We have a 529 savings plan meant for all of our kids (3). Our savings are not enough to cover college for all of the kids (by a long shot). How have you handled your savings you have put aside for multiple children? Do people use it all on their oldest and hope for more aide as the savings deplete? Did people then get more aide? It sounds like families are primarily getting merit scholarships, not need based. Is that what’s happening at colleges that aren’t top top ranked schools? Thanks for any help.
Any amount you have in the 529 account will count against you in the financial aid formula at something like 5.6%, so you don’t want to keep a large amount in there but it’s not unreasonable to keep some aside for kids 2-3 if that’s what you decide. It’s so hard to know which of your kids will find merit scholarships and who will qualify for need-based aid in any given scenario.
“It sounds like families are primarily getting merit scholarships, not need based. Is that what’s happening at colleges that aren’t top top ranked schools?”
Yes, top ranked schools are not prone to giving merit aid but they are much more generous with need based aid. Outside of the very high-ranked schools, they tend to use merit to entice students. Good luck.
We planned from the beginning that our sons would probably not qualify for any need-based FA so we set up separate 529’s for each. They were 1 year apart in school and basically had about the same 529 amount/budget to use. Both opted to stay in-state and we divided the 529 account amounts by 4 to cover their Bachelor’s degree. If they happen to get some merit aid, then they had additional money available for Graduate or Professional school available. Our goal was to have them complete their Undergrad without debt. Beyond that, it was up to them to pay for any additional schooling. One son went to a pricer school vs the other, but the other son selected a higher priced school location so housing costs were higher and he joined a Fraternity so with these additional costs it pretty much evened out.
Merit aid will be based on academics so the strategy is different than just needing need-based aid.
There are many seasoned CC posters that can give you better advice but start with a budget and I would definitely try to treat each kid equally when it comes to doling out the money.
1 Like
We had an account for all 5 which ended up having the same amount of money (only $30,000 each). All will end up in public schools with loans.
We’re full pay. We’ve saved money for both boys in separate accounts. We will use each child’s account evenly on each of them, they’re both performing similarly. We will have to make up any differences with loans, jobs, further contributions from us, merit aid and scholarships. I don’t have an answer for you but we’re giving each kid basically equal inputs.
I have 4 kids and all have their own 529’s. I’m the owner, they’re the beneficiaries. It does count against financial aid, but to me if the amount in there grew enough to where I didn’t need financial aid, then I wasn’t going to worry about the financial aid and hope someone who does need it gets it.
Each plan depending on the state has different rules. Our state allows you to contribute 20k a year (if married, otherwise 10k) tax deductible. Anything over that you can’t deduct off state taxes. The benefit of course is the tax deduction and tax free growth. You can pass it down from one kid to the next and even to any relative if it’s not all used up by your last kid. My oldest did not wind up going to college. He had 2 529’s that I owned. One was established before the divorce from his father and one I established after. When he didn’t go to school we moved the money to my youngest and paid him out of cash because it was money given to him when he was born and over the years. The one I own I still own with him as the beneficiary. I just haven’t changed it and will ultimately use it for one of my other 3 but haven’t determined which kid yet. There are rules about how often you can change beneficiaries etc, so don’t do it until you know how.
As someone else mentioned, it doesn’t matter if you have 1 or 10 accounts as the aggregate value is what goes on your 529. Even with 2 in college now we still fund it every year and watch for dips in the market to add more if we can.
It’s hard to treat each kid equally when their costs and tuitions may be completely different. I have one where her tuition is now about 13k a year, and another with tuition of about 30k. Plus based on when the money has been distributed, the values are completely out of whack due to market changes. Books and housing also can be completely different from one school to the next. It is definitely a challenge!
Two separate 529s. One for each kid. Oldest kid was born before 529 was enacted, so for the first two years we setup a UTMA account. Each kid gets to decide how to spend the money. Going to a pricey undergrad school means less leftover for any graduate work.
Thank you everyone for your help. I really appreciate it.