For Those of Us With Kids - College Tuition Costs - Prepaid College Tuition Programs

Discussion in 'General Distance Learning Discussions' started by pugbelly, Oct 1, 2006.

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  1. pugbelly

    pugbelly New Member

    For those of you with kids...

    The current annual tuition rate in America right now is as follows:

    In State Public - $12,841
    Out of State Public - $19,188
    Private - $27,677

    At a modest 4% annual increase in these rates (the average increase since the 1950's has been twice the rate of inflation), the tuition would be as follows 14 years from now, when your toddler is ready for college:

    In State Public - $22,236 in year 1 ($94,426 for all 4 years)
    Out of State Public - $33,327 in year 1 ($141,099 for all 4 years)
    Private - $47,928 in year 1 ($203,523 for all 4 years)

    Many states offer 529 or other prepaid college trust options. My home state, Maryland, offers these options. I enrolled two of my sons years ago. At the time, the required contributions to the trust were painful, but in comparison to the current tuition rates, they were a deal! My seventeen year-old starts college in the spring, my thirteen year-old in 4 years, MAN am I grateful I sucked it up and took advantage of this program!!! I highly reccomend this to anyone with children. It also offers tax breaks along the way.

    How important is college to your child when it comes to earning potential? The average annual wage in 2003 was:

    $19,257 for those without a HS Diploma
    $27,906 with a HS Diploma
    $52,368 with a BA Degree
    $74,494 for 5 years of college or more

    (Statistics were pulled from CollegeBoard and the U.S. Census Bureau)

    Pug
     
  2. MrLazy

    MrLazy New Member

    Great post Pug!

    I enrolled my daughter in the prepaid college program in Florida many years ago. The Florida program has many options for the tuition plans.

    1) Full Tuition at a 4-year University
    2) A 2+2 plan for 2 years at a Community College and 2 years at University
    3) A 2-year plan for just the 2 years at Community College.

    Florida also has add-ons to pay for on-campus housing.

    Florida also recently added an investment plan. While the investment plan isn't guaranteed to fully pay tuition, it does allow for smaller deposit amounts and allows the owner to invest at their own pace.

    Also, this isn't just for toddlers or newborns either. Even if your child is already in elementary or middle school, you can still signup for the prepaid college program. You'll just have to make larger payments each month in order to accumulate enough in the account to pay the tuition.

    BTW, if your child decides not to go to college, you don't lose your money. You get a refund of what you put into it. I don't think you get any interest on the money, but at least you don't lose it. I might be wrong on the interest part.

    Each state's plan is different, but they have to follow the same general rules. So, if you have children, find out if your state has a prepaid college program. It is well worth it.
     
  3. JoAnnP38

    JoAnnP38 Member

    The prepaid college tuition plans are great ways to plan for your children's education as long as they are flexible enough to allow for your son or daughter being accepted to a great school outside your state.

    One topic that is not often spoken of here are 529 plans. When I returned to school in 2002, I started a 529 plan for myself to save for a planned PhD. Its nice to know that my savings grows tax free and I can withdraw it without penalty to pay for any education related expense (room & board, books, tuition, fees, etc.) There is no way I will go in debt for a PhD degree so I'll need to have whatever I need saved. The good news is that I'm almost there and it will be at least two more years before I'm ready to start a PhD program.
     
  4. MrLazy

    MrLazy New Member

    Actually, the Florida plans are 529 plans. :) However, the Florida prepaid college programs run by the state are only for children.

    The Florida prepaid plans allow for instances where a student attends a school out of state. It does not guarantee complete coverage of tuition for college enrollments in other states but will pay the amount of tuition that it would have paid if the student attended an in-state public school.

    It's important to check the rules on a state's prepaid college program. However, the Florida plan is practically a no-lose situation.
     
  5. Andy Borchers

    Andy Borchers New Member

    Michigan - 529

    I've gone with the Michigan plan - administered by TIAA-CREF. I think 529 plans are the way to go for many people. You have the flexibility to use the money to send your kid (or other family member, including cousins) to a private or public school. The contributions in Michigan can be deducted on your Michigan state income tax.

    As opposed to a UGMA (uniform gift to minor act) based account, 529's are actually controlled by the contributor. Your 18 year old can't run away with the money and spend it on a car. Only you can authorized the money to be sent to a school. In the case of TIAA-CREF this is pretty easy. I simply fill out a form and my daughter's school gets the money in about 10 days.

    Regards- Andy
     
  6. pugbelly

    pugbelly New Member

    Maryland, where I live, offers a 529 and a Prepaid Trust option. I went with the Prepaid Trust because it's guaranteed. It essentially works like this: You pay "x" into the fund on installment and the fund guarantees to pay the average in-state tuition for the term of the agreement. A variety of options are available (community college, 4 year universities, 1 year through 4 years, etc.). Also, Maryland allows you to use either plan at any accredited school, in state or out of state.

    The point is simply this:

    1) College is EXTREMELY important to the earning potential of your child.

    2) College tution is climbing at an extraordinary rate and will be unaffordable to most.

    3) Unless you want to take a six-figure mortgage out on your home later in life, look into these plans.

    Pug
     
  7. Hille

    Hille Active Member

    NJ Star Program

    Hi, In NJ the upper 20 percent can go to CC for free. Book costs only for the two years. If they keep a 3.0 they can go the next two years to a state college for a drastically reduced rate. There is something like this in WV also. Hille
     
  8. pugbelly

    pugbelly New Member

    Re: NJ Star Program

    In Georgia, kids go all 4 years with a $3000 per year grant as long as they maintain a 3.0 GPA. If they fall below 3.0 the grant is taken away, but it's reinstated once the GPA returns to 3.0 or higher. This also applies to adult learners. $3000 doesn't sound like a lot, but the tuition for in-state residents is ridiculously low compared to the national average. Even Georgia Tech is only $4600 per year. Most of the other, less prestigious state schools, are between $2500 and $3200 per year, so the $3000 annual grant is really the same as a 80% to 100% scholarship.

    Maryland on the other hand, where taxes are out of this world, offers zilch for free.

    Pug
     
  9. jimnagrom

    jimnagrom New Member

    You can also plan to take advantage of local conditions. Indiana gives veterans with any disability rating at all a 90% break on tuition at ANY state-supported school.

    Hammond, Indiana, has a home ownership program - as do other towwns and municipalities. Own a home and pay property taxes in Hammond, and the city will pay your childrens regional college tuition. Buying a "fixer-upper" in Hammond could be a great education investment (www.chicagotribune.com then "find real estate").

    Single-family dwellings in Hammond are as low as $30,000 - estimated payment of $144 per month - and the town will pay for your children to go to IU, Purdue, UIC...
     
    Last edited by a moderator: Oct 3, 2006
  10. Jigamafloo

    Jigamafloo New Member

    Re: Re: For Those of Us With Kids - College Tuition Costs - Prepaid College Tuition Programs

    Wow - too bad it doesn't cover private colleges! I'm originally from Indiana, plan on retiring from the military in a year, and my younger son is at Rose-Hulman (Terre Haute) in the mech engineering program.

    Most of it covered by scholarship, but 25% of Rose-Hulman is still a bundle.... :(.

    A house in Hammond would be a steal in comparison.

    Dave
     
  11. jimnagrom

    jimnagrom New Member

    Re: Re: Re: For Those of Us With Kids - College Tuition Costs - Prepaid College Tuition Programs

    And THAT is what they're counting on...increased home owership goes hand-in-hand with increased revenues, property values, etc...
     

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