Discussing a 529 with your kids

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RandomUser
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Re: Discussing a 529 with your kids

Post by RandomUser » Sun Jan 21, 2018 9:26 pm

I would encourage that you have structured conversations about college costs & funding with each child. My Dad sat down with me annually, laid out what my tuition costs, financial aid & scholarships, their contribution & the remainder was my responsibility.

Similarly, I helped my daughter develop a financial model for her college education. It was clear what we had saved for it. It was also clear that she would have to foot part of the bill. (Enough that she would have to work or take out some small loans). You kids can run that model for different schools, costs & duration (4 yr v. 5 year). They should include financial criteria as one of the criteria to consider in addition to the education, social, campus, etc. criteria they would naturally choose from.

When kids have "skin in the game" they don't cut class casually or put up with professors who love to tell stories rather than teach or are poor teachers. Once they've calculated how hard they had to work for each hour of class it had more value.
They are also less inclined to go on the 5 year program.

We found this the next logical next step in her financial education and ever increasing responsibility for her financial decisions. In the end she decided to follow a lower paying career (elementary teacher at a small private school in the inner city for economically disadvantage kids) but she's also doing something she loves & is good at. She is also making smart financial decisions even on a lower income (& educating her husband too!), so I feel it worked in our case.

miamivice
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Re: Discussing a 529 with your kids

Post by miamivice » Sun Jan 21, 2018 9:34 pm

RandomUser wrote:
Sun Jan 21, 2018 9:26 pm
When kids have "skin in the game" they don't cut class casually or put up with professors who love to tell stories rather than teach or are poor teachers. Once they've calculated how hard they had to work for each hour of class it had more value.
They are also less inclined to go on the 5 year program.
I would like to see where a randomized study backs up your opinion that you just expressed.

While, as a parent, I would like to think that was true, I am not convinced. I think a lot of study skills and work ethic are developed before college.

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cockersx3
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Re: Discussing a 529 with your kids

Post by cockersx3 » Sun Jan 21, 2018 9:37 pm

AllMostThere wrote:
Sun Jan 21, 2018 9:06 am
staythecourse wrote:
Sat Jan 20, 2018 8:10 pm
What does this have anything to do with it affecting the kid's choices. It is money under YOUR control (yes the ONLY situation in the IRS where a completed gift is still under full control of the giftee). Just tell them what your expectations are and that you will only support payment if under x conditions..

I am not sure why parents are so hesitant to lay down the law with their kids. There is not excuse for allowing kids to pick majors and careers that can't even pay of the education amount (no matter who pays).

Good luck.
I cannot agree more. It is a parents job to guide and direct a young adult to enable their successful launch into adulthood. A 529 is just one element of this parental wisdom that gives them choices that must be realistic. How many of us have listened to a Dave Ramsey episode of a recent college grad from Blah Blah Private College with a degree is Antarctic Art History with +$100K in loans and cannot find a job or they have a job paying $28K! This uncorrected path ensures a kid stays on the parents payroll to even survive. It all comes down to cost-benefit and most, not all, kids will need this guidance. It's never easy. Good Luck.
Me too. I know far too many people who went to college for either low-paying jobs, or degrees without a clear purpose (think Marketing, Business, Environmental Studies, etc). They all now occupy jobs for which a high school degree would probably be sufficient. I cannot and will not allow that to happen on my watch, with my money - seems very irresponsible to me.

If one of my kids wants to pursue a major like this, no one's stopping her. But she'll have to figure out how to pay for it. I do not feel that I am somehow obliged to unconditionally fund college anywhere, for any degree, at any cost. Ultimately college is a luxury, not a right. If it makes sense for my family and it seems like a good use of money, then obviously I'll help. But if she wants to major in Antarctic Art History, even afterI try to talk her down from it? That's on her, not us. Ditto if she doesn't maintain a reasonable GPA in high school, or goes to college and doesn't maintain a reasonable GPA there, or wants to go on the 5+ year plan.

Regarding the original topic - I have communicated to our daughters the total amount we will offer her to go to college, if she chooses to do so, along with our expectations to maintain that funding (minimum high school / college GPA, our agreement on a major, etc). I have not shared with her what her 529 balance is, since I consider it irrelevant - doesn't really matter where the money is coming from, as long as we commit to that amount.

finite_difference
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Re: Discussing a 529 with your kids

Post by finite_difference » Sun Jan 21, 2018 10:01 pm

My parents funded 100% of my education. So it’s only fair that I pay it forward.

In fact, I personally don’t believe you should have kids if you aren’t prepared to more or less sacrifice everything for them. That’s basically what my parents did for me. “Kids first”, if you will. But I fully realize that not everyone can afford it, and the costs for college sure are rising. I also think there are many valid schools of thought on this topic, but that’s mine.

If I make enough money I would like to create a scholarship to fund someone else as well.

