Burgum makes announcement about Higher ed future

[mebisonII]

Will I be penalized if the money in my 529 plan isn't used for college expenses?

Bah, I have heard about that scholarship exemption, but I forgot, thanks for the reminder!

Roll it over to other kids/grandkids.

Yeah, kind of what I figured. Usually not hard to find someone who could use some additional college funding.

[Bison bison]

With the new tax bill it can also be used for K12.

[EightyfourBison]

Keep the $100k and do what my parents did. Hand the kid a FAFSA and call it a day.

There is a bit more incentive for the student when they've got some of their own skin in the game. I always knew my parents would back me up if needed, my kids knew that too.

[westnodak93bison]

There is a bit more incentive for the student when they've got some of their own skin in the game. I always knew my parents would back me up if needed, my kids knew that too.

Attach some strings imho

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[EC8CH]

Kids should work too while going to school. Best finals week I ever had, I worked a full 40 hours. I'll help my kids but I'll expect they find a part time job as well to pull some of their own weight and gain some work experience.

[Gully]

Kids should work too while going to school. Best finals week I ever had, I worked a full 40 hours. I'll help my kids but I'll expect they find a part time job as well to pull some of their own weight and gain some work experience.

I agree with this. I don't subscribe to the idea that parents owe their kids their entire college education. Help them out, sure.

[Gully]

Will I be penalized if the money in my 529 plan isn't used for college expenses?

The answer does say this, but just to make it clear. If you put $10,000 in a 529 and it grows to $18,000 and then you use it for something other than qualified education expenses, you would pay tax and penalty on $8,000, not the entire $18,000. This is because you already paid tax on the $10,000 and invested with post tax dollars. Correct?

I stopped contributing to 529s for the reason someone mentioned earlier....you lose flexibility.

[bisonp]

The answer does say this, but just to make it clear. If you put $10,000 in a 529 and it grows to $18,000 and then you use it for something other than qualified education expenses, you would pay tax and penalty on $8,000, not the entire $18,000. This is because you already paid tax on the $10,000 and invested with post tax dollars. Correct?

I stopped contributing to 529s for the reason someone mentioned earlier....you lose flexibility.

That would make sense. Though I am getting a substantial Minnesota deduction on 529 contributions as of 2017.

Our plan is to have about half available for their education. They can get scholarships and/or loans and/or work for the rest. In our experience the kids that earn it tend to get more out of it. We can always chip in more if we have to.

[EC8CH]

I agree with this. I don't subscribe to the idea that parents owe their kids their entire college education. Help them out, sure.

Spending the first 4 years of your "adult" life without working at some level and beginning to learn financial independence is probably not the best for most people. I can see how student athletes would struggle to find the time to work a part time job while going to school, but otherwise I found the time while studying engineering and it wasn't that difficult.

In the end I'd like to help prevent my kids from having a huge debt burden when they graduate, but I'd like them to have some skin in the game as well.

[1998braves64]

The answer does say this, but just to make it clear. If you put $10,000 in a 529 and it grows to $18,000 and then you use it for something other than qualified education expenses, you would pay tax and penalty on $8,000, not the entire $18,000. This is because you already paid tax on the $10,000 and invested with post tax dollars. Correct?

I stopped contributing to 529s for the reason someone mentioned earlier....you lose flexibility.

I don't think you'd want a huge chunk of money (by my definition of huge and with current pricing of college as anything more than say $40,000 a kid) tied up in it. You can gain flexibility if your kids don't use it by changing it over to grand kids, since assuming you have kids when you start donating to a 529 you're likely to have grandkids who could then use it. I believe they can just keep on passing it down the line. Eventually I think college/university is going to get to be almost too much for the "lower" upper class which are those moving up from middle class, and the rest of middle class is going down to lower class.

I was a fortunate and view it as highly fortunate that the most of the skin I had in the game was my student loans. My parents helped with the rest, not to say I didn't put any of my earnings through 18 years towards it either though because I did. That said I don't think the cost above my student loans/grants/scholarships (didn't have a lot of grants/scholly's though) for 4 years of schooling, 98-01 and 09-10 didn't add up to more than $15,000. I probably had about $6-7,000 in student loans (combined). I also went to NDSU for only 1 year and NDSCS for 3. That said I will likely help my kids out some, definitely probably should start doing 529 I think as savings accounts aren't going to give me the returns I need to get me to say even $40,000 that I put above.

I think leaving a kid in drowning debt isn't exactly helpful either so there probably is a fine line between doing too much or doing too little. The real key is education of what they should do with their money, what are you saving for, how much do you save. What is left over and spending that wisely so you don't overspend will make sure they start on the right financial step.