Kool said:

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JSKolache said:

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Start a roth and deposit 6500 tomorrow. Buy an S&P 500 or total market ETF. Your annual contributions are withdrawable at anytime. You can cash out some as you need it for tuition etc. The earnings you make on your investment are not withdrawable without penalty, and you should keep that portion intact until you retire. If you have the cash to contribute, have your wife open a Roth as well. Market will be higher in 3 yrs than today, thats a nice long ramp, dont worry about it.

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The child has to have income in order to do this, correct? Does that income have to be proven by their tax return with W-2s, 1099s, etc.? Can you go back and "catch up" if they had income in a previous year?

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No clue about rothing your kid. Im saying open a roth for yourself, if you dont already have one (pro tip: you should.) Then in a few years you can pull out chunks of your 6500 annual contribs to pay bills for kids school as needed.

AP classes cut an entire year off my kids college.

Depending on where you work, stock.Transfer the stock to the kid's in gift form, $34k/yr per kid no tax. You can get creative with relatives and do more. Their capital gains should be nothing.

In semiconductors, you can get ridiculous amount of stock. This is a popular way to pay for college where I work.

HECUBUS said:

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Depending on where you work, stock.Transfer the stock to the kid's in gift form, $34k/yr per kid no tax. You can get creative with relatives and do more. Their capital gains should be nothing.

In semiconductors, you can get ridiculous amount of stock. This is a popular way to pay for college where I work.

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This wouldn't be applicable to us, but an interesting thought. Thanks for sharing

I think we're going to go the ROTH route for now until we hit the 6500 limit, then funnel any extra into a 529

Age 65, 75, and 85 year old you...and Death + 10 year old kids...are going to wish you'd have left the money in the Roth...Those are the best dollars, exponentially more so the longer they stay growing (double every 7-10 and all).

The fact that you can fund a Roth (x2) means your tax bracket isn't that high, meaning cap gains taxes on brokerage moneys are minimal. No tax benefit today for adding to the Roth, and the time horizon is too short for the older one to really amount to much.

Splitting my dollars between 529 (in case they don't go to college) and brokerage (possibly transferred to the kid depending on the totality of the situation at age 18) would be how I'd approach this one.

Only reason we went AP vs dual credit, is the dual credit may not be accepted at private or out of state schools.

Turns out kid went in State so it didn't matter.

can you please post a link for reference? Everything I see is $16k max

2022 limit was 16k.

2023 is 17k. Husband & wife 17k x 2 = 34k

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$34k/yr per kid no tax. You can get creative with relatives and do more. Their capital gains should be nothing.

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I don't see how you avoid cap gains, or are you saying the gifter (parents) don't pay cap gains, but the kids would. I don't see how you get out of this paying "nothing"

How do 529's work

https://clark.com/personal-finance-credit/investing-retirement/529-plan/

Thanks

mosdefn14 said:

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2022 limit was 16k.

2023 is 17k. Husband & wife 17k x 2 = 34k

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So my wife and I can separately give/"gift" our kids $17k a year, adding up to $34k, even though we are Married Filing Jointlu? Do they have to be of certain age to receive that? Is that $34k subject to tax?

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We have 2 kiddos aged 15 and 12 who always talked about setting up a 529 plan for college savings but never got around to it for various reasons and are now stressed out about having nothing saved up.

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Why? Have them pay for their own college. I will never understand why we all feel it is our responsibility to pay for our kids to go to college. If anything, them fronting the bill will make them hustle for scholarships, choose a useful degree that pays more than a Starbucks barista, and to not screw around too much while there. You can certainly help out as you're able to in order to help keep what they're borrowing down. My parents paid for my living expenses (my part of the rent and bills, some money for groceries/gas, and my cell phone). Everything else was on me. I took out loans for books and tuition (gave back any overage...this is where kids screw up) for anything my scholarships didn't cover, and worked full-time during the summer to save money and also drove a bus for A&M so I could have some fun on the weekends.

My inlaws paid for my wife and her sister's college (BIL had football scholarship), and they both went to private schools. $300k or more for school and both are teachers. If you ask them, they'll tell you it was money well spent, but give them truth serum, and they'll most likely tell you it would have been better for them to go to Sam or SFA and to put a giant down payment on a house for each. One of the teacher's in my wife's department (her husband is also a teacher) paid for their daughter to go to Rice, and she got such a useless degree that she can't find a decent job after a year and has now decided to go to grad school, so they're freaking out about how they're going to pay for it. WHY?

And in all honesty, it's probably better for them to skip college go to a trade school and learn a trade they can sell to desperate college grads who don't know much beyond changing a light bulb. I know plenty of people who were lucky to be C students in HS who fell into a trade somewhere in their 20s who now make as much, if not more, than I do. You probably know plenty, too.

