My brother just asked me this question: he currently has a son that is three years old. What are some ways to save for his son's education? What are the pros and cons of each way? How much should he be contributing to his son's education? Any other advice?


4 Answers 4


He should definitely look into a 529 plan. Each state offers one. These provide tax incentives. Other relatives can contribute.

A downside is if your nephew does not end up going to college, there will be a pentalty for withdrawing the money for other purposes (as there would be for withdrawing from a 401K early).

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    There's only a penalty if you don't put the money to educational purposes. You can change the beneficiary on the plan (even to yourself). Commented Aug 18, 2010 at 16:05

Look into the Coverdell Education Savings Account (ESA).

This is like a Roth IRA for higher education expenses. Withdrawals are tax free when used for qualified expenses. Contributions are capped at $2000/year per beneficiary (not per account) so it works well for young kids, and not so well for kids about to go to College.

This program (like all tax law) are prone to changes due to action (or inaction) in the US Congress. Currently, some of the benefits are set to sunset in 2010 though they are expected to be renewed in some form by Congress this year.


In today's dollars, cost including room and board can total $20K - $60K/yr depending on the school. With college 15 years away, these numbers can double by then. And the annual savings required, adjusted accordingly. If we look at the low end, we're still at $40k/yr or $160k total, and it would be prudent to start saving $10k/yr if possible. It's easy enough to drop the number if 5 years in, you see college costs dropping or rising less quickly.


I have children. I’m not saving a dime for their college tuition. With the exception of some technical degrees, I think college is not a great source of education.

When I reflect on where I obtained the most knowledge I come up with two major sources: work and my own self education. I have a Master’s degree but working has, by far, taught me more than any school system. That includes bagging groceries, baling hay, painting, factory work, engineering, and programming. Doing something, working with others, making mistakes, and then learning from those mistakes educates more than listening to someone preach in a classroom. My own interest in history and economics has also expanded my knowledge more than any classroom.

If my children learn anything from me I hope it is this: think. Watch, listen, read, and then think. Think for yourself. Don’t let others think for you. I believe there would be a lot less heavily indebted college graduates if they would have thought for themselves instead of having others think for them.

Soapbox = off.

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    I don't entirely agree, but your answer reminds me of this excellent book: amazon.com/… ... My personal opinion is that formal education can be enhanced with a self-education mindset. Commented Aug 18, 2010 at 12:58
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    Unfortunately, college isn't about learning. Most people don't learn anything in college other than how much beer they can chug and how many exams they can pass on 15 minutes of sleep. But many employers still require a college degree, regardless of major, just to get in the door. As unfair as it may be, a dumb college graduate is more likely to get a good job than a smart non-graduate, given equal job experience.
    – Joe Enos
    Commented Aug 18, 2010 at 14:15
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    As a graduate from a staunchly liberal arts institution, I learned way more than I thought I did about how to think. Could I have done all that learning on my own? Maybe, but I appreciated having professors to guide me through how to read a book (this was all from a book I could have read on my own, but it made me learn), how to discover authorial intent, and (as much as I hated it at the time) the history of computing. Did I learn a ton on the job after graduation? Yes. Would I trade my college experience for anything? Not much. Certainly not the dollars.
    – justkt
    Commented Aug 18, 2010 at 15:29
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    Technically you can get an (almost) ivy league education for free: ocw.mit.edu/courses but that isn't really what you are paying for when you get a diploma. It's certainly possible to do your own thing, get a great job, learn all you want, etc without a college degree, but it's definitely much much much easier to do that if you have the degree. Plus college was a freaking awesome experience socially... Commented Aug 18, 2010 at 16:07
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    College opens doors in jobs, with people and to experiences. A degree is like a receipt, but education is just a small part of the purpose.
    – MrChrister
    Commented Aug 18, 2010 at 20:37

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