So there’s not much to discuss regarding the 529.. it’s just a vehicle to cover some costs in a tax advantaged way.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

finite_difference
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Re: Discussing a 529 with your kids

Post by finite_difference » Sun Jan 21, 2018 10:05 pm

miamivice wrote:
Sun Jan 21, 2018 9:34 pm
RandomUser wrote:
Sun Jan 21, 2018 9:26 pm
When kids have "skin in the game" they don't cut class casually or put up with professors who love to tell stories rather than teach or are poor teachers. Once they've calculated how hard they had to work for each hour of class it had more value.
They are also less inclined to go on the 5 year program.
I would like to see where a randomized study backs up your opinion that you just expressed.

While, as a parent, I would like to think that was true, I am not convinced. I think a lot of study skills and work ethic are developed before college.
I would like to see this study as well.

So students on full scholarship must be cutting a lot of classes!

I am also very anti-“tough love” in general. Does not work on anyone I know (not to say it doesn’t work on some.) I prefer the “unconditional love” + “guilt trip” + “high expectations” approach with perhaps a mix of “passive aggression” ;)

raisinsaregrapes
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Re: Discussing a 529 with your kids

Post by raisinsaregrapes » Sun Jan 21, 2018 10:19 pm

I want to save up enough for my kid to go anywhere, and if I do I'd sure as hell better tell them. Otherwise they may never apply to Harvard, MIT, or Stanford thinking it is too expensive.

KlangFool
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Re: Discussing a 529 with your kids

Post by KlangFool » Sun Jan 21, 2018 10:46 pm

OP,

1) My son wants to study Physic. I told him flatly that I am not paying. He could double major Engineering and Physic. But, if he is going to major in Physic only, I am not paying. After one year in college, he dropped his physic major. He found out that he is not suitable for a scientist type of career. He is inherently an Engineer type of person.

2) My daughter wants to major in Arts. I said go right ahead. In fact, I will support her regardless of whatever major that she chooses.

3) I know my children. I know that my son is clueless. He has absolutely no idea what he is good at and what he wants to do with his life. So, I need to guide him. Meanwhile, my daughter knows what she wants out of her life. She started art internship while she is in high school. So, I do not need to worry about her choosing her major.

4) Each child is different. We have to provide the appropriate amount of guidance and control on our children.

KlangFool

Shikoku
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Re: Discussing a 529 with your kids

Post by Shikoku » Mon Jan 22, 2018 1:22 am

livesoft wrote:
Sat Jan 20, 2018 6:45 pm
When FAFSA time rolled around, we filled it out together, so my oldest knew about our entire financial situation. I'm a big believer in not hiding anything and telling the truth.
We did the same. We also discussed how different buckets of fund will be used in coming years and decades.

When our oldest was in 10th grade, we told him that he will get full financial support from us for undergrad education irrespective of the program or college he selects.
"I don't worry too much about pointing fingers at the past. I operate on the theory that every saint has a past, every sinner has a future." -- Warren Buffett

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Re: Discussing a 529 with your kids

Post by daveydoo » Mon Jan 22, 2018 2:37 am

noco-hawkeye wrote:
Sat Jan 20, 2018 6:01 pm


During this process, we are asking our kids "how much does that school cost?", as we are trying to help make the decision with them, and coach them through this process as much as we can / should. They usually can find some rough numbers, which are almost always overwhelming to a high school student.
I think you need to lay the cards on the table early in the process before they fall in love with their dream schools (some of which may not even be "reach" schools). A few of my kids' friends had the rug pulled out from under them when they learned very late in the game that parents would not pay for a top-tier school. All were high-achieving kids, and one family even owns a private business worth nine figures and that will soon be acquired :shock: . These families all have enviable lifestyles, beautiful homes, and college-educated parents. These kids were kinda baffled. They did not have unrealistic expectations for their demographic, imo.

Apart from your own state school, all colleges are insanely expensive. Asking your kids how expensive a college is is moot, imo. An out-of-state "state" school will be $10K+ less than a private school. The only bargain is your state school, provided you live in one of the (many) states with great local options. We do not. As you will see, the question is not "How much is that school?", but rather "How much is that school likely to be for you?" If your bright, accomplished kids aim low enough, they can get tons of merit aid, but it's very rare at the top tier.

And then you need to decide how much emphasis you place on the quality of the school vs. how much your kid loves it. Our stance has been that we'll pay what it takes at an excellent school, but we would have had serious reservations about paying for a mediocre private school. Most in-state "state" options are better than that (even for us), although the food is worse and the dorms suck and there's no climbing wall...
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"

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celia
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Re: Discussing a 529 with your kids

Post by celia » Mon Jan 22, 2018 3:19 am

Yooper wrote:
Sat Jan 20, 2018 7:23 pm
Personally I'd be thrilled if they did a stint in the military before heading off to school, but that's another story.
LOL. We only had some college money saved for the oldest as we were still paying K-12 tuition for the others. The oldest went to a military academy and later used the saved UGMA money for a car. I considered the "free" military academy a scholarship just like the scholarships the other kids received.

We started by having them list the criteria they needed for a college, like good majors that met their career goals, size of school, distance from home and how they'd get there, campus housing or not, average SAT scores for admitted students, chance of being accepted, chance of scholarship, etc. Then they compared each college of interest to their criteria list and applied to a couple of "reach" schools and several "safe" schools. Money was not an upfront issue, but they knew they'd have to get some financial aid/scholarship from the private colleges for most of them to be a viable choice.

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Re: Discussing a 529 with your kids

Post by aristotelian » Mon Jan 22, 2018 8:59 am

staythecourse wrote:
Sat Jan 20, 2018 11:31 pm
When did I say I would choose their major? I said I would not pay if they chose a degree in something that will not recoup the education that it cost to get that degree. That is different then me saying, "My son is going to be a dentist and will only pay if he does that on field". As I said previous there are a TON of jobs out there that are fulfilling and that pay well. I don't begrudge those in the arts, but can't seem to forget the Northwestern drama student grad who I paid $20/ hour to put my kid's IKEA furniture together. Having him tell me that is basically what all his cohorts are doing with their degrees until they can get employed is not a life I want for my kids.

Good luck.
Philosophy major here. It is not the most lucrative path but there are ways that it can directly or indirectly lead to a career. Keep in mind as well that one can major in philosophy and go to grad school in law, education, business, etc. I would certainly want my kids to have realistic expectations, but personally I would not force them down one path or another. If they would truly be happier putting together IKEA furniture while painting or writing, why begrudge them that, as long as they are self sufficient? Perhaps they will see what that life is like in their 20s and go into something "productive" in their 30s as their values change. I would not want my kids to be bitter and resentful if they go into corporate law or business because of me, and ended up hating it.

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Re: Discussing a 529 with your kids

Post by staythecourse » Mon Jan 22, 2018 9:39 am

aristotelian wrote:
Mon Jan 22, 2018 8:59 am
staythecourse wrote:
Sat Jan 20, 2018 11:31 pm
When did I say I would choose their major? I said I would not pay if they chose a degree in something that will not recoup the education that it cost to get that degree. That is different then me saying, "My son is going to be a dentist and will only pay if he does that on field". As I said previous there are a TON of jobs out there that are fulfilling and that pay well. I don't begrudge those in the arts, but can't seem to forget the Northwestern drama student grad who I paid $20/ hour to put my kid's IKEA furniture together. Having him tell me that is basically what all his cohorts are doing with their degrees until they can get employed is not a life I want for my kids.

Good luck.
Philosophy major here. It is not the most lucrative path but there are ways that it can directly or indirectly lead to a career. Keep in mind as well that one can major in philosophy and go to grad school in law, education, business, etc. I would certainly want my kids to have realistic expectations, but personally I would not force them down one path or another. If they would truly be happier putting together IKEA furniture while painting or writing, why begrudge them that, as long as they are self sufficient? Perhaps they will see what that life is like in their 20s and go into something "productive" in their 30s as their values change. I would not want my kids to be bitter and resentful if they go into corporate law or business because of me, and ended up hating it.
If my son or daughter wants to be a starving artist then no problem. BUT in my view starving artist don't get 100% paid tuition to become a starving artist. I would rather them do it on their own dime (which leads to the starving part) and I'll give the money to some poor kid who wants to become x, y, or z and can't because he doesn't have the funds to do it. What I don't believe in is letting kids live a lifestyle that is not conducive to the life they choose just because they won the gene lottery.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

staythecourse
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Re: Discussing a 529 with your kids

Post by staythecourse » Mon Jan 22, 2018 10:02 am

gasdoc wrote:
Sun Jan 21, 2018 8:47 pm
staythecourse wrote:
Sun Jan 21, 2018 8:15 pm
gasdoc wrote:
Sun Jan 21, 2018 8:02 pm
I never actually mentioned the amount in the 529, but she can figure it out easy enough. I told her it was enough to cover 4 years at any school she would choose, and if she chose a cheaper school, or got scholarship money, she could use the rest of the money for grad school (she is pre-med). She is currently a college freshman.I have told her I will try to help her out with the remainder of grad school, but she is aware that I have become very money conscience because I would like to retire in the next 3-5 years. It is kind of funny- she apologizes for doing things that cost me money (like dislocating her elbow recently). Funny, also, she gets anxious when I take an expensive vacation or when I cut back on my hours at work. I think she "gets it."

gasdoc

Just curious if you regret letting them know if it is causing them ANY concern. I would assume she feels enough internal pressure trying to get into med. school. Feeling anxious about the costs seems to be the opposite of what letting kids know about having a 529 plan is all about. No?

Good luck.
I don't understand what you mean- I may not be able to pay for all of a four year education in medical school and it would mean taking out some loans to finish. My goal is to pay for as much as possible. Her goal is to get by with as little loans as possible. Maybe anxiety is not the correct term. Are you thinking it would be better not to tell her what is in the account? I think I have done well in getting over $250K in that account, and the rest will depend upon finances. I don't think it would be terrible if she had to take out some amount of loans to finish med school, though I would feel pride if she could start a medical career debt free.

gasdoc
Sorry for the misunderstanding. I was curious by discussing finances with your daughter do you feel it put any extra pressure on her to perform. Not even saying it is bad, but was thinking of your examples of dislocating elbow and you wanting to retire early has her getting nervous about finances and its implication of her own tuition costs.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

McGowan
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Re: Discussing a 529 with your kids

Post by McGowan » Mon Jan 22, 2018 11:27 am

To OP,
I have twin juniors in high school who are both great students in all their courses. One seems to be heading towards a science track; the other seems to have ruled out engineering or Math and is headed towards a business track.

Have told them that we are willing to pay for a track that gets them to independence; whether private or public if they keep their end of the bargain which is to do well academically. I have tried to convince them that the best approach/philosophy is to continually create more 'options' for yourself. The better they do in HS; the more college choices they will have. The better they do in college; the more options they'll have post-college. The better they do in their jobs; etc.

College financing was a challenge for my family and my Dad made some rules. I'm glad he did and will follow this to some degree with my kids. I majored in accounting and was not in love with it but I got a job at a very tough time in the economy. Once I graduated and started working with a bunch of different companies in different industries with varying management approaches and regulatory environments, I became very intrigued by it all and a much bigger fan of having the options I had coming out of college. I also was able to manage peers at 22/23 which I thought was crazy at the time (and now). I went back to get an MBA full time after several years and ended up in a different career path. Bottom line is that at every step of the way and even today, it has been about having options.

I tell my kids when I hear stories from friends or acquaintances whose kid who is more than 6 months out of college, still has no job and immediate prospects that seem to be getting more limited as cautionary tales. These kids are all kinds of undergrad majors including finance, math and liberal arts majors. I tell my kids that they do not want to be the kids with no options.

In general, I am not a fan of non-marketable majors because of my perception that there are fewer options immediately post-college.

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gasdoc
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Re: Discussing a 529 with your kids

Post by gasdoc » Mon Jan 22, 2018 11:43 am

staythecourse wrote:
Mon Jan 22, 2018 10:02 am
gasdoc wrote:
Sun Jan 21, 2018 8:47 pm
staythecourse wrote:
Sun Jan 21, 2018 8:15 pm
gasdoc wrote:
Sun Jan 21, 2018 8:02 pm
I never actually mentioned the amount in the 529, but she can figure it out easy enough. I told her it was enough to cover 4 years at any school she would choose, and if she chose a cheaper school, or got scholarship money, she could use the rest of the money for grad school (she is pre-med). She is currently a college freshman.I have told her I will try to help her out with the remainder of grad school, but she is aware that I have become very money conscience because I would like to retire in the next 3-5 years. It is kind of funny- she apologizes for doing things that cost me money (like dislocating her elbow recently). Funny, also, she gets anxious when I take an expensive vacation or when I cut back on my hours at work. I think she "gets it."

gasdoc

Just curious if you regret letting them know if it is causing them ANY concern. I would assume she feels enough internal pressure trying to get into med. school. Feeling anxious about the costs seems to be the opposite of what letting kids know about having a 529 plan is all about. No?

Good luck.
I don't understand what you mean- I may not be able to pay for all of a four year education in medical school and it would mean taking out some loans to finish. My goal is to pay for as much as possible. Her goal is to get by with as little loans as possible. Maybe anxiety is not the correct term. Are you thinking it would be better not to tell her what is in the account? I think I have done well in getting over $250K in that account, and the rest will depend upon finances. I don't think it would be terrible if she had to take out some amount of loans to finish med school, though I would feel pride if she could start a medical career debt free.

gasdoc
Sorry for the misunderstanding. I was curious by discussing finances with your daughter do you feel it put any extra pressure on her to perform. Not even saying it is bad, but was thinking of your examples of dislocating elbow and you wanting to retire early has her getting nervous about finances and its implication of her own tuition costs.

Good luck.
No problem, statythecourse! I think most kids, if they are reasonably responsible, understand that large amounts of money are a big deal. I do think it is good that she understands that I want to retire early. It helps her to understand that money is the result of working, and that there is a finite amount, and that to come up with more involves some sacrifice. As far as her feeling stressed is concerned, I don't think she is stressed about money. I think she is stressed about getting the grades she needs to get into medical school, which is her biggest goal. Thanks!

gasdoc

H-Town
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Re: Discussing a 529 with your kids

Post by H-Town » Mon Jan 22, 2018 11:51 am

noco-hawkeye wrote:
Sat Jan 20, 2018 6:01 pm
My question for others is - how did you approach this process and disclosing 529 information to your kids? We've setup a 529 for each kid, so having this discussion could be pretty straightforward. We've also tried to teach our kids that while you might have $X - this does not mean you need to spend $X (as a general financial rule / upbringing... LBYM etc).
Thanks for all the responses. I'm following this thread because they have some valuable advice.

Has anyone run into situation where your children become complacent knowing that there is money set aside for them? I grew up where nothing has set aside for me. I don't want to rob my future children the experience of joining the workforce at early ages and learn the value of earned money and work ethics. Those types of lesson are easier to talk about, but I don't think the children can fully comprehend those lessons if they don't go through it themselves.

staythecourse
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Re: Discussing a 529 with your kids

Post by staythecourse » Mon Jan 22, 2018 11:54 am

gasdoc wrote:
Mon Jan 22, 2018 11:43 am
. As far as her feeling stressed is concerned, I don't think she is stressed about money. I think she is stressed about getting the grades she needs to get into medical school, which is her biggest goal.
Good to know. My kids are toddlers, but trying to figure out how much to let them know the finances as they get older. My father was a doc also and when I asked him in 3rd grade how much he made (which at the time I thought was the same as net worth now) he told me, "I have enough to put food on the table and a roof over your head and don't ask me any more questions like that again". That was great because I didn't grow up with a silver spoon, but then again that experience is so vivid even now that I never asked him a single question again about finance or investing to my own detriment. I had to wait to I was mature enough to go find the answers what to do with money. Of course that happened to be once I started makes some bucks so not too surprising.

Always interested to see how others deal with this first world problem.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Engineer250
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Re: Discussing a 529 with your kids

Post by Engineer250 » Mon Jan 22, 2018 1:12 pm

On the major selection topic-

I went back to school for a second time on my own dime while working to get my engineering degree. My parents paid for a state school while I lived at home and a liberal arts degree that I thought was employable but wasn’t.

I suggest people sit down with their kids and look at open jobs that might hire for what the kid wants to study. Even in a decent economy, and I’d worked all through college, I couldn’t get a job in my field when I graduated. I know there are a lot of successful English majors on these boards but the labor market is a bit different now. Also, internships right away in whatever field your kid wants to work in. I made the mistake of working in a different field (healthcare) while in school and employers in my liberal arts field didn’t think my experience was applicable. That will be tenfold if your kid has a retail or restaurant job instead.

That said, the 2nd chance engineering thing worked out for me. I never had a “passion” for engineering and as an adult think I could be happy doing a lot of different jobs. That’s a lot different from the “choose your passion” message I was getting at 17.
Where the tides of fortune take us, no man can know.

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Re: Discussing a 529 with your kids

Post by Grt2bOutdoors » Mon Jan 22, 2018 1:33 pm

McGowan wrote:
Mon Jan 22, 2018 11:27 am
To OP,
I have twin juniors in high school who are both great students in all their courses. One seems to be heading towards a science track; the other seems to have ruled out engineering or Math and is headed towards a business track.

College financing was a challenge for my family and my Dad made some rules. I'm glad he did and will follow this to some degree with my kids. I majored in accounting and was not in love with it but I got a job at a very tough time in the economy. Bottom line is that at every step of the way and even today, it has been about having options.

I tell my kids when I hear stories from friends or acquaintances whose kid who is more than 6 months out of college, still has no job and immediate prospects that seem to be getting more limited as cautionary tales. These kids are all kinds of undergrad majors including finance, math and liberal arts majors. I tell my kids that they do not want to be the kids with no options.

In general, I am not a fan of non-marketable majors because of my perception that there are fewer options immediately post-college.
Not all accountants find employment directly out of college. Not all accountants are employed 6 months out of undergrad. You could have majored in a half dozen other marketable degrees and still not have found employment. The cautionary tale to your kids should be a college degree does not assure you of marketable employment. You discount the luck factor, there were plenty of well qualified individuals who did not find employment or were underemployed during the 2008-2012+ time period. One does not always create their own luck.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

McGowan
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Re: Discussing a 529 with your kids

Post by McGowan » Mon Jan 22, 2018 3:30 pm

Fair enough. Luck has played a significant role in my life.

And I didn't intend to make my post about any particular major. Kids can, however, create more options for themselves by the decisions they make which can include: high school GPA, marketable college major and high GPA, involvement in school, clubs, networks and LUCK. But not luck all alone.

I definitely got lucky in some interviews. But if I didn't do some of the other things listed above, I wouldn't have made the cut for those interviews.

Maya1234
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Re: Discussing a 529 with your kids

Post by Maya1234 » Mon Jan 22, 2018 4:11 pm

My nephew attended an Ivy at full pay much to the disdain of my FIL who didn't know why he couldn't have gone to a lower tier school with merit. He would bug the kid who was a English major with "An Ivy only matters if you want to go into investment banking. I assume an English major doesn't want to go into investment banking."