Why? Because most parents are like "well, it's what they wanted and we wanted them to be happy?"

Call me crazy, but if I wanted to go into a career that tops out in the $60k range and my parents had the means and told me "We'll pay for you to go to TCU or pay for SFA and put the difference down on a house when you're ready to buy," even 18 year old me choose the latter.

Shallowminded14 said:

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Orrrrrr

Your kids can get a part time job to support their higher education desire. I worked my way through school to pay for everything except tuition (rent, food, fuel etc.). Graduated with 14K in student loans after my parents paid 1/2 of the loan balance upon retirement. What I learned working in my college years has translated well into my career now and has expedited my growth x3 compared to my peers.

Unless your child is a 4.0 honors student they have time to work. You cant eat their degree in retirement.

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L.O.L.

"Have your kids pay for their own college, just like I didn't"

I paid for 1/2 of my college. I paid for 100% of my living expenses while in college.

My parents didn't cover their 1/2 until I graduated. I didn't have time to screw off like the majority of my peers. LOL at you for getting conned into footing the bill for your child's likely useless degree and playtime on your dime. Good way to teach them to mature.

My wife's college was completely paid for. She worked for spending money, though.

I had student loans and worked. My parents probably covered 20%. They did help by paying some of my loans down later.

My wife took college more seriously than I did.

A blanket statement of making them pay for it will make them care more is as dumb as the blanket statement of everyone these days is getting a useless degree that will have zero ROI.

I'm in no way saying you have to pay for your kids college. Every situation is different. I'm just saying it's laughable to question why people want to.

Both of our scenarios are anecdotal.

If you have a financial stake in the game you're playing you're more likely to take it serious. That's a fact

Diggity said:

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Honestly....why do you give a **** what other people do with their money?

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I don't give a crap what people do with their money. But I also understand why someone would look back and wonder why they paid S-Class money for a Civic.

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you sound bitter/jealous in that post. "If I gave them truth serum., they would tell me I'm right". Gimme a break.

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Why the eff would I be bitter or jealous? Because my inlaws have money? If anything, I should be ecstatic, right? I wouldn't change a thing about how I grew up, because it's made me appreciate what I have a lot more than someone who had everything given to them.

And you're putting words in my mouth because that's not what I said. It may be what you think I said, but that's a you problem.

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As far as major, you can pick good/bad majors at any school. Pretty different argument.

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Goes to my point that you obviously missed. If the student is paying for their degree, they'll put more effort or research into what opportunities are out there for whatever they choose to get their degree in.

Shallowminded14 said:

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Both of our scenarios are anecdotal.

If you have a financial stake in the game you're playing you're more likely to take it serious. That's a fact

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Not necessarily when you're talking about 18 year olds who don't understand the severity of student loans they're taking out. I mean pretty obvious in the news today, i.e. loan forgiveness.

htxag09 said:

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It's odd to want to invest and support your child so they have more tools to succeed and do what they want in life, have a better life than you, etc.?

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If you have the means to do it, then help them out in some ways, but don't pay for everything. Make them have skin in the game. And if you don't have the means, or if having them is a strain on your finances or jeopardizes your retirement, don't do it. As a society, we've somehow morphed something we would like to do for our children into something we have to do for them, and it puts too much stress on people.

Shallowminded14 said:

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I paid for 1/2 of my college. I paid for 100% of my living expenses while in college.

My parents didn't cover their 1/2 until I graduated. I didn't have time to screw off like the majority of my peers. LOL at you for getting conned into footing the bill for your child's likely useless degree and playtime on your dime. Good way to teach them to mature.

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I bet if we all think back to some people we knew our freshman year, we'll remember the ones who never went to class and all flunked out. Their parents did nothing more than pay for a 9 month party and got nothing outside of a 19 year old moving back home for good at the end of the year.

htxag09 said:

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Shallowminded14 said:

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Both of our scenarios are anecdotal.

If you have a financial stake in the game you're playing you're more likely to take it serious. That's a fact

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Not necessarily when you're talking about 18 year olds who don't understand the severity of student loans they're taking out. I mean pretty obvious in the news today, i.e. loan forgiveness.

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I'd say that's a societal problem where people are told "follow your heart" or "study your passion." Well, often times, following your heart or your passion doesn't equate to well paying jobs, and going to expensive private schools to do that is a horrible idea more often than not if you're not going to an Ivy league school, Hopkins, Chicago, etc.

aTm2004 said:

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Diggity said:

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Honestly....why do you give a **** what other people do with their money?

