For those who started late.. how did you save for college??

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For those who started late.. how did you save for college??

Postby AtlantaFamily-2013 » Wed May 08, 2013 4:11 pm

Hello all... I have posted my story on here before so I wont bore you with it again :) Lets just say I made some poor decisions early on and now I want to do better. My son is entering High School next year (9th grade). My wife and I want to begin saving towards his college education. I have being reading what others have posted about the College 529 plan, etc. Im really interested in knowing how some of you, who may have started late in the game like I did, saved for your kids education?? Any help or advice would be appreciated. Thanks.
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Re: For those who started late.. how did you save for colleg

Postby wilked » Wed May 08, 2013 4:24 pm

One dollar at a time... :beer

Do you have a reasonable guess as to where your son will attend college? If so, is it a FAFSA school or CSS? Learn the rules of each, there are ways to 'game' (or reduce one's expected contribution, legally of course) each. For instance, FAFSA doesn't count home income, so you could stick a bunch of your savings into your home and it wouldn't show up on the forms.

Search the forum, there are plenty of other threads on this. There is no silver bullet. You can use a 529, recognizing though that if you need the money in the next 5ish years it should not be invested too risk-ily, and as such you won't get much gains from it all.

At this stage it is a cash-flow analysis in my mind. Start putting numbers to a spreadsheet, pull out the FAFSA form, and begin estimating / budgeting
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Re: For those who started late.. how did you save for colleg

Postby snowx800 » Wed May 08, 2013 7:01 pm

I started late when my kid was in 6th grade
Just come up with the amount you can put away
Each year or month. I just keep putting extra in
When I have it. Just get started it will grow
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Re: For those who started late.. how did you save for colleg

Postby livesoft » Wed May 08, 2013 7:04 pm

I guess we started late on the college thing because we were more interested in saving for retirement.

So I am not sure what you mean. Do you mean where did we put our savings for college? Or did you mean how did we come up with any money to save for college? Those are fundamentally two different questions.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: For those who started late.. how did you save for colleg

Postby Padlin » Wed May 08, 2013 7:18 pm

How about those who didn't start at all? We paid out of pocket quarterly, had no savings. The kids did have to take the federal subsidized loan each year for their part, we paid what was left. Small private colleges ran about 20k a year at the time so we paid somewhere around 14k a year which was about 30% of our net. Wasn't much fun.
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Re: For those who started late.. how did you save for colleg

Postby LadyGeek » Wed May 08, 2013 7:33 pm

This thread is now in the Personal Finance (Not Investing) forum (saving for college).
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Re: For those who started late.. how did you save for colleg

Postby MathWizard » Thu May 09, 2013 8:27 am

I started when my eldest was in
5th grade.
I started with a portion of what I
expected to need each year and
increased it each year, using a Roth.

By the time he went to college,
I was saving as much as I needed
so I just stopped adding to the Roth
and paid directly not having to tap
the Roth.

If I had waited until 9th grade
I could have done it, but would
have needed to use the savings.

For example, if you need $8K per year
save $1K this year, $2K next year, $3K
the next and so on.
The 5th year you would be saving $5K,
put that with the $3K from the 3rd year
and you have the $8K needed.
Next year you would have saved $6K
put that with the $2K from the 2nd year
3rd year you would have saved $7K put
that with the first years $1K
After that you go to $8K and can pay
that indefinitely
and have $4K as as an Efund
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Re: For those who started late.. how did you save for colleg

Postby SeattleCPA » Thu May 09, 2013 8:57 am

Can I throw out an idea which I think gets far too little attention?

I think you ought (if you're feeling truly stressed about all this college costs stuff) just go cheap. I.e., pick a college alternative that isn't something you need to save and sacrifice for (or at least not much). E.g., during high school, encourage your son to do the AP classes thing or if available one of the "get a running start at the local community college" deals. You might in this case get your local high school to essentially pay for your son's first two years of college.

For the third and fourth year, look at an option like Western Governors which will cost you around $6K a year... a focused student could probably spend $9K to $12K in total to get the last half of college paid for. If you can't cash flow this amount, http://www.wgu.edu will probably provide student loans that your son can pay off in the interval between when he graduates early from college and when his peers graduate from college (a year or two or three later).

My kids are done with college. But I will note here that in gigantic surprise to me, both my kids (though I fully funded four years at a public university) decided spending that money on college wasn't what they wanted to do. In those days, the Sec. 529 plan was not available, so I'd used a UTMA account at Vanguard. They used that college money to do other stuff... like buy a home.
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Re: For those who started late.. how did you save for colleg

Postby N1CKV » Thu May 09, 2013 9:18 am

This whole "paying for my kids college" thing still puzzles me.

