Yes. They need to have some skin in the game

Can you use 529 money to pay off student loans? If you're beating the interest rate in the 529 then it would make sense to max out the loans and pay them with the 529 as long as possible. Forgive me if this has been discussed in the thread as I didn't read the whole thing.

Won't be a popular opinion here after reading the thread.

Teach your kids by your actions that sound planning and taking care of your own obligations is important. It is a sound investment in their future that's honestly a more valuable lesson than anything they will learn in college, and they will believe what you do more than what you say.

If you tell them not to rely on the govt or others to save them, and then show them that's what you plan to do, you might keep more cash but have kids that end up worse off.

Doing the right thing is doing the right thing, regardless of what other people do.

How is taking advantage of a government program not doing the right thing? If OP doesn't lie about his means and isn't considered ineligible for the forgiveness, how is that doing the wrong thing? From following OP long enough, I dont think his kids have any sort of sense that their father relies on govt for anything.

I'm not sure, but don't think Jack Ryan can help you.

Sea Speed said:

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How is taking advantage of a government program not doing the right thing? If OP doesn't lie about his means and isn't considered ineligible for the forgiveness, how is that doing the wrong thing? From following OP long enough, I dont think his kids have any sort of sense that their father relies on govt for anything.

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If they use the GI Bill or one of the other programs set up for public servants, I'd tell his kids: good for you and thanks for your service.

If they just plan to get bailed out like what's been happening: **** him and his kids. Pay back what you owe.

You can tell people all you want you don't like big government. But guess what, if you take govt bailouts, I'll call you a liar.

Bonfire.1996 said:

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If your 529 plans have been in place for 15 years or more, you can take up to $35k per 529 plan and transfer to an IRA for your kids or you or your spouse, tax and penalty free.

This new rule has completely changed the game because of the contribution limits of regular IRAs and the absence of contribution limits in 529 plans. Whatever you do, make sure you leave $35k in every 529 plan you own.

My son is c/o 28 at A&M as well. My daughter will be c/o 31. We have shifted my regular monthly IRA savings completely into their 529 plans as it gets invested in the same types of funds. I will fund our IRAs at year end with bonus money. This is a once in a lifetime opportunity to goose your IRAs.

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Do look at the rules around this,...

https://www.schwab.com/learn/story/529-to-roth-ira-rollovers-what-to-know

Urban Ag said:

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C@LAg said:

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1a. Use the 529 monies to cover school costs as far as that will go.
1b. Use loans for the rest since no interest is accrued in the interim.
2. Continue investing the trust monies in higher return investments.
3. Use to investments later to pay off the loans. you might get lucky and have some/all forgiven at some point.

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Yes, this is absolutely sound. Thanks.

The 529 is pot committed but you can get the money out if you're willing to take the hit, like early withdraw on a 401k or IRA (I know you know that). LOL.

But yeah, this is the overall strategy I am considering. I don't feel good about it but it is what it is.

Totally agree. Roll the dice one the loans. If whichever commie president is next wipes them out, yahoo for me. If they don't, service them on what remains in the 529 then down to the trust.

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We had the opportunity to do the loans, but ultimately chose not to. Pretty much for the same reason I chose not to participate in the PPP program.

Yes, I know that the government is giving some pretty substantial allowances for playing the game, but to me, instilling a value of personal responsibility still outweighs the financial gain of joining the herd.

As long as I still have hope for our country to one day right itself, I will continue to forego personal gain obtainted at the public trough. Maybe I'm stupid, but I feel if I give in and join the herd, I've admitted defeat that the country is lost.

SunrayAg said:

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Both kids graduated from A&M recently. Class of 21 and 23.

Between our college savings and them working through school, they both graduated without a penny of debt.

And **** anyone and everyone who is taking loans they plan to pay back with what the government is stealing from us on April 15th.

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My dad wouldn't even allow me and my siblings to apply for a scholarship. We were middle class, but he didn't want other families to think that we needed a handout. He cared about our family name in the small town.

Both of my girls have graduated in the last couple of years. I 'let them' receive a scholarship from our church. We didn't apply for the scholarship, but the youth director mentioned my two daughters to the committee, and they received $2k each semester. We didn't need the money, but it was cool that the girls felt like the community believed in them and supported them.

I work with some wealthy individuals that have their kids take out student loans, and then pay it off when they graduate. I understand why they do it, but I want to teach my kids to avoid debt.

More importantly, we have an endowed scholarship, and I want my kids to focus on helping out other people in society, instead of having the mindset of "What can I get for free?".

First of all, no way will I do what the OP is suggesting. I think that forgiving student loans is wrong. While it MIGHT eventually happen, if everyone starts playing this game there will be even more demand for it.

Here is my plan:

We have enough in 529's to pay for both kids' college. We definitely plan to end up with $35k in each account for Roth transfers as Bonfire pointed out. If there is anything left in there beyond that, it can go to future grandkids.

That said...

I still want my kids to take out loans for at least the $10k that can be paid back from the 529's, and I am not going to help with the process. I want them to not only have skin in the game, but to understand what a pain in the ass it would be for them had my wife and I not sacrificed and saved for their benefit.

If they make grades (A's, B's, obvious effort shown, etc.), I'll pay it off. If they screw around, party, and come home for Christmas with a 2.0, the $10k is on them. They can then spend the break applying for more loans to cover the next semester if they so choose.

Other rules include getting a degree that is worth a ****, I'm only paying for four years, and don't plan on living at home after you graduate.

Regarding federal loans:

- Unsubsidized loans accumulate interest while the student is in school. These are not need-based; however, the student must have filed a FAFSA for that aid year.

- Subsidized loans do not accumulate interest while the student is in school at least half-time. These are awarded based on the financial need of the student, as demonstrated through FAFSA.

This might not be super great or legal.......but when I was in school I had buddies who would take out loans for every damn thing, and always end up with healthy five figure refunds. Of course they blew every penny, but I've often wondered if they took all that money and invested it, seems perfectly reasonable to make over 8% during their education. Then pay off the loans over time and let the bulk of it keep making money, one of those opportunities that has long since passed for most of us.

If you want to gamble with the future of your son, go ahead for only about one third has been forgiven and there are a lot of people that will pay the price waiting for their "savior".

A lot of the loan forgiveness that's currently been done is around the for-profit colleges that over-promised and under-delivered (think ITT Tech and other similar "colleges"). I'd be very surprised if someone got $60k forgiven from a traditional college with no public service.

Why in the world are you sending your kids to public schools?

For at least 3 years now, we all know this is a bad investment at best, and at worst, you're paying for brainwashing.

Seriously- either send them to a Christian school, or a vocational school.