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I don't give a crap what people do with their money. But I also understand why someone would look back and wonder why they paid S-Class money for a Civic.

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you sound bitter/jealous in that post. "If I gave them truth serum., they would tell me I'm right". Gimme a break.

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Why the eff would I be bitter or jealous? Because my inlaws have money? If anything, I should be ecstatic, right? I wouldn't change a thing about how I grew up, because it's made me appreciate what I have a lot more than someone who had everything given to them.

And you're putting words in my mouth because that's not what I said. It may be what you think I said, but that's a you problem.

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As far as major, you can pick good/bad majors at any school. Pretty different argument.

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Goes to my point that you obviously missed. If the student is paying for their degree, they'll put more effort or research into what opportunities are out there for whatever they choose to get their degree in.

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I'll skip your first two nonsense responses and go to this one.

If anything, kids taking out student loans are more detached from the real costs of things. I know so many people who maxed out student loans for tuition, kept the extra for shopping and were amazed 10 years later when they had all this debt.

That's one of the major issues with our current system. In a similar vein to health insurance, the payor/provider/payee are all detached (intentionally). This is why the Art Institute recruits kids from poor neighborhoods to sign on for $100K in loans to get a useless degree. Kids don't know any better, parents aren't footing the bill, and you get what you get.

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I'll skip your first two nonsense responses and go to this one.

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Translation: I put words in your mouth and yelled at a cloud that didn't exist.

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If anything, kids taking out student loans are more detached from the real costs of things. I know so many people who maxed out student loans for tuition, kept the extra for shopping and were amazed 10 years later when they had all this debt.

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Kids taking out loans are more detached from the real costs, but the ones who never see a tuition bill aren't? Give me a break. I'd bet there's a strong correlation between those and individuals with massive CC debt as well.

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That's one of the major issues with our current system. In a similar vein to health insurance, the payor/provider/payee are all detached (intentionally). This is why the Art Institute recruits kids from poor neighborhoods to sign on for $100K in loans to get a useless degree. Kids don't know any better, parents aren't footing the bill, and you get what you get.

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I agree. It's an intentional gap in the student loan program coupled with society's need for immediate satisfaction. IMO, anything that's left over shouldn't even be offered to the student, or held for a few weeks by the school so the student can use it to buy books if they need to. Bring receipts, and that amount will be dispersed and the rest given back.

Also, privatizing loans and making them dischargeable with bankruptcy, and you'll see massive changes to stuff like this. It's all intentional.

Also, let's not forget that the OP stated they're stressing because they're late to the game, which goes back to my original post/point...why do we feel it's our responsibility to pay for their college?

Probably because the way you framed it. "Give them the truth serum" and it was a waste of money.

In my first response, I said there was nothing wrong with the OP having their kids get student loans. A little different in that and your response.

Diggity said:

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aTm2004 said:

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If anything, kids taking out student loans are more detached from the real costs of things. I know so many people who maxed out student loans for tuition, kept the extra for shopping and were amazed 10 years later when they had all this debt.

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Kids taking out loans are more detached from the real costs, but the ones who never see a tuition bill aren't? Give me a break. I'd bet there's a strong correlation between those and individuals with massive CC debt as well.

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You don't think parents have more influence over their kids than the Stafford loan folks?

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I think you're underestimating how ignorant most parents are when it comes to college and it's true value. So many people today still think just having a college degree actually means something. The school. The degree. It's all the same to them. They're in 2023 with 1973 mindset. I'd also go out on a limb to say that many parents get caught up in the school vs. the value it will provide and the interests of the kid. If you have a son that wants to be a game warden, him going to SMU sounds a lot better to your friends than him going to Sam Houston State, which, IMO, is the better choice.

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I don't know about you, but if I'm footing the bulk of a six-figure college education, my kids are going to be accountable for the school they attend, the major they pick, and the grades they deliver.

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Oh, you're going to guide them with strings attached to the money.

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You act like a kid coming out of high-school and taking on a mountain of debt is going to mature immediately and make good choices on their own. That isn't the norm in my experience.

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No. I'm saying having some financial skin in their degree will help them more than having mommy and daddy there to catch them if they fall. And if they do mess around and fail out or choose a useless degree, they carry that burden, not the parents.

I know this is TexAgs, and everyone here has dual 6-figure incomes, 8-figure portfolios with 20% annual returns, and kids who will impress Mary Poppins, but there's a whole other world outside of this bubble. A world filled with people (even Aggies) who make <$100k/yr combined who somehow feel obligated to pay $100k+ for their kid to go to college. It's insane to me. And I say this as someone who already has college covered for all 3 of my kids.