I am in my mid-thirties now. I got a cash job when I was 15 years old, got a real job at 16 and I worked and saved. I bought a car when I graduated high school, my parents never promised me anything other than that they would pay the the liability only insurance on a reasonable vehicle as long as I stayed in school. I moved out at the end of the summer and payed for my own apartment. I payed for my first semester of school and my parents surprised me with reimbursing my books. I worked while in school, I had everything ready for the second semester and my parents picked up the bill for tuition, books were on me that time. This kept alternating throughout the time it took (5 yrs for my bachelor's, I was working 30+ hrs a week). After all was said and done I was far more proud of my accomplishments and life lessons learned by working my way through school. I NEVER was promised, not really expected any help. I always had the money to take care of the bill, it was my responsibility.

For those wondering, I came from a middle class background. My parents were/are financially secure, they could have easily footed the entire bill if they chose. Instead they let me figure it out for myself, giving me life lessons in work ethic, personal finance and many other things.
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Re: For those who started late.. how did you save for colleg

Postby HardKnocker » Thu May 09, 2013 9:23 am

I never saved specifically for college funds. I just saved period.

Money is money.

An unfortunate consequence of having lots of money is qualifying for little or no financial aid.
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Re: For those who started late.. how did you save for colleg

Postby travellight » Thu May 09, 2013 10:10 am

yup, me too. My son is finishing tenth grade and I have saved nothing. I am planning to just pay for it when the time comes up figuring it to be basically another mortgage payment. I hope to have all my mortgages paid off by then so it is a simple transfer of allocation of exiting money.
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Re: For those who started late.. how did you save for colleg

Postby momar » Thu May 09, 2013 10:22 am

N1CKV wrote:This whole "paying for my kids college" thing still puzzles me.

I am in my mid-thirties now. I got a cash job when I was 15 years old, got a real job at 16 and I worked and saved. I bought a car when I graduated high school, my parents never promised me anything other than that they would pay the the liability only insurance on a reasonable vehicle as long as I stayed in school. I moved out at the end of the summer and payed for my own apartment. I payed for my first semester of school and my parents surprised me with reimbursing my books. I worked while in school, I had everything ready for the second semester and my parents picked up the bill for tuition, books were on me that time. This kept alternating throughout the time it took (5 yrs for my bachelor's, I was working 30+ hrs a week). After all was said and done I was far more proud of my accomplishments and life lessons learned by working my way through school. I NEVER was promised, not really expected any help. I always had the money to take care of the bill, it was my responsibility.

For those wondering, I came from a middle class background. My parents were/are financially secure, they could have easily footed the entire bill if they chose. Instead they let me figure it out for myself, giving me life lessons in work ethic, personal finance and many other things.

So what you're saying is that your parents helped you out?
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Re: For those who started late.. how did you save for colleg

Postby N1CKV » Thu May 09, 2013 10:40 am

momar wrote:
N1CKV wrote:This whole "paying for my kids college" thing still puzzles me.

I am in my mid-thirties now. I got a cash job when I was 15 years old, got a real job at 16 and I worked and saved. I bought a car when I graduated high school, my parents never promised me anything other than that they would pay the the liability only insurance on a reasonable vehicle as long as I stayed in school. I moved out at the end of the summer and payed for my own apartment. I payed for my first semester of school and my parents surprised me with reimbursing my books. I worked while in school, I had everything ready for the second semester and my parents picked up the bill for tuition, books were on me that time. This kept alternating throughout the time it took (5 yrs for my bachelor's, I was working 30+ hrs a week). After all was said and done I was far more proud of my accomplishments and life lessons learned by working my way through school. I NEVER was promised, not really expected any help. I always had the money to take care of the bill, it was my responsibility.

For those wondering, I came from a middle class background. My parents were/are financially secure, they could have easily footed the entire bill if they chose. Instead they let me figure it out for myself, giving me life lessons in work ethic, personal finance and many other things.

So what you're saying is that your parents helped you out?

I am saying that I, as the student, didn't need the help. Fretting over how to pay for your child's college education is ridiculous. Instead of getting a free ride I got a real world education in the process. Besides the help my parents gave I received no other financial aid and never took a student loan. The only real benefit from my parents helping was I was able to dump my $2,000 car halfway through school and buy a $10,000 used truck (cash).
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Re: For those who started late.. how did you save for colleg

Postby AtlantaFamily-2013 » Thu May 09, 2013 3:25 pm

livesoft wrote:I guess we started late on the college thing because we were more interested in saving for retirement.

