@srparent15 I hear what you say. For me the $27K is clearly allocated to my son. It is his money (call it lent money or otherwise) - just trying to explore option where he (or I on his behalf) can invest this $27K for 4 years and earn more returns than what has to be paid as interest for 4 years by taking $27K loan from Fed @ 2.75% interest. Actually, if we have $27K liquid cash, by investing them on 529 plans, the state income tax deductions themselves will fetch around $1,500 over 4 years and there would be more returns from even the conservative 529 investments. 529 could be the “safest” way to “invest” one’s $27K to offset the ~$1,500 interest accrual over 4 years on a Fed UNSUB loan of $27K!
Well, you can always consider investing it in a solid stock that historically pays a nice dividend. The downside of course is you still have to pay the taxes on the dividend, so you’ll have to figure out your effective tax rate and yield, and then also there is some risk if the stock either stops paying or lowers its dividends which happened with so many last year or if you lose the principal altogether. But there are some great companies like ABBVIE that have dividend yields over 4% so there you go.
529 plan seems to be the safest option.
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Well, in a 529 plan there is risk. There’s no guarantee your investment choice will increase, so there’s that, and if you apply for financial aid every year and put money in the 529 every year that will count as an asset so your financial aid will be limited but I think you know that since you are only planning for the loan and not a grant.
But again, one always has to be careful in any investing because there have been plenty years of negative returns or nominal returns in many different investment vehicles in the 529s. I’m a fan for the tax deduction (although limited), tax free growh, long term investing, and also because my kids don’t need financial aid and I will have a kid in school for a long time. If you don’t cover those reasons, and don’t have subsequent kids, you’ll have to empty the 529 by the time your student graduates as well as only use it for qualified expenses so depending where a student goes to school some people wait too long to empty the 529 and then have to pass it off to a relative or take a penalty. There are a lot of analysis to be made.
Most 529 plans are just a tax advantaged investment account, not an actual investment. I can invest my kids’s 529 funds in anything from money-market equivalents to junk, errr…, “high-yield” bond funds to emerging market small-cap equity funds.
The risk of a 529 is that of the underlying investment, identical to the same investment in a traditional brokerage, IRA, 401k, etc.
(There are exceptions - plans under the 529 section of the IRS code that are pre-pay accounts for a state’s education system, but as would avoid these unless a student is absolutely certain to go to State U)
Yeah I’m going to be 0 for 4 in state and while we have a great pre-paid state plan, that was one of the best decisions I have ever made. Not to put my money into that.
Vanguard 529 moderate growth fund. Medium risk and tax deferred growth. If you haven’t donated in a while you could put all the $27k in there now but you need to take it out by the time your kid graduates or pay penalty on the gains.
We just had a phenomenal few years of equity returns fueled by low taxes and interest rates, rising debt and now significant stimulus.
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Only issue with this assuming you’re talking about 529s since you say $ has to be used before the kid graduates which implies you are is if he/she is looking for the state tax deduction as well there may be limits on it and they can’t put the entire 27k in for that in this year. My state has a limit of 10k/person or 20k if married.
Your 529 also dictates what funds you can pick but I know Illinois uses Vanguard and Trowe Price but Vanguard is really the one that has been the rockstar for us. So many options.
Appears that VG doesn’t give state tax benefit but state sponsored ones do.
I looked at some top Big 10 schools and Purdue is the best value. Kudos to President Daniels. I wanted to vote for him for POTUS but at least we see his fine work.
Great discussion all , can we move this discussion about investing etc into to different thread as it’s generic nothing to do with Purdue 
it will be useful for everyone
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My daughter was deferred for EA and hasn’t received any updates yet. Does this mean we can assume she will definitely NOT be accepted to FYE??
I would not necessarily make that assumption. I noted somewhere else on this thread that historically Purdue has a low yield, only has around a 25%. It’s very possible that enough students will withdraw before the RD announcement deadline and that there will still be room in FYE.
Good luck to your D!
Out of state school will always be far more expensive than in-state, but there is a huge variance there. Purdue is a bargain compared to other out of state schools of it’s caliber: Colorado, Michigan, UW in Seattle, Virginia, and California schools are much more expensive than Purdue for out of state students.
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Very true. And it’s almost at cost for us with the In State fees for UIUC. That’s a bargain!
Any Non-US citizens living in Indiana who can be eligible for in-state fees? It states that Purdue will accept in-state residency applications only from June. How can we make an educated acceptance decision without knowing eligibility for in-state tuition fees?
Sad to say that $41K is a good deal. My son also got into Ohio State Honors for less that $30K.
Presumably in-state or with aid. tOSU OOS COA is over $51K, the number comparable to Purdue’s 41k.
They do make substantial aid available to high performing OOS students. I seem to recall OOS was about the same as in-state at Penn State for my D. PA has close to, if not the, highest in-state cost at state universities.
I havent heard from purdue yet - i applied as an international student RD. Is it okay to not hear so far coz some people already know their decision. Should I give up hope
?
What’s the major you applied to ? Looks like Purdue closed admissions for Fall-2021 for most of majors