Well my nephew didn't want to be an investment banker. But he did want to do another profession where apparently an Ivy League degree is a job requirement: Television comedy writer. He's worked on three shows and every one of his co-workers attended an Ivy League School.

My FIl's "joke" now is 'Ok I guess you have to attend Yale to be a comedy writer, who knew?"

focusedonwhatmatters
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Re: Discussing a 529 with your kids

Post by focusedonwhatmatters » Mon Jan 22, 2018 6:03 pm

thangngo wrote:
Mon Jan 22, 2018 11:51 am
noco-hawkeye wrote:
Sat Jan 20, 2018 6:01 pm
My question for others is - how did you approach this process and disclosing 529 information to your kids? We've setup a 529 for each kid, so having this discussion could be pretty straightforward. We've also tried to teach our kids that while you might have $X - this does not mean you need to spend $X (as a general financial rule / upbringing... LBYM etc).
Thanks for all the responses. I'm following this thread because they have some valuable advice.

Has anyone run into situation where your children become complacent knowing that there is money set aside for them? I grew up where nothing has set aside for me. I don't want to rob my future children the experience of joining the workforce at early ages and learn the value of earned money and work ethics. Those types of lesson are easier to talk about, but I don't think the children can fully comprehend those lessons if they don't go through it themselves.
My kids do not know the amount in the 529, nor do they know the amount in any of my accounts.

After paying for private school from preschool on, my deal with my kids is this: as long as they maintain a 3.0 or better, I will pay the full amount with them paying me back 50% no sooner than 10 years after they graduate. My reasoning for the deferred repayment schedule is so that they concentrate on their studies while in school (instead of working), and have plenty of time to establish a stable career before paying me back. My interest rate is 0%. Any scholarships they earn come straight off their half. I hope this arrangement encourages them to have skin in the game and incentifies them to apply for merit scholarships. So far, my oldest will owe me $0.

staythecourse
Posts: 5882
Joined: Mon Jan 03, 2011 9:40 am

Re: Discussing a 529 with your kids

Post by staythecourse » Mon Jan 22, 2018 6:35 pm

Maya1234 wrote:
Mon Jan 22, 2018 4:11 pm
My nephew attended an Ivy at full pay much to the disdain of my FIL who didn't know why he couldn't have gone to a lower tier school with merit. He would bug the kid who was a English major with "An Ivy only matters if you want to go into investment banking. I assume an English major doesn't want to go into investment banking."

Well my nephew didn't want to be an investment banker. But he did want to do another profession where apparently an Ivy League degree is a job requirement: Television comedy writer. He's worked on three shows and every one of his co-workers attended an Ivy League School.

My FIl's "joke" now is 'Ok I guess you have to attend Yale to be a comedy writer, who knew?"
Really I would still be upset if I paid full tuition for my kid to be a comedy writer in LA. Sounds glamorous, but COL and high volatility of that profession usually ends up with periods of unemployment/ underemployment or finding a different job.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Pigeon
Posts: 158
Joined: Mon Mar 06, 2017 8:50 am

Re: Discussing a 529 with your kids

Post by Pigeon » Mon Jan 22, 2018 6:59 pm

thangngo wrote:
Mon Jan 22, 2018 11:51 am
noco-hawkeye wrote:
Sat Jan 20, 2018 6:01 pm
My question for others is - how did you approach this process and disclosing 529 information to your kids? We've setup a 529 for each kid, so having this discussion could be pretty straightforward. We've also tried to teach our kids that while you might have $X - this does not mean you need to spend $X (as a general financial rule / upbringing... LBYM etc).
Thanks for all the responses. I'm following this thread because they have some valuable advice.

Has anyone run into situation where your children become complacent knowing that there is money set aside for them? I grew up where nothing has set aside for me. I don't want to rob my future children the experience of joining the workforce at early ages and learn the value of earned money and work ethics. Those types of lesson are easier to talk about, but I don't think the children can fully comprehend those lessons if they don't go through it themselves.
My kids know that there is enough for four years. There isn't enough for 6 years, so if they screw around, they have to figure out how to fund the extra time. It isn't an endless process. We also will stop funding if they aren't doing their part effort wise. My parents did the same thing for their six kids.

