Any gap between the 529 balance and the total cost will be filled in out of our cash.

If they want to go out of state or private they'll need to get scholarships or raise funds some other way. Then, they'd need to endure my lecturing about not taking on debt.

I really hope to avoid saving too much in the plan, but I don't guess it would be the end of the world to hope grandkids could use it one day. There's also a chance that grad school will be a factor.
“Having, first, gained all you can, and, secondly saved all you can, then give all you can.” - John Wesley
plasticofantastico
Posts: 53
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Re: How much do you target for a 529 plan?

Post by plasticofantastico »

Like many have posted, our plan was to contribute enough early in our daughter’s life that it would cover the cost of attendance to our state (CA) flagship public university. I think we put in $40K when she was 2, and it grew to $120K by the time she graduated HS. She ended up getting a merit scholarship that covered half her tuition at a good private school. The 529 covered the balance of her tuition, with a little left over for grad school, and we covered living expenses from free cash flow.

We used the Iowa 529 plan administered by Vanguard, in the aggressive growth age-based track.
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