So I am serious about starting a college savings plan for my son. He is three weeks old and I know it is early, but really I don’t think it is ever too early to start saving for such a goal.
I have found a great resource at savingforcollege.com. A 529 plan or something like it seems right for me. There are so many choices I’m starting to feel overwhelmed. Of course there is the Coverdell ESA which gives me the option of using the money for qualified elementary and secondary eduction expenses as well. However the current contribution limit of $2,000 a year would not nearly be enough to cover the $7,200 a year this college calculator tells me I should save.
There are other choices. I’ve found something called Independent 529 Plans. With these plans I would actually buy college tuition at today’s prices and just wait 18 years to use my tuition credit. This might make a lot of sense. When looking at the college calculator, I noticed that it assumed college tuition would increase 6% a year and I would hope to make 7% return on my investments. Does this not look like chasing after the wind? My alma mater, Westmont College, participates in this pre-paid tuition program; this is a good thing. The college my wife attended, however, as of yet does not. I’ll have to wait until she wakes up and talk to her about some of our choices.
Disclosure: I have not started a college savings plan yet and I am in no way your financial advisor. I am simply blogging my process of discovery as a way to motivate me to follow through with some sort of plan. Do your own homework and enjoy the learning process.