I am planning to open 529 plan. Since I graduated in Russia I have no idea how much it costs to get a degree here. What amount should I be aiming for in 16-18 years from now?

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that's an impossible question, the range now is probably $20k to $200k depending on school, and then multiply that by inflation over your time period...  Who knows what financial aid will be like, or even if costs stay proportional to inflation (they have not been in recent years).

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"Я это понимаю на рациональном уровне, но не могу принять на эмоциональном" --Бизнесмен Борис Березовский

Then $80-$100K * inflation rate seems about right.

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Hopefully GA will continue the HOPE scholarship and if the kid goes to school locally the savings are all extra :)  I had a free ride at University of Georgia (ok, so it's not Harvard... but it's a good school) and Lanier Technical (paramedic certify - they'll pay for that ON TOP of covering a 4 year bachelor program!)  It was easy as pie... maintain 3.0 gpa and you're set :) 

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Gou ni itte wa, gou ni shitagae.

Can 529 be used for private school expenses before college time?

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I think when I was doing research on that there was no option like that......but not sure.

I was advised not to open it up and I thought there were lots of disadvantages to it.  don't you think so?

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If you haven't already done so, you can read up on the best 529 plan on the Clark Howard's website - http://clarkhoward.com/topics/529_guide.html - there is also an option with a Coverdell account (which can also be used to pay for private school up to 12th grade), but there is a limit of contribution. 

You may also want to look into U-Promise - you can register your credit cards, and have your friends and family register theirs; certain purchases will qualify for a contribution at no out of pocket cost for you.

There are also 529 credit cards that contribute a % of what you spend into a 529 account.  Fidelity offers one.

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You can't keep doing the same thing and expect different results

Hmmm, Sergey, opening 529 assumes the presence of a child!  Did we miss something??  Are congrats in order??

We created two 529 accounts a few months ago, wrote off part of the contribution in last year's GA taxes, too.  I don't think you can spend that money on private school, but any college-level education and expenses (rent, etc.) qualify.  Go to their website, it's all described in great detail.  There are several investment options there too, depending on the risk level you are comfortable with.

http://www.gacollegesavings.com/index_home.html

 
 

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I'll second the Hope Scholarship - it's cheaper to move to GA and spend a year in high school then pay tuition at some colleges.  I graduated from one of the top 20 public business schools in the country and didn't pay one cent in tuition (except an extra $75 for my golf class )

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16-18 years is a long time..  I wouldn't rely just on HOPE being around when time comes, seriously.  Lucky you who have been able to use it, good for you.  It already has funding problems, and with all the Social Security and Medicare looming bankruptcies in around that time frame who knows what arrangements or drastic changes and shakeups would happen.  I think it's plain irresponsible to rely on the assumption of the availability of this program, but then again, maybe I am listening to too much talk radio :)  Neal Boortz and Co. 

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Minime21:

I was advised not to open it up and I thought there were lots of disadvantages to it.  don't you think so?

There are couple of disadvantages.
1. If you spend 529 money on something other than college expenses you pay tax + 10% penalty
2. If your child decides not to attend a college you either can transfer this account to another beneficiary or withdraw with tax + 10% penalty

Advantages are:
1. You write down up to $2000 from state tax. This makes contribution before taxes (am I right?)
2. If your child receives a scholarship you can withdraw up to scholarship amount from 529 account without paying tax or penalty (this even better than IRA)

I think you can have benefits from this account if you do not overestimate the amount and especially if your child will get a scholarship. Overestimating will cost you. Also I agree with some comments that you should invest in this account after you maxed out your retirement contribution. Meaning saving for retirