College Fund - How much?

Mom987 · August 2013

Hi everyone!

In following Dave Ramsey's steps, he says to pay towards college funds after doing 15% retirement savings (we're going out of order, oops). My question is, he doesn't give a guideline or example of how much to contribute towards college.

What do you guys do? Is it a percentage of your income or dollar amount? Right now, we're paying $100/month towards Roth IRA which can be used for education. Kids are 2 and 5 months.

Thanks!

moonprincessd · August 2013

Well it really depends on if you plan to pay for all their tuition or just some of it. We plan on doing a college fund thing and pay for the whole tuition (given they go to a college in state). No kids yet, so we haven't thought up a firm plan, but I would go with a savings account so you get interest over time as well, or maybe a bond.

So if you save $1,000 a year then you'll have $18,000 (enough for prob 2 years) by the time the kid goes off to college. $2,000 a year = $36,000 (enough for all 4 years). But again you have to keep inflation in mind and it can depend on what school they go to, but what you're saving will probably be enough for 1 kid's tuition, but not enough for 2 (if you're paying for all of it).

mgarza1231 · August 2013

We are only planning to contribute for part of their tuition so we will save $50/ month per child. I think that came up to about $17,000 by the time they go to school. Any extra birthday money or bonuses will also partly go towards this fund so I don't know how much will actually be in it when they turn 18.

Mom987 · August 2013

Thanks for your responses!

Ducktale · August 2013

I think we're going to plan around $100 a month plus any money they're given for birthdays, etc. if you start later, you'd obviously have to contribute more. We are comfortable if we don't foot the whole bill for college. It's our personal opinion that if they have to come up with some of the money they will take more responsibility for their education. We also believe part time jobs prepare kids for full time jobs after graduating. Personal preference there, I guess. Also if they choose to go to a more expensive school, then they will be responsible for the added costs.

Wulfgar · August 2013

First fund YOUR retirement accounts to the maximum that you can, at least 10%. Then worry about funding a college fund. There are other ways to get your children through college but you have only once chance to fund your retirement and remember it will most likely have to last at least 20 years.

Mom987 · August 2013

Ducktale said:
I think we're going to plan around $100 a month plus any money they're given for birthdays, etc. if you start later, you'd obviously have to contribute more. We are comfortable if we don't foot the whole bill for college. It's our personal opinion that if they have to come up with some of the money they will take more responsibility for their education. We also believe part time jobs prepare kids for full time jobs after graduating. Personal preference there, I guess. Also if they choose to go to a more expensive school, then they will be responsible for the added costs.

Totally agree with them paying part of it!

College Fund - How much?

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