Thanks for all those that post about various options and opinions. I tend to look around and have used a lot of whats been posted in some of my financial options. That being said I have a question of my own now. Thanks in advance for any help.

Currently my wife and I are set up fine. Jobs are good, savings, emergency savings, retirement and very manageable debt. Don't look for ways to spend money and credit cards are rarely used. It took a while to get here,but the plan has worked. We currently put around $400 a piece a month into our son and daughters 529 Texas college savings plan. I want a better option.

I've noticed that there are pre-paid tuition options. It's my understanding that you purchase "units" at a preset cost that can be used toward a public Texas college. 100 units generally equals 30 credit hours.

http://www.texastuitionpromisefund.com/content/how-it-works

Has anyone done this? If you have, whats your opinion? If anyone has even looked into this, maybe you have come to a decision like I am trying to.

Quick version: Looking to change out of 529 college plan into pre-paid tuition. Thoughts?

The one thing that I didn't know until recently was that you can invest in any state's 529 plan and use it at any institution in the country. I currently live in a state other than TX and invest in Vanguard's 529 which is technically through Nevada.

Oh - and I intend to send my kids to Texas A&M University

Just something to keep in mind ... definitely not an answer to your question

I didn't sign up for the Texas Tomorrow Fund when it came out and now I wish I had. School would have been so much less expensive had I done that. However, my reasoning for not doing it was what if if my kids decided they really wanted to go to school somewhere else - somewhere outside of Texas?

We instead have the Vanguard 529 Plan. Get the Upromise MasterCard - your "cash back" on purchases are deposited into the 529 Plan. Every little bit helps.

If you stick with the 529 plan, start early and invest often. A year at a public school in Texas is about $22,500 for tuition, fees, room, and board. Books are another ~$1500 per year. Private schools are in the $40,000-45,000 per year range. Education right now is stupid expensive.

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The one thing that I didn't know until recently was that you can invest in any state's 529 plan and use it at any institution in the country.

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CPA is better suited to answer this, but I believe you give up some tax benefits by investing in another states 529 plan.

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CPA is better suited to answer this, but I believe you give up some tax benefits by investing in another states 529 plan

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It depends on what state you live in. In many states that have state income tax you get a deduction on your state income tax if you invest in your own states 529 plan. Since Texas doesn't have state income tax it makes absolutely no difference what state you invest in if you are a Texas resident.

Through the promise fund-We have paid for 4 years tuition for 3 grandchildren- bought at 2011 price and will be redeemed at 2028 rates. Works by units for any type college anywhere in Texas, and if they go elsewhere can redeem cash value (some market risk involved in that case). If someone doesn't go to college, it can be transferred to other family members).

We went with the 529 option for our grandkids simply due to flexibility if they moved out of state.

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It depends on what state you live in. In many states that have state income tax you get a deduction on your state income tax if you invest in your own states 529 plan. Since Texas doesn't have state income tax it makes absolutely no difference what state you invest in if you are a Texas resident.

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This.

I could never do something like this... But then again both my brother and I went out of state... Pending on how my kid grows up I'd encourage the same...lots of world to explore and a great learning experience

My advice would be make sure there's a good plan if they/you don't stay in Texas

Who do you guys recommend for handling the 529 plans? Am I correct in assuming it is a plan that, similar to an IRA, 401K, etc. can be administered by multiple different groups (rather than a single entity)?

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Who do you guys recommend for handling the 529 plans? Am I correct in assuming it is a plan that, similar to an IRA, 401K, etc. can be administered by multiple different groups (rather than a single entity)?

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Can do yourself or financial institution can do it for you. My bank (Wells Fargo) takes out set amount each month that go into my Virginia 529 plans.

Thanks everyone for your input. As mentioned earlier, i'm currently with the Texas 529 plan but have definitely been looking at the Utah or Vangaurd 529 plan. Through some heavy internet hound dogging i've read a lot of good things about the V529 option.

Thanks for the upromise CC mention, I will look into that.

So either option looks like I will have to ramp up my monthly contribution to cover my projected future cost. Not a huge deal but it leads into my next question.

