College Funding for our kid

When it comes to college funding, there are a few main questions to answer.

  • How much to fund?
  • Where to fund?
  • What if unused for college purposes?

How much to fund?

College cost is soaring like crazy…looks like there is no end in sight. I wish I could fund the entire cost, but I am not sure I can. So, I have set a target of $20000 per year for 4 years. Anything more than this, the kid has to manage.

Where to fund?

I wanted a most generic college funding option. By generic I mean the following:

  • 529 plan
  • basic age based investment option
  • passive fund is okay
  • good set of low-cost investment options
  • acceptable in any college across the US
  • any state tax advantages
  • online acct management possible
  • automatic investment possible

Since I am a fan of Vanguard, I have a bias towards Vanguard 529 plans. But, I did dig into many articles on the web to find a good 529 options. Turns out, most of the good plans happened to be Vanguard ones. I picked Nevada 529 plan as satisfied all the above requirements.

What if unused for college purposes?

If unused, the 529 plan can be withdrawn but with a 10% penalty. The penalty is applicable ONLY on the earnings in the plan and not on the principal (because I am using post-tax money for investing into the 529 plan). There is a wonderful article from savingforcollege.com that I will refer to here for further reference.

Starting Status

07/25/2014        $22600        28.25% complete

09/29/2014        $23185         28.98% complete

….. (see Progress Report for more updates)

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2 thoughts on “College Funding for our kid

  1. Pingback: What is Financial Independence to me? | Humble FI

  2. Pingback: How long does it take to accumulate $80000 in a 529 College fund? | Humble FI

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