March 7th, 2013
This post is about saving for college and may be a little more panicked than usual because I just found out my health insurance premiums went up $100 and HOW DOES ANYONE OF NORMAL INCOME LIVE IN CALIFORNIA?
So then NOW we’re supposed to put money away for our kids’ college?
It’s all so daunting.
But first, let me tell you a story. With visuals.
This was just my daughter, Toots:
This is now my daughter:
It’s like Dr. Doofenschmirtz threw her in his Growinator.
So the other day, my husband and I were talking about Toots’s upcoming ninth birthday, and he said, “She’s halfway to college.” I replied with an altruistic “Do I look old?” and everything went back to how it was: the same. But different. Because worms had crawled into our brains: how are we going to send not one but TWO kids (my youngest is 6) to college? Where will the money come from? Is there a tree?
My husband and I are both self employed and so it feels like everything is more expensive: health insurance, tax bills, life in general. It’s difficult to take from our pot of just getting by to put into a savings account (which we don’t have) or into anything other than simple survival (I told you this would be panicked!), and so a college savings plan was not a contender for our cash. Only because it felt not doable.
But there it was: my oldest would be in COLLEGE in nine short years. And when you’re a parent, you know those nine years go as quick as a blink of a horse’s tail (I’m too hysterical to come up with good similes). Also, DO I LOOK OLD?
But back to her (the right one):
WHAT ARE WE GOING TO DO?
I don’t want her to be the only one on our block to attend a homeschool college, and I don’t want to terrify YOU, but last I checked it’s about $50,000 a year for private university and $20,000 for public.
I remember being what felt like the only kid from my Catholic high school to NOT be going to university in the fall. My family was moving from Chicago to San Diego, and although I’d been accepted to schools in the midwest, my parents just couldn’t swing sending me the first year we moved. So I attended community college for a year and transferred to Marquette University when my dad got back on his feet. Marquette cost $15,000 a year. I’m one child of four, and it cost my parents the same to send three of us to school as it will for me to send ONE child to college. (Guess what? Between 1985-2005, tuition has risen 439%. Just ask the Bureau of Labor Statistics Report.)
I have to say that while the experience of not going to the college I wanted to right after high school sucked, it taught me a lot and made me more resilient.
But I don’t want that for my kids. (Just kidding pretty much.) I want them to go where they want and when.
I was thinking all this right around the time Scholarshare contacted me and asked if I’d like to learn more about saving for college. “Yes!” I replied right away. Then: “Are you paying?”
They did pay. They took me to dinner and assuaged my concerns and told me things that made me want to crawl into their arms and let them rock me (and I even told the woman from TIAA-CREF that she reminded me of my mom – I bet she LOVED that). (I told another Scholarshare guy he had the profile of a superhero. I could have just thought that in my head and not let my mouth say it.)
But the point is: I feel better. I want you to feel better, too, so I’m going to tell you a little bit about what I learned from my mom and the superhero:
-Scholarshare is what the 529 college savings plan is called in California. TIAA-CREF is the agency that administers the plan.
-It takes minutes and $25 to open a Scholarshare 529 plan. After the account is opened, friends and family can contribute to it (if you have that kind of friend and family).
-Annual management fees are based on plan assets and range from 0.18% to 0.62%. There is no annual fee.
-The money in your 529 plan is invested in one or more of 19 investment portfolios, which you choose. You also choose the beneficiary.
-529 earnings are California and federal tax-deferred. What you withdraw from the account for higher education is not taxed either.
-The money can be used for undergrad or graduate programs, community colleges and even trade schools. The money can be spent on tuition, books, and some room and board expenses.
-If your child (the beneficiary) doesn’t go to college, you can change the beneficiary to yourself and use the money for a boob job (they didn’t actually say that, but I felt my mom was suggesting it).
I was lucky that my parents could (eventually) send me to college and I wasn’t saddled with student loans, which in the state of California, are exceptionally high. Many students have to take out multiple loans and the average outstanding debt per account is between $8,337 and $12,702.
I feel the bile of dread rising again…
The point is, a lot of college planning panic can be somewhat mitigated if you feel like you’re doing something to save for it. And if that something is only $25, it’s $25 more than nothing.
And look! I’m only behind by .8 years!
This is a sponsored post from One2One Network and Scholarshare, but look, if I didn’t dig the topic, I wouldn’t write about it.
This is also an inspired post from this kid who in nine years will read this and sue me for defamation of character and embarrassment, probably making all the money she needs for college from an out-of-court settlement.