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I have 2 kids (10 and 6) and I was thinking about putting money away for them (for college, for instance). I've looked at various options and the more I look, the more I am confused with the array of options and its tax implications.

My question is what options should I looking at? How much should I be investing (e.g. per month) in order to be able to go to a good school?

  • Hi NeedAdvice. This question is highly dependent on your location. Consider: Some countries have cheaper post-secondary education, while some don't. Then, education savings plans vary by country, too. So, I've inferred from your other questions that you're in the U.S. and I've tagged this as such. – Chris W. Rea Jan 15 '11 at 13:11
  • Similar: money.stackexchange.com/questions/2910/… .. (though in your case you have two kids and they're older.) – Chris W. Rea Jan 15 '11 at 13:13
  • @Chris Your assumptions are correct. Thanks for the tag. – NeedAdvice Jan 15 '11 at 21:48
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There are entire books devoted to this topic... :)

I'd suggest focusing on a % of income that you can set aside for each child and start doing that instead of looking at a specific dollar target. I would look at a 529 plan to get the state tax benefit for growth.

Also, be careful to counter the "advice" given by admissions folks, who encourage high school kids to "choose the college that will make you happy" and expose them to as many pictures of lovely, leafy private campuses as possible. The lawns at the private school are nice, but state colleges offer a great education at a relative bargain.

Try to teach your kids about money so they understand the downsides of the loans that schools throw at you. I went to a state school, had very supportive parents and worked throughout. I came out with $750 of debt (on a 0% credit card for a laptop replacement). I have a friend who went to a similar, private school who came from a similar background and who is now in a similar place career-wise. Except he has a $500/mo monthly tribute to Sallie Mae.

My parents started working on me when I was about 12, and it worked!

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Before you save too much, have a look at this:

http://www.lowestcostcolleges.com

The writer of this is working with a guy who has a bachelor's degree at age 18. Not an associate's, a bachelor's.

The cost was something like $15,000, total, and the kid paid for it himself. No debt.

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    The link is bad. Since changing it would mean restructuring the entire post, I will leave that up to someone who knows better. – Bob Roberts Dec 26 '12 at 14:45

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