My kids have also been expected to get summer/vacation jobs. They both seem to enjoy earning money and are sensible about saving most of it. But they do like to be able to go out to the movies with their friends without worrying about where the funds are going to come from on occasion.

setnsettled
Posts: 10
Joined: Wed Feb 03, 2016 12:38 pm

Re: Discussing a 529 with your kids

Post by setnsettled » Wed Jan 24, 2018 12:29 am

We didn’t tell our son about the 529. From an early age we made it clear that he would have to pay (either directly or by taking out loans in his name), for education past high school. It wasn’t a lie – he’s ours, will always be welcome in our home with a bed and hot meal, and he knows it. So “support” is not an issue. But to buy someone something so large and possibly extraneous to their life as multiple years of college is not “support”, it’s a gift. And something received as a gift is rarely as valued as something earned. (This was in keeping with how we raised him – an adult pulls his own weight; if you want something, earn it.) As well, we didn't really have the wherewithal to do it anyway!

Contradiction I know – if that’s our belief why’d we have a 529 at all? Well… life is full of contradictions. When he was in jr high (and we'd started to get our act together saving/investing wise) we decided to open one.

As the years went on – and we heard/saw horror stories of friend’s kids literally wasting tens of thousands on never finishing college, or finishing with a worthless degree, we decided that he would not know about it until his junior year. I.e. he’d have to prove it was a serious endevor.

As it turned out he didn’t go to college immediately out of high school. Much to some of our neighbors dismay (pretty upscale community, people brag about the college their kids get in to…), he worked, moved in with buddies and lived life. Had adventures. Grew up.

One night he was over for dinner, and he looks at us and says “I’m thinking of going back to school, and will probably need some help.” I asked him (not being facetious or sarcastic). “Why, what don’t you like about your life?” I will remember what he said until the day I die:

“Oh, nothing, I love my life.” Pause “I work with guys 28, 29 years old. I don’t want to be doing this at 29.”

He was 22. We worked out a couple hundred bucks a month subsidy. (Never pay your kid’s bills – give him the money and then he pays the bills. If you can’t trust him to use it the way he should, don’t give him the money.) The subsidy allowed him to work part time instead of full time. He enrolled, took out loans, and went to community college.

He stayed in CC for over two years – it was hard to get back into the swing of school, and changed his goals a couple of times, but in the end decided to get an accounting degree. So he’d have to transfer to a 4 year school. He applied, was accepted, and was all set.
We presented his 529 to him that summer; he actually teared up. It was definitely a gift – I love giving my family things! Paid for his final two years, so didn’t have to take out any more loans.

And the happiest ending – he roared ahead at university. President of the chapter of the accounting fraternity. Recruited by multiple firms. Successful paid internship, so he didn’t even have to worry about a job on graduation as they made the offer at the beginning of his senior year. A bit over a year into his career now he just passed the fourth and final CPA test.

A chance to brag anonymously about my boy. I couldn’t be more proud.

All in all I’m for not telling them about any money for college. Create the mindset that they’ll do it themselves. If you’re blessed to have the cash, pay it off after the fact. Or half way through, or whatever. There’s no wrong way really. But make it after they have the accomplishment of knowing they did it themselves. We definitely weren’t perfect raising our son but the way he knows the value of working for what he wants is one area that was very successful.

Broken Man 1999
Posts: 1385
Joined: Wed Apr 08, 2015 11:31 am

Re: Discussing a 529 with your kids

Post by Broken Man 1999 » Wed Jan 24, 2018 9:13 am

setnsettled wrote:
Wed Jan 24, 2018 12:29 am
We didn’t tell our son about the 529. From an early age we made it clear that he would have to pay (either directly or by taking out loans in his name), for education past high school. It wasn’t a lie – he’s ours, will always be welcome in our home with a bed and hot meal, and he knows it. So “support” is not an issue. But to buy someone something so large and possibly extraneous to their life as multiple years of college is not “support”, it’s a gift. And something received as a gift is rarely as valued as something earned. (This was in keeping with how we raised him – an adult pulls his own weight; if you want something, earn it.) As well, we didn't really have the wherewithal to do it anyway!

Contradiction I know – if that’s our belief why’d we have a 529 at all? Well… life is full of contradictions. When he was in jr high (and we'd started to get our act together saving/investing wise) we decided to open one.

As the years went on – and we heard/saw horror stories of friend’s kids literally wasting tens of thousands on never finishing college, or finishing with a worthless degree, we decided that he would not know about it until his junior year. I.e. he’d have to prove it was a serious endevor.

As it turned out he didn’t go to college immediately out of high school. Much to some of our neighbors dismay (pretty upscale community, people brag about the college their kids get in to…), he worked, moved in with buddies and lived life. Had adventures. Grew up.

One night he was over for dinner, and he looks at us and says “I’m thinking of going back to school, and will probably need some help.” I asked him (not being facetious or sarcastic). “Why, what don’t you like about your life?” I will remember what he said until the day I die:

“Oh, nothing, I love my life.” Pause “I work with guys 28, 29 years old. I don’t want to be doing this at 29.”

He was 22. We worked out a couple hundred bucks a month subsidy. (Never pay your kid’s bills – give him the money and then he pays the bills. If you can’t trust him to use it the way he should, don’t give him the money.) The subsidy allowed him to work part time instead of full time. He enrolled, took out loans, and went to community college.

