529 Plans -- Opinions? - Tilted Forum Project Discussion Community

HamiC · 04-21-2004, 05:40 PM

I've got a toddler and another one on the way any day now. What do you folks think of 529 plans as a way to save for their college expenses?

I'd love advice. Thanks!

arch13 · 04-21-2004, 06:22 PM

One of the best that has paid for many a peers education.

http://www.florida529plans.com/

(That's a whole hearted endorsement)

BigBlueWrecking · 05-15-2004, 10:31 AM

They have certain advantages, but have some disadvantages as well. Some state laws allow you to write off state income tax if you use the states plan (only in the state you live in). There are still some grey areas in the law as to who really has ownership. There are several other ways to save, and a lot of it depends on how old the child and if there is a chance they won't use the money for college.

HamiC · 05-15-2004, 06:27 PM

Quote:

Originally posted by BigBlueWrecking
They have certain advantages, but have some disadvantages as well. Some state laws allow you to write off state income tax if you use the states plan (only in the state you live in). There are still some grey areas in the law as to who really has ownership. There are several other ways to save, and a lot of it depends on how old the child and if there is a chance they won't use the money for college.

Between 0 and 2 years old and absolutely going to college or I will (not literally) kill them.

Assuming my state has favorable tax treatment and decent investment choices and assumin the money will be used as intended, my question boils down to whether or not these are good plans. In other words, do they hurt financial aid, are there more tax efficient ways of saving for college, will the plans last?

arch13 · 05-16-2004, 12:30 AM

State based plans have a serious advantage: Many lock in the cost of college at the year you start the plan. College has increased in price by 350% for private college and 200% for public in the last 15 years.

{vent}
So not be rude, but few over the age of 30 have any clue about what is needed to atttend college now. Most are nostalagic and have a skewed view of what their kids go through to attend college. College work loads since 1990 are about 600% of the average workload between 1950 and 1980. In concurence, the average private college costs 20,000 a year and public is between 7500 and 10,000 a year. For those without family help, that could mean as much as 200,000 in dept for a top tier school
{/vent}

Most colleges view the money at it's modern value so; say i had the price locked at 4500 a year for florida, with current tuition being 7500 a year. even though i only pay 4500 a year, the school reviews my need as if i need 7500 a year. In state schools this often works, but only for schools within the state of the plan.
I choose to attend school at The Rhode Island School of Design, so my tuition need is 45,000 a year. Florida simply sends along the 4500 it would have paid an in-state school and my private college views it as part of my income in calculating need. Most in state private colleges will do the same, view it as part of your yearly income in deciding need.

In state sponsored 529 plans, you never pay income tax on the money saved, as even when withdrawn it's used for education and is exempt. however, if they choose not to attend college and get paid out (state plans pay you out if you don't attend college at all by age 25) then you get the defered tax bill.

BigBlueWrecking · 05-16-2004, 09:45 AM

Quote:

Originally posted by HamiC
Between 0 and 2 years old and absolutely going to college or I will (not literally) kill them.

Assuming my state has favorable tax treatment and decent investment choices and assumin the money will be used as intended, my question boils down to whether or not these are good plans. In other words, do they hurt financial aid, are there more tax efficient ways of saving for college, will the plans last?

Technically there is a sunset provision that hurts the tax status of these plans after 2010. Not many people think that there will not be some sort of continuation of certain parts of EGTRRA, but there are no guarantees.

I think it is a good plan, but your question about financial aide is a good one. It varies based on your income, but saving in any plan can affect your childs ability to get it. That is not exclusive to a 529.

Warf Rat · 05-26-2004, 07:25 AM

Since the assets in a 529 are held under the SS# of the person gifting the money, they have little effect on financial aid.
The best site for info is http://www.savingforcollege.com/
Choose the state with the best plan and make sure that you tranfer it to your current state prior to a need for the money, if there is a tax advantage for being in your own state's plan. Because if your state has tax advantages but the plan sucks then don't invest there. Plans can be transfered, all info can be found on the site above.

Good luck

04-21-2004, 05:40 PM	#1 (permalink)
HamiC Insane Location: USA	529 Plans -- Opinions? I've got a toddler and another one on the way any day now. What do you folks think of 529 plans as a way to save for their college expenses? I'd love advice. Thanks!

04-21-2004, 06:22 PM	#2 (permalink)
arch13 Loves my girl in thongs Location: North of Mexico, South of Canada	One of the best that has paid for many a peers education. http://www.florida529plans.com/ (That's a whole hearted endorsement) __________________ Seen on an employer evaluation: "The wheel is turning but the hamsters dead" ____________________________ Is arch13 really a porn diety ? find out after the film at 11. -Nanofever

05-16-2004, 12:30 AM	#5 (permalink)
arch13 Loves my girl in thongs Location: North of Mexico, South of Canada	State based plans have a serious advantage: Many lock in the cost of college at the year you start the plan. College has increased in price by 350% for private college and 200% for public in the last 15 years. {vent} So not be rude, but few over the age of 30 have any clue about what is needed to atttend college now. Most are nostalagic and have a skewed view of what their kids go through to attend college. College work loads since 1990 are about 600% of the average workload between 1950 and 1980. In concurence, the average private college costs 20,000 a year and public is between 7500 and 10,000 a year. For those without family help, that could mean as much as 200,000 in dept for a top tier school {/vent} Most colleges view the money at it's modern value so; say i had the price locked at 4500 a year for florida, with current tuition being 7500 a year. even though i only pay 4500 a year, the school reviews my need as if i need 7500 a year. In state schools this often works, but only for schools within the state of the plan. I choose to attend school at The Rhode Island School of Design, so my tuition need is 45,000 a year. Florida simply sends along the 4500 it would have paid an in-state school and my private college views it as part of my income in calculating need. Most in state private colleges will do the same, view it as part of your yearly income in deciding need. In state sponsored 529 plans, you never pay income tax on the money saved, as even when withdrawn it's used for education and is exempt. however, if they choose not to attend college and get paid out (state plans pay you out if you don't attend college at all by age 25) then you get the defered tax bill. __________________ Seen on an employer evaluation: "The wheel is turning but the hamsters dead" ____________________________ Is arch13 really a porn diety ? find out after the film at 11. -Nanofever Last edited by arch13; 05-16-2004 at 12:36 AM..

05-26-2004, 07:25 AM	#7 (permalink)
Warf Rat Psycho Location: Philadelphia	Since the assets in a 529 are held under the SS# of the person gifting the money, they have little effect on financial aid. The best site for info is http://www.savingforcollege.com/ Choose the state with the best plan and make sure that you tranfer it to your current state prior to a need for the money, if there is a tax advantage for being in your own state's plan. Because if your state has tax advantages but the plan sucks then don't invest there. Plans can be transfered, all info can be found on the site above. Good luck __________________ A day late, and a dollar short.

05-15-2004, 10:31 AM	#3 (permalink)
BigBlueWrecking Psycho	They have certain advantages, but have some disadvantages as well. Some state laws allow you to write off state income tax if you use the states plan (only in the state you live in). There are still some grey areas in the law as to who really has ownership. There are several other ways to save, and a lot of it depends on how old the child and if there is a chance they won't use the money for college.