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I have three kids ages 4, 3 and 0 and I am concerned about the cost of college education for my daughters. A lot of the "public" schools (not community colleges) cost between $20,000 to $24,000 a year (and some others even more than that). That is a LOT of money!!!!! That would be somewhere between $250 and $300 K for a 4 year degree for the three of them.

I think its unrealistic to come up with that money within the next 14-20 years since we roughly bring in home $110 a year.

  1. What is the best way to save for college? Here in Ohio there is this http://www.collegeadvantage.com/. Is this the best way?
  2. Or would you do a 529 through a bank? or financial institution like vanguard?
  3. How much money should allocate to each one of them each month? (I thought $100 a month but that seems low).

Anyways I am interested to see how are you doing it and how much you contribute to it each month (I am trying to find that magic number that will give me piece of mind later) is it $100 a month per child, $300 per child, $500 a month per child....

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Although its a fair question on investing options for future education expenses, I would challenge your assumption that you should fund your children's entire college education (if any at all). I was paid (in overage refunds) to go to school simply by acquiring several scholarships every year (my gpa was around a 3.5 in high school and college). It simply took a lot of time and effort on my part to apply to a dozen scholarships. Also I would not rule out community college's as an option. –  n00b Feb 4 '13 at 17:53
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possible dup: money.stackexchange.com/questions/8462/… –  n00b Feb 4 '13 at 17:56
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According to this calculator archimedes.com/vanguard/csp.phtml I have to save $600 a month per child to fully fund their education all by myself. I am cold sweating now. Is that what you guys do? –  Viriato Feb 4 '13 at 20:43
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People have differing opinions on what is actually needed. For example, the amount of undergrads with expensive smart phones I see on my campus makes me wonder why they complain about not having enough money: That'd be ~50 dollars (at least here in Canada) per month you can shave off the $600. Next item is food: They all eat the ~ $10 dollar meals from the fast food joints on campus. That alone adds up to a huge chunk of the bill, when really they should do their own grocery shopping and bring packed lunches... –  Lagerbaer Feb 5 '13 at 4:49
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Another good "investment" is to make sure your kids actually enjoy learning. That's the best way to ensure they'll excel at it and makes it more likely for them to get scholarships. –  Lagerbaer May 5 '13 at 15:32
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3 Answers

I'm not a 'rule of thumb' guy, but here, I'd suggest that if you can set aside 10% of your income each year for college, that would be great. That turns out to be $900/mo.

In 15 years, if you saw an 8% CAGR, you'd have $311K which happens to be in your range of expenses. And you'd still have time to go as the baby won't graduate for 22(?) years. (Yup, 10% is a good rule of thumb for your income and 3 kids)

Now, on the other hand, I'd research what grants you'd be able to get if you came up short. If instead of saving a dime, you funded your own retirement and the spouse's IRA if she's not working, and time the mortgage to pay it off in 15 years from now, the lack of liquid funds actually runs in your favor. But, I'm not an expect on this, just second guessing my own fully funded college account for my daughter.

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In your situation you will be using your normal savings to offset additional funding from student loans or similar financing.

Also, sending your children to or moving to a jurisdiction that has lower education costs but ample opportunity should also be in your cards. That can be another state, or another country.

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Live where you live now untill your kids are about to go to college. Then move to Germany and send your children to college for FREE. The german universities may be not in the top 10 of the world (THE), but are still competitive enough on a worldwide scale. Also, if your children excell at college, it should not be a huge problem to transfer them to the top universities in the UK or US (with scholarships from Germany). In addition, your children can go on a exchange to other universities for a couple of months or multiple years, fully funded by the European Union or the german universities.

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If you're not a EU citizen, you can't necessarily just go and move to Germany. You can of course not move to Germany but still send your children there, but note that many lectures (and the university administration) will still be held in German language, although that's slowly changing towards English. It's true that they're competitive enough, though, especially for undergrad and master's degrees. I had no problem transferring from a German university to a really good university in Canada. –  Lagerbaer May 9 '13 at 14:05
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