My kids are young and I tend to use purchases, vacations as financial learning tools. The importance of savings versus the pay for it now type of mentality. Never called debt evil as I've heard preached before but they need to understand what a CC or loan means. I feel that a little college debt is not a bad thing, my wife does not. I can understand 1 semester of loans that can be easily be paid off with a little work. It is a teaching tool. What is your opinion on letting your kids take a small tuition loan, even though you as a parent/grandparent can pay for it?

Little backstory: I used a loan for two semesters, my wife had hers paid in full.

I'm not sure how accurate the information is, but I've read in multiple places (I think one is Millionaire Teacher) that making kids/young adults work through financial issues (i.e. pay for some of their schooling, car, phone, whatever...) leads to adults that are more successful at money management.

I think it would be good to be a safety net - don't let them bring crippling levels of debt upon themselves by knowing you're there, however - but make sure they have to put enough skin in the game to understand the cost of purchases and to get the same level of respect for financial responsibility that you have at this point.

Our daughters are young, but I have every intention of letting them learn by contributing as they get older. I'm not sure how that will look when the time comes, but knowing how my parents approach spending, the fact that it wasn't really discussed growing up and the resulting poor decisions that I made, I will make sure there is something that my wife and I put in place to make sure they are aware of their financial situation and responsibilities early on.

i have four 529's through vanguard (1 being a upromise account)

my kids have no idea that i'm saving for their colleges

in their minds, they have to earn college with either scholarships and/or money they make from work

my goal is to have at least half of their college costs available if needed...

i mowed a lot of yards as a teenager to pay for college... learned quite a few life lessons as well about business & money... skin in the game is important imo

i guess if they end up not needing it, i'll get a phD degree or a yacht :-)

brazos4

I would consider keeping the 529 plan as well. I have been reading up on it and tossing it around as well and pre-paid tution is for undergrad only but you can rollover into a 529 if they choose grad school. Plus all unused units can be as well if you don't qualify for a refund. I'm wandering if there any differences regarding my taxes/deducts.

This is one of those topics that most don't have any investing interest in until....well, everything changes.

I've invested directly in NY's program (Vanguard) because I felt they had the lowest fees. However, the key is to get started and not procrastinate 8 years while you do research.

A few links for your reading pleasure on this subject:

http://texags.com/main/forum.reply.asp?topic_id=2103036&page=1&forum_id=57

http://texags.com/main/forum.reply.asp?topic_id=2133310&forum_id=57

I think like anything else "investment" -related, it's good to diversify.

My plan is a mixture of:

1. prepaid through Promise Fund
2. 529 money
3. Cash out of pocket

I don't think any single solution is fool-proof/no-brainer. It's good to hedge.

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Has anyone done this? If you have, whats your opinion? If anyone has even looked into this, maybe you have come to a decision like I am trying to.

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I bought four year plans for both my kids under the old Texas Tomorrow Fund Guaranteed Tuition Plan in 2001. It was a hugely advantageous decision based on the performance of virtually any other 529 plan. For tax purposes state sponsored prepaid tuition plans are a "defined contribution & defined benefit" 529 plan as opposed to a regular defined contribution plan.

Had I made the choice two years earlier during the market froth of the dotcom boom I would have chosen a regular 529 plan. However, since the illusion of my investing genius had been greatly deflated since March 2000 I decided that over a period of the coming 18 years I was unlikely to be able to generate consistent returns on my kids college funds (no matter how closely I watched and managed them) that would compare to the rate of cost increases for tuition.

Looking backward over the period from August 2001 through the beginning of the August 2012 academic year the S&P 500 with dividends reinvested has returned a total of 48.42%. Incomparison, my original $14,995 investment (for 128 hours in a four year public college) in the TGTP is valued at $34,042 (based on credit hour refund rates for 2012-2013 academic year http://www.tgtp.org/details/hourlyrates.html) which is 127.02% rate of return. The guaranteed prepaid tuition might not have sounded as appealing in 2001 but it has done very well in my opinion.

While many people might believe that they can earn 7% rate of return after commissions and management fees year in and year out (I can't) I am pretty sure that the rate of increase for tuition and mandatory fees will be far beyond the rate of return of the market indices. Consider the boring option.

edit: I also have the backup plan of transferring 18 months of GI Bill benefits to each of my kids which includes not only the tuition and other fees but also a housing stipend. That is a REALLY good feeling to have as a backup to the regular college savings plan.

[This message has been edited by Ulysses90 (edited 3/28/2013 9:09p).]