Im not OP, but thought Id share. Once the kids got their SS#, I put $500/month per kid.

First goal is is to have funds available for each kid. Enough to cover min 2-3 years.

Second goal is to not over fund. We will still be working while kids are in college, so we plan to cash flow some college expenses. We plan on cash flowing each kid at same amount as costs of current private school (approx $12k/year).

Taking that into account, the "underfund" 529s, plus cash flow, plus any scholarships/etc should make for comfortable college financial experience for us.

If 1 of 3 kids choose a different path - we will be over funded.

If any of the kids get major scholarships - we will be over funded.

At that point, we will kick the can down to our god children, etc.

HDeathstar said:

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We did a 529 and regular savings. Frontloaded the 529 fund at the beginning to take advantage of the tax free gains. You can always transfer the 529 to a sibling or to yourself for future classes.

Not an expert, but I think a 529 just needs to be tied to a SSN and can be used whenever someone with that SSN has eligible expenses.

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Can you expand on this... I understand front loading helps with compounding effect, but what do you mean by taking advantage of the tax free gains if 529 gains are already tax free?

TIA, new to this. 10 month old at home and about to open account.

I am hesitant to jump all in considering the political risk involved.

15-20 years from now, is college largely government funded through loan forgiveness? Will prices be even more astronomical due to subsidy? Will savers be penalized even more than they currently are? Will a degree be less valuable in light of the trade offs?

I front loaded a lot for Kid 1, but am having second thoughts on committing to the same strategy for Kid 2 and 3.

I'm also a bit concerned about this. What happens to 529s if government starts funding college?

You guys are kidding yourselves if you think the government is going to pay for your middle or upper middle class kids college.

I agree with the above that it's highly unlikely that the government will pay for college for my kid(s).

But, the way it is now, is the 10% fee on the earnings is waived if your kid gets a full scholarship. I'd imagine it would have to be similar if college becomes "free". So you'd just pay the taxes on the earnings when withdrawing. Or you keep it in the account for grad school, pass onto grandkids, etc.

AgsMyDude said:

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I'm also a bit concerned about this. What happens to 529s if government starts funding college?

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Then you'll use it in a situation similar to european healthcare with government doctors and then real doctors that you have to pay for privately.

The government will pay for college. You can then use your 529 to pay for an actual quality education.

AgsMyDude said:

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I'm also a bit concerned about this. What happens to 529s if government starts funding college?

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Put it in the NIL fund for for that 8th or 9th natty.

The tax advantages of the 529 are too good to pass up. Anything outside of a 529 will always have the added expense of tax consequences.

Our oldest of 4 is a HS senior. Although I am an advisor, we hired a college planning advisor to help navigate the process. The points below will be a combination of thoughts from both of us.

First, any of these options present a number of trade offs. 529 plans and Coverdell ESA both allow for tax free earnings if used for education expenses. Our family has used a Coverdell because you can use any family of funds that you like. There is no requirement to use one of the state plans. The main drawback to a Coverdell is the relatively meager $2000 annual limit. Also, you cannot fund a Coverdell after the child's 18th birthday. Mainly, the Coverdell catches funds from grandparents, birthdays, Christmas, etc. Anything that is given in the kids' names goes here. We have contributed our own funds to max these accounts each year. Coverdell funds can be transferred between family members/siblings, but we don't really plan on doing that as so much of the funds were contributed in the name of each child. In the event anything is left over, gains would be taxed as ordinary income. Lots more, but don't want to type anymore.

I advise most of my clients to fully fund a Roth first with their own money. Ethically, we would never put gifts to our children into our own accounts. As noted before, Roth funds can be used to pay for education expenses penalty free. Be aware, though, that doing so will add to your FAFSA income calculation, so you will jeopardize any need-based aid in subsequent years.

We have significant amounts in life insurance cash after funding Roths. These funds grow tax free and don't show up anywhere on FAFSA. While I recommend LI for children, I NEVER do so based on college funding. It is extremely difficult to accumulate more than a couple of thousand in a juvenile policy.

Minors are prohibited from owning securities, so UGMA and UTMA are simply securities accounts owned by adults with a specified minor named as the eventual owner. There are no tax benefits or shelters, per se, to these accounts, so investing in tax managed/sensitive funds may make the most sense. I can see these being useful in the scenario I described with wanting to separate funds for each child, but the parent would maintain control by using their own non-qualified investment account.

For the record, I was not fully on board with engaging the college planning group that we did, and time will tell if it was worthwhile financially. That said, I am now a better advisor having done so, so I view it as a kind of advanced CE seminar for my practice.

TL,DR; tradeoffs abound with all college funding ideas, and a good advisor will present options.

There are also income limits on Coverdale. So some may need to do Coverdale AND 529 since college costs so damn much..

T Durden said:

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There are also income limits on Coverdale. So some may need to do Coverdale AND 529 since college costs so damn much..

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Yeah I think the ESAs are like $2,000 per year max or something silly like that

That's the contribution limit. You get phased out at income limits too..

AggieinAlabama said:

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If you don't mind me asking, how much did you open it with and how much do you put in monthly?

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Don't think we put any $ in there when we opened it.
Each kid is at $400 or 450 a month. Then maybe another $1,000 annually from relatives gifts (Christmas or bday $).

So $400x12. $4800 + $1000= $5800 annually
x7 years of age. = $40,600 in contributions.
Our utah 529 account has grown 150%+

I think the 529 is still the way to go, but I'm in line some of these other folks. Don't overfund it. Use another savings method to do hold some additional money. The goal is try and use up your whole 529 balance, or have someone else you can transfer it to in the event you don't use it. 3ish years worth funds in the 529, all spent, and then a little bit out of your Roth IRA at the end ensures 100% of your savings grew tax free. No tax consequences after school is finished.