Anybody on CC for more than a day knows just how big an issue the funding of college is- and how many students and families get caught out. Aside from the lucky ones for whom finances are not an issue at all, most of us have had to figure out how we are going to manage the costs.
However, there are at least 3 active posters on CC atm who have lived within budgets that let them fully fund their 529s- only to find that their students did well enough to get a huge merit award (and I like to think that there are others who just haven’t posted that).
I want to give a shout out to them. You modeled self-discipline, long-term planning, and working towards your goals- and your offspring obviously followed your example. You were making those decisions when you weren’t all that much older than your kids are now- so you were showing your own maturity as well. As parents we make so many mistakes, and so often fall short of our parenting aspirations on a day-to-day level that it’s sometimes hard to see the successes for what they are.
So, to all of you who are having to figure out what to do with too much 529 because your students got really generous merit offers: well done! You have raised kids who have shown maturity, persistence, responsibility and the ability to think long term- in other words, you have given them key tools they need to chart their path through adult life.
We are a family in that boat with my older daughter. It has been such an unexpected gift, especially with her going to school during these disrupted covid years. We have been able to tell her to take her time, go an extra semester if necessary, plus she will have her 529 money for grad school if her choice of major doesn’t work out. When her school was virtual last year, we were able to let her decide if being on campus or not was better without having to factor in any financial strain.
She has thanked her father and I for being so smart, lol!
We did not have her education or her sibling’s fully funded, but she received a full-tuition merit scholarship. It has been a gift to the entire family and really is a life-altering achievement that none of us take for granted.
Thanks to the Military Family Tax Relief Act, the fully-funded 529 returned to us penalty-free (minus taxes on the gains) when our son chose USMA for college. Those funds allowed us to retire two years earlier than expected. OTOH, we paid college rates for high school so a bit of a wash.
Thank you @collegemom3717! We will end up having money left over in the kids 529 plans as well. For the first kid, because college was 100% online and did not allow any kids on campus for all of 2020-21 school year, so we did not have to pay room and board for two semesters. And because the second kid got a merit scholarship (not huge by any means, but fairly generous) which we hadn’t planned on, and his school also discounted the tuition when they were online. If neither one decides to go to grad school (which we had initially told them would be on them), we will likely save it for any grandkids instead of taking the penalty for a non-qualified distribution.
We’re in the same situation now with our son who is USMA '24. Nice problem to have. We have decided to take some of his 529 $ out (only pay taxes on the gains) and fund a Roth IRA for him. We’re also going to leave some $ in his fund should he “5 and dive” and need the $ for grad school.
Yep, we didn’t withdraw all the funds until he threw his hat in the air. He’s in grad school now, also on the Army’s dime, so no grad funds required.
We are another one of these families and so thankful. It’s a wonderful dilemma to have! Oldest (now a senior) received a full tuition scholarship so we’ve had only room and board to pay. Since he is planning on grad school, we will probably leave the funds there. It’s certainly something to celebrate. I suspect we will use a bit more for the other kids but even then will have some leftover.
I am eternally grateful to my colleague who recommended we open a 529 account for our son. We front end-loaded the account, and the market timing was auspicious so that, with the gain, the account would have fully covered his undergraduate education. He also received a large merit award from the school he is attending, so there is still a lot remaining in the account. But he loves school and is currently mapping out graduate school in the UK, with the goal of eventually earning a Ph.D. We will be able to use the 529 for all of the UK schools under consideration, and, especially as we are planning to retire in the next year or so, it is a huge gift for us to know that his graduate education will also be covered. We also funded an account for his younger sister. The market timing was not as auspicious in her case, but it still added up. We tapped the 529 for her high school education at a private online school and we are also using it for an online college program she just started. She definitely does not have the same kind of career student potential as her brother, so at some point we are going to have to think about what to do with the balance. It is an attractive idea to leave it for our kids’ kids to use, so that they can have the same kind of peace of mind we have enjoyed, even if they opt for lower-paying careers themselves. With respect to merit scholarships, people on CC often treat them as merely a discount off the sticker price, but at least in our case, it was very meaningful to our son that the school he felt the strongest connection with also offered him the largest merit award.
We’re hoping to be part of this crowd. When D22 was born, I wanted to provide her the option to attend college in the US and opened a 529 when she was 2 or 3. The account has appreciated such that it would fund undegrad at most US colleges. Our merit-equivalent windfall would be her opting to stay in the UK, in which case the all-in cost would be ~$25-30K annually for 4 years, resulting in a masters.