So I am not sure what you mean. Do you mean where did we put our savings for college? Or did you mean how did we come up with any money to save for college? Those are fundamentally two different questions.


Yes, I am interested in knowing where did/would you put your savings for kids college, if you started so late in the game as we did?
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Re: For those who started late.. how did you save for colleg

Postby nodenuff2 » Thu May 09, 2013 3:34 pm

Atlanta doesn't Ga. have an excellent scholarship program for kids with a 3.0 grade point average?. Encourage your kids to do well go to an in-state school price is low. Apartments, cars extras are where college gets very expensive. Kids need to help out by doing their part. Been there done that . We educated a chemist and a lawyer with no debt after graduation. Not bragging at all but it can be done.
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Re: For those who started late.. how did you save for colleg

Postby livesoft » Thu May 09, 2013 3:52 pm

AtlantaFamily-2013 wrote:Yes, I am interested in knowing where did/would you put your savings for kids college, if you started so late in the game as we did?


Here a link where I described in too much detail what we did:
viewtopic.php?f=1&t=107916&p=1568298

Basically, we just used the Utah 529 plan 100% stock option and the Ohio 529 plan 100% Vanguard Income (VINC) option.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: For those who started late.. how did you save for colleg

Postby stoptothink » Thu May 09, 2013 3:56 pm

N1CKV wrote:
momar wrote:
N1CKV wrote:This whole "paying for my kids college" thing still puzzles me.

I am in my mid-thirties now. I got a cash job when I was 15 years old, got a real job at 16 and I worked and saved. I bought a car when I graduated high school, my parents never promised me anything other than that they would pay the the liability only insurance on a reasonable vehicle as long as I stayed in school. I moved out at the end of the summer and payed for my own apartment. I payed for my first semester of school and my parents surprised me with reimbursing my books. I worked while in school, I had everything ready for the second semester and my parents picked up the bill for tuition, books were on me that time. This kept alternating throughout the time it took (5 yrs for my bachelor's, I was working 30+ hrs a week). After all was said and done I was far more proud of my accomplishments and life lessons learned by working my way through school. I NEVER was promised, not really expected any help. I always had the money to take care of the bill, it was my responsibility.

For those wondering, I came from a middle class background. My parents were/are financially secure, they could have easily footed the entire bill if they chose. Instead they let me figure it out for myself, giving me life lessons in work ethic, personal finance and many other things.

So what you're saying is that your parents helped you out?

I am saying that I, as the student, didn't need the help. Fretting over how to pay for your child's college education is ridiculous. Instead of getting a free ride I got a real world education in the process. Besides the help my parents gave I received no other financial aid and never took a student loan. The only real benefit from my parents helping was I was able to dump my $2,000 car halfway through school and buy a $10,000 used truck (cash).


I am with you 100% on this, but it is not a popular opinion on this board. 31 with an MS and PhD and completed my education without ever having taken out a loan or getting a penny from mom. I worked hard to get scholarships and grants, had jobs at all times, and saved, as did 4 of my 5 adult siblings who have at least undergrad degrees and never got a penny from mom. It was hard, but we are all greatful for the experience. Funding my (future) children's college educations is pretty much at the bottom of the list as far as my financial priorities.
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Re: For those who started late.. how did you save for colleg

Postby Banana » Thu May 09, 2013 4:18 pm

stoptothink wrote:
N1CKV wrote:
momar wrote:
N1CKV wrote:This whole "paying for my kids college" thing still puzzles me.

I am in my mid-thirties now. I got a cash job when I was 15 years old, got a real job at 16 and I worked and saved. I bought a car when I graduated high school, my parents never promised me anything other than that they would pay the the liability only insurance on a reasonable vehicle as long as I stayed in school. I moved out at the end of the summer and payed for my own apartment. I payed for my first semester of school and my parents surprised me with reimbursing my books. I worked while in school, I had everything ready for the second semester and my parents picked up the bill for tuition, books were on me that time. This kept alternating throughout the time it took (5 yrs for my bachelor's, I was working 30+ hrs a week). After all was said and done I was far more proud of my accomplishments and life lessons learned by working my way through school. I NEVER was promised, not really expected any help. I always had the money to take care of the bill, it was my responsibility.

