family,  geeky

how to save for college: years down the road with our 529 plan

[Updated for OCTOBER 2017]

Now that it’s been SEVEN years since started Miss L‘s college savings fund, I thought I’d provide another update on the progress of her 529 Plan! [I’ve previously posted a 4-year update as well as when we started the fund.]

Just as a quick review, we decided to invest our money in the Utah Educational Savings Plan based on the information and availability of plans back in 2010. It had great ratings from Bankrate’s (comparison of all state plans), and stuck out as the best option for us. [It’s worth noting that California now has a 5-star plan of its own, Scholarshare, which actually gets slightly better ratings than Utah.]

Now, what does 7 years of consistent investing actually look like?

Currently, Miss L’s funds are valued at 152% of our net principal contribution. As you can see, we’ve invested the same amount every year (we have an automatic monthly withdrawal from our checking account), but thanks to favorable market conditions, Miss L’s money is growing pretty nicely. This February, we chose to increase the monthly contribution by 10% and will hope to do that on an annual basis going forward.

Here’s the annual breakdown:

  • 2010 = 105% of principal contributions
  • 2011 = 90% of principal contributions
  • 2012 = 112% of principal contributions
  • 2013 = 129% of principal contributions
  • 2014 = 136% of principal contributions
  • 2015 = 124% of principal contributions
  • 2016 = 135% of principal contributions
  • 2017 = 152% of principal contributions

As for administrative costs, we’ve currently paid a total of 0.75% of our principal contributions over 7 years.

It’s really nice to know that we’ve started this school fund and have it growing for whenever it’s needed. And it truly is “out of sight out of mind” until those quarterly statements show up! If we got a tax break for doing it, we’d be even happier, but so far all efforts on that front have failed.

Will we hit the target expenses?

Well, right now, a college that is currently $30,000/year is expected to cost $222,148 for four years by the time Miss L starts her freshman year! Ouch! So every little bit now counts!

Some people have asked about how this helps/hurts for financial aid when a student goes to school. If a parent owns the fund, then up to 5.6% of the fund’s value can be counted toward FAFSA inclusion. Those are the rules now… who knows what they’ll be in 12 years!

So here we are…7 years down and only 11 more to go! Ooooh boy! If those first seven years are any indication, then they are going to just FLY by!

Anyone else have any thoughts on a 529 plan or college savings?

Here are a few handy links if you’re looking to invest in a 529 plan: