The Wall Street Journal gives a three-year countdown for college saving as follows:
Three Years Out: While you've hopefully been setting money aside since your teen was a baby, this is the time to get your college savings on the fast track.
Two Years Out: Continue funding your 529 and other savings accounts, upping the amount if possible. This also is the time to start taking a serious look at potential schools -- and estimating the cost of each.
One Year Out: By this point, you should have the bulk of your money in less-risky investments, such as money-market funds, CDs and Treasurys, since you won't have much time to recoup any losses. Mr. Kantrowitz says no more than 20% of college savings should be in at-risk investments when your child is this close to college.
Really? A three-year plan? What about a ten-year plan? Wouldn't that make life a whole lot easier? Ugh.
What really interested me in this article though (since the three-year stuff was mostly a waste) was the pie chart detailing how the typical family generally pays for college. It is as follows:
- 33% Grants and scholarships
- 30% Parent income and savings
- 15% Student borrowing
- 11% Student income and savings
- 7% Parent borrowing
- 4% Friends and relatives
Our plan is to get 100% from friends and relatives. Anyone want to donate as a "friend"? ;-)
Seriously, here's what we are planning on doing:
- Grants and scholarships -- If our kids get one/some, this would be great, but we're not counting on them.
- Parent income and savings -- This is where we'll get the vast majority of the college funds for our kids.
- Student borrowing -- Not going to do this unless it's an extreme case (like they insist on going to a school that's $50k per year.)
- Student income and savings -- Yes, we'll expect our kids to work and help pay for their own educations.
- Parent borrowing -- Nope, not gonna happen.
- Friends and relatives -- Again, not gonna happen.
Here are some additional thoughts:
- We've talked to our kids about what we will provide and won't provide for their college costs (for details, see Determine a College Budget), and they see the vision: if they can help pay for their college themselves through work, scholarships, etc., they'll get a good amount of money from us that can be used for a car, house downpayment, etc.
- One of our kids (an over-achiever) is already working to pass the CLEP test for Spanish (even though she's in 8th grade.) She has a tutor and is planning/hoping to pass the test sometime next spring/summer/fall. The motivation? I promised I'd buy her an iPad if she did. :-) Throughout the course of high school, we're hopeful that she can get 15-20 college credits through a combination of CLEP and AP/college classes.
- Our kids' course through college should leave them graduating with little debt, especially if they keep costs low and work to supplement what we've saved. I can see the situation playing out in something similar to this.
How about you? Anyone else working on college savings/plans for your kids?