<p>Midwest -- I hope your broker is up to date on the most recent changes in tax law, extending "kiddie tax", for taxable years beginning with 2008, to age 24 if the child is a fulltime student whose earned income does not exceed 1/2 of his support. I really question this advice.</p>
<p>Well, my son is a junior, but here's what we've done so far. </p>
<p>First off, we've paid off our house. </p>
<p>Many people say we're stupid, because now we'll have no chance of financial aid, but I really like the idea that I won't have to tell my son no to a college because we have a house note, too.</p>
<p>Secondly, only looking at colleges that give merit aid. No way we're going to qualify for financial aid. My parents had five children, and my dad made about 30K a year (of course, this was 30 years ago, but still, not wealthy by any means) and we didn't qualify back then. </p>
<p>Third, make choices. We've had to do this already to pay for son's high school education. Had to choose between getting him a driver's license (which would mean insurance) and paying tuition this year. Will get him a license before college, because I don't feel comfortable about sending him away without one, but will not buy him a car. Will send him to a college where he doesn't require a car.</p>
<p>Will say this, sending son to the flagship state school may be tuition free, based on his grades, and maybe even housing free, but he would probably need a car, which would be an added expense, and he may take longer than four years to finish, which seems to be the norm for state schools. So looking at the big picture, a private school may be cheaper. </p>
<p>Also, looking at schools with coops, internships, that help out with tuition. Also, plan to look into scholarships, grants, available for upperclassmen.</p>
<p>And here's a thought. He can get a job!</p>
<p>Midwest parent, I'm with KayF on this. Do not get tax advice from your broker. Do not get medical advice from your hairdresser. Do not let your neighbor tell you to get your transmission repaired.</p>
<p>There are some interesting estate planning vehicles which use generation skipping techniques, deferred capital gains payments, using a trust to avoid probate, etc. All of which require expertise of a lawyer or CPA.</p>
<p>kayf and blossom - Not to worry! We are educated people who do our own research when given advice before we act. Also, our broker and CPA have offices across the street from each and collaberate on everything when they have mutual clients. Our broker is one of those fellows who reads constantly and remembers everything he reads. Our CPA is the most thorough professional of his kind we have ever encountered. We have done this for years and have complete trust in their advice. Others, of course, should check with their tax adviser before they embark on a similar path.</p>
<p>ur Ss and Ds are very very lucky that they have parents like, my dad earns a meager 3000$ per month and my mom holding a degree of Masters in Education .... does nothing...but sits at home,talk to relatives,watch tv etc. And here i always have to worry about my fees,books,pens etc. the recent tension being buyin a graphing calculator for maths... which is of 100$ .... though i have applied for financial aid but being an out of state student further surmounts my heart with tension....
and the funny thing is i am attending a community college :-)</p>
<p>Yep, we will also need to talk to a tax advisor soon re: these properties we are planning to sell to finance kids college.
Forgot to mention that I plan to start working full time when the kids are out of the house (we are dreaming about OOS school, for many reasons), which will add quite a bit of money to our "college fund". Kids will overlap for two years, which should help.
I am very, very upset by the fact that college tuition is not tax deductable. Something we should write our government about!</p>
<p>Thanks for the explanation, midwestparent. I have given stock to charity on occasion, but had not considered giving to child as the same deal (that their basis is the value at the time they received it, not your initial cost). We're not using stock to pay for college, but I will file that away in the back of my mind for future expenses.</p>