We’re back! And by we, I really mean I. Johnny was never gone last week, just busy taking care of Baby Girl sans me. Last week I was playing the role of an inanimate object, very convincingly, I might add. I became sick Tuesday night and spent the second half of the week either sprawled on our bed or with my head in the toilet. We’re chalking it up to a bad case of food poisoning. I think Johnny’s convinced I did it on purpose to avoid changing diapers for a few days. Either way, we apologize for our absence the past week.
A couple of weeks ago, we discussed the pros and cons of a 529 college savings plan. Johnny and I have decided to go forward with starting to save for Baby Girl’s college so we can hopefully help her not have student debt like we did. And now all that’s left is figuring out just how much to save each month for the next 17 years.
Back in February when Baby Girl was just one month old, we discussed what we hope to be able to pay for her college. Here’s a recap of what we hope to cover:
- All college expenses for freshman year (tuition, books, fees, housing, supplies)
- Her college tuition for the following three years, if she maintains a certain GPA (housing and other expenses will be her responsibility)
Pretty simple, right? And now onto our calculations. Actually, first, here are a few decisions we made before calculating how much to save:
- We’re going to save for four years of college for our girl. For one reason or another, it may take longer than that. But for the 529, we’re just saving for four. If we’re in a position to help with any additional schooling, then we’ll cross that bridge when it comes.
- We’re saving according to today’s expenses. The 529 will (hopefully) gain enough interest to offset inflation.
- Lastly, for the 529, we’re saving as if our daughter will go to our alma mater, which is a very inexpensive school. If she chooses to go somewhere more expensive, we’ll help as far as the 529 goes (and more as needed and as able to do so).
Okay, and now onto the calculation for real:
Four years of tuition: $20,000
Freshman year expenses (minus tuition): $10,000
GRAND TOTAL: $30,000
$30,000 / 204 months (17 years) = $150 per month toward her 529 plan
So there you have it. Like I said, our tuition was really inexpensive ($2500 per semester). Obviously, we’re planning and saving for a hypothetical world where everything turns out perfectly (she gets good grades, she chooses our alma mater, etc.). And we all know that rarely happens. But the point is that while we have the extra money to do so, we’re saving. Maybe it will cover all of her college. Maybe it won’t. But we’ll help where we can. And the 529 is going to make it a lot less painful.
One final note: We’re giving our girl a free pass her freshman year to adjust to the whole living away from home thing. But the buck (literally) stops after her freshman year for all of the extra expenses. Hence, demanding a certain GPA and not paying for all of her expenses the other three years. We hope that’s a good method. But we’re new at this whole parenting thing, so we could be totally wrong on everything.
We’d love to hear how any of you were affected by having to help pay or not having to help pay for your college. And what are your plans for covering/not covering your children’s college expenses?