He stayed in CC for over two years – it was hard to get back into the swing of school, and changed his goals a couple of times, but in the end decided to get an accounting degree. So he’d have to transfer to a 4 year school. He applied, was accepted, and was all set.
We presented his 529 to him that summer; he actually teared up. It was definitely a gift – I love giving my family things! Paid for his final two years, so didn’t have to take out any more loans.

And the happiest ending – he roared ahead at university. President of the chapter of the accounting fraternity. Recruited by multiple firms. Successful paid internship, so he didn’t even have to worry about a job on graduation as they made the offer at the beginning of his senior year. A bit over a year into his career now he just passed the fourth and final CPA test.

A chance to brag anonymously about my boy. I couldn’t be more proud.

All in all I’m for not telling them about any money for college. Create the mindset that they’ll do it themselves. If you’re blessed to have the cash, pay it off after the fact. Or half way through, or whatever. There’s no wrong way really. But make it after they have the accomplishment of knowing they did it themselves. We definitely weren’t perfect raising our son but the way he knows the value of working for what he wants is one area that was very successful.
Great story! Your son was wise enough to take stock in his condition, and had the initiative to seek another path.

And, it would seem you were also wise enough to not try to change his initial path, instead letting him realize there was a better path.

Good job by both of you!

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

clutchied
Posts: 558
Joined: Mon Jan 05, 2015 12:11 pm

Re: Discussing a 529 with your kids

Post by clutchied » Wed Jan 24, 2018 9:14 am

itstoomuch wrote:
Sat Jan 20, 2018 6:33 pm
I made the mistake (?) in telling (soph/jr 2000/2001 ?) that he could attend any place he wanted to go to. He was/is a high caliber performer. We still have something like 40k in student loan debt but at 3%, manageable :x .
Good Luck, YMMV, watch out for bears and swans and politicians . :oops:
how did the investment in your kid go? How are they doing now?

shawndoggy
Posts: 109
Joined: Tue Sep 05, 2017 3:01 pm

Re: Discussing a 529 with your kids

Post by shawndoggy » Wed Jan 24, 2018 2:05 pm

setnsettled wrote:
Wed Jan 24, 2018 12:29 am
All in all I’m for not telling them about any money for college. Create the mindset that they’ll do it themselves. If you’re blessed to have the cash, pay it off after the fact. Or half way through, or whatever. There’s no wrong way really. But make it after they have the accomplishment of knowing they did it themselves. We definitely weren’t perfect raising our son but the way he knows the value of working for what he wants is one area that was very successful.
I don't think 529s in particular work that way tho? The 529 needs to be used for educational expenses... so what good is a 529 if you don't tell your kid about it? How does it actually get put to use paying educational expenses without the kid knowing that that's happening?

Jack FFR1846
Posts: 7643
Joined: Tue Dec 31, 2013 7:05 am

Re: Discussing a 529 with your kids

Post by Jack FFR1846 » Wed Jan 24, 2018 2:21 pm

I think my discussion was easier than anyone else's here. I had no discussion because, well, I had no 529.
Bogle: Smart Beta is stupid

setnsettled
Posts: 10
Joined: Wed Feb 03, 2016 12:38 pm

Re: Discussing a 529 with your kids

Post by setnsettled » Wed Jan 24, 2018 2:38 pm

shawndoggy wrote:
Wed Jan 24, 2018 2:05 pm
setnsettled wrote:
Wed Jan 24, 2018 12:29 am
All in all I’m for not telling them about any money for college. Create the mindset that they’ll do it themselves. If you’re blessed to have the cash, pay it off after the fact. Or half way through, or whatever. There’s no wrong way really. But make it after they have the accomplishment of knowing they did it themselves. We definitely weren’t perfect raising our son but the way he knows the value of working for what he wants is one area that was very successful.
I don't think 529s in particular work that way tho? The 529 needs to be used for educational expenses... so what good is a 529 if you don't tell your kid about it? How does it actually get put to use paying educational expenses without the kid knowing that that's happening?
We were confident that sooner or later he would be in some kind of program, probably college but maybe trade school. He was all over the map in what he wanted to be when he grew up. :) But whatever, it's hard to get by today without some kind of sheepskin. So yeah, I guess it was a risk; he could have never wanted to do anything that would qualify. Would have been about $35k down the drain. :shock:

Re-reading your question, perhaps you meant how we did it logistically. Had him turn in an "expense report" every so often with invoices and receipts, took money from the 529, wrote him a check for the amount. It wasn't until he was in his 3rd year that this happened; he handled the first two years.

--- Edit I was probably too flippant originally - coordinating from the get go would take some work. Because afaik you can NOT pay off student loans with 529 money. Our situation was such that we didn't pay for his first two years, so he had the machinery in place and the gift simply slid right in, instead of loans/his own $.

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