For those wondering, I came from a middle class background. My parents were/are financially secure, they could have easily footed the entire bill if they chose. Instead they let me figure it out for myself, giving me life lessons in work ethic, personal finance and many other things.

So what you're saying is that your parents helped you out?

I am saying that I, as the student, didn't need the help. Fretting over how to pay for your child's college education is ridiculous. Instead of getting a free ride I got a real world education in the process. Besides the help my parents gave I received no other financial aid and never took a student loan. The only real benefit from my parents helping was I was able to dump my $2,000 car halfway through school and buy a $10,000 used truck (cash).


I am with you 100% on this, but it is not a popular opinion on this board. 31 with an MS and PhD and completed my education without ever having taken out a loan or getting a penny from mom. I worked hard to get scholarships and grants, had jobs at all times, and saved, as did 4 of my 5 adult siblings who have at least undergrad degrees and never got a penny from mom. It was hard, but we are all greatful for the experience. Funding my (future) children's college educations is pretty much at the bottom of the list as far as my financial priorities.


Great post stoptothink. I'm also in the minority on this. I've mentioned this on other threads, but even though I do have the resources to fully fund my kids education I'm considering not doing it just so I don't deprive them of the opportunity. I used the military/part-time work/scholarships to pay for my school, and looking back I wouldn't have it any other way. Lots of lessons learned, and an accomplishment I can be proud of.
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Re: For those who started late.. how did you save for colleg

Postby TomatoTomahto » Thu May 09, 2013 4:46 pm

Instead of reviving the tired "help/no help for the kid's college" or the closely associated selective/Ivy/StateU debate, why don't we stick to OP's question? I've gotten involved in the other debates, but after a gazillion posts, has a single person had their opinion changed? By my count, no.

Atlanta, we started late, but we had sufficient cash flow to cover our mistakes, so my example won't help. i wish you and your family the best of luck.

EDITED TO ADD: you might find more help at http://Www.collegeconfidential.com
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Re: For those who started late.. how did you save for colleg

Postby VictoriaF » Thu May 09, 2013 4:54 pm

TomatoTomahto wrote:Instead of reviving the tired "help/no help for the kid's college" or the closely associated selective/Ivy/StateU debate, why don't we stick to OP's question?

I don't remember all the debates, but I do know that the top 3-4 schools (Harvard, Princeton, Stanford, Yale) provide much better financial aid than other private schools. Thus, I advocate the bar-bell approach: Either H/P/S/Y or the best state school (in one's state of residence). This helps with college savings whether it's due to the late start or desire to save.

Victoria
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Re: For those who started late.. how did you save for colleg

Postby TomatoTomahto » Thu May 09, 2013 5:03 pm

VictoriaF wrote:
TomatoTomahto wrote:Instead of reviving the tired "help/no help for the kid's college" or the closely associated selective/Ivy/StateU debate, why don't we stick to OP's question?

I don't remember all the debates, but I do know that the top 3-4 schools (Harvard, Princeton, Stanford, Yale) provide much better financial aid than other private schools. Thus, I advocate the bar-bell approach: Either H/P/S/Y or the best state school (in one's state of residence). This helps with college savings whether it's due to the late start or desire to save.

Victoria
I think it's most of the Ivies and some other highly selective schools that will fill in for "demonstrated need" without loans. OTOH, if you have the chops to get into one of those schools, you would probably have a free ride at a good but less selective school.
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Re: For those who started late.. how did you save for colleg

Postby VictoriaF » Fri May 10, 2013 2:15 pm

TomatoTomahto wrote:
VictoriaF wrote:
TomatoTomahto wrote:Instead of reviving the tired "help/no help for the kid's college" or the closely associated selective/Ivy/StateU debate, why don't we stick to OP's question?

I don't remember all the debates, but I do know that the top 3-4 schools (Harvard, Princeton, Stanford, Yale) provide much better financial aid than other private schools. Thus, I advocate the bar-bell approach: Either H/P/S/Y or the best state school (in one's state of residence). This helps with college savings whether it's due to the late start or desire to save.

Victoria
I think it's most of the Ivies and some other highly selective schools that will fill in for "demonstrated need" without loans. OTOH, if you have the chops to get into one of those schools, you would probably have a free ride at a good but less selective school.


When I was researching this issue, the financial aid available from H/P/S/Y was far above the aid from Brown or Cornell. The top few universities have huge endowments that they use to attract those with the superior chops.

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Re: For those who started late.. how did you save for colleg

Postby HardKnocker » Fri May 10, 2013 4:47 pm

VictoriaF wrote:When I was researching this issue, the financial aid available from H/P/S/Y was far above the aid from Brown or Cornell. The top few universities have huge endowments that they use to attract those with the superior chops.

Victoria


Princeton is not any more expensive to attend than any other private university. They are very generous with aid for qualified applicants in need.
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Re: For those who started late.. how did you save for colleg

Postby RadAudit » Fri May 10, 2013 5:01 pm

I'd suggest tax advantaged accounts as much as possible. Since you started late, use something safe although yields are low. I found it was better to have something when it was needed than miss low on a projection.

Best of luck.
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Re: For those who started late.. how did you save for colleg

Postby MnD » Sat May 11, 2013 8:52 am

Assuming you won't qualify for need aid......
State U's, merit aid, set a firm college cost budget and communicate to student before they start applying, cast a wide net, increase work hours if both parents aren't working full time, student work, reduce other costs, refi mortgage to longer term during the college cost years then later resume faster payback by paying extra or refiing to a shorter term, 529 accounts even if it's just money in, money out to capture the state tax deduction.

If all of the the above in some combination can result in enough free cash flow to finance one student in college at a time, just focus savings on savings for one student for just the overlap years. For example if you have two kids two years apart and need the funds for 16 semesters, you'll only need to save for 4 semesters worth of costs if you can finance one college cost out of cash flow (for 12 semesters). Firmly communicate to students that anything over 4 years is their problem if they opt for the 6 year plan.
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Re: For those who started late.. how did you save for colleg

Postby market timer » Sat May 11, 2013 3:13 pm

The best payoff is likely to come from motivating your son to get good grades and a high SAT score. For example, throughout high school in the mid 1990s my parents would pay $400/year ($100 per report card) for straight A's and offered me a prize of $1000 if I could score in the top 1% on the SAT, investments that paid for themselves many times over in scholarships.
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Re: For those who started late.. how did you save for colleg

Postby Saving$ » Sat May 11, 2013 5:12 pm

1. Fully fund your and your spouse's Roth. You can take money from that with no penalty for your kids college if needed.
2. Fully fund your and your spouse's 401k.
3. If you have extra money after that, only then consider saving for the kids college.
a. Set the expectation that the kid will work. Use your extra money to fund the kids Roth IRA. The kid can take principal out of their own Roth penalty free to fund their own education.
b. Encourage good grades
c. Encourage self sufficiency.

Full disclosure: I put myself through college with work and loans. It was a good lesson. I valued my education more than many of my peers.
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Re: For those who started late.. how did you save for colleg

Postby awaraarawa » Thu May 30, 2013 5:04 pm

One more in the late boat....although I fall into the late planning boat rather than late saving boat. I am a bit thrifty by nature and so that helps with the saving part.

wilked mentioned "Learn the rules, there are ways to reduce one's expected contribution".....is there a consolidated list of options available, planning tools and/or best places to invest to reduce taxes and expected contributions.....have three kids to put through college and none of them overlap. First kid starts college in Fall 2014. Kids are studious and do their best on the academic front. It has been made clear to them and they recognize that education is the most important thing for them to focus on.

Would appreciate pointers/tips via this thread or via PMs. Thanks.

wilked wrote:One dollar at a time... :beer

Do you have a reasonable guess as to where your son will attend college? If so, is it a FAFSA school or CSS? Learn the rules of each, there are ways to 'game' (or reduce one's expected contribution, legally of course) each. For instance, FAFSA doesn't count home income, so you could stick a bunch of your savings into your home and it wouldn't show up on the forms.

Search the forum, there are plenty of other threads on this. There is no silver bullet. You can use a 529, recognizing though that if you need the money in the next 5ish years it should not be invested too risk-ily, and as such you won't get much gains from it all.

At this stage it is a cash-flow analysis in my mind. Start putting numbers to a spreadsheet, pull out the FAFSA form, and begin estimating / budgeting
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Re: For those who started late.. how did you save for colleg

Postby johnep » Fri May 31, 2013 8:39 am

I did not start making enough money to save for kids college until they were in early teens. We did a pay as you go approach. Unfortunately, my son only finished one year of college. My daughter graduated from local state university. I told her she could go to any state supported school and that was where she chose. She also chose to stay at home although she probably spent half her time at school. I did give her a generous allowance so she would not have to do parttime work and bought her a new car her junior year. She had a great college experience and education.

My big regret is my son not getting his degree. I would have paid a lot of money to see that happen. That has definitely cost him in his career and has cost us as well by providing assistance to him during layoffs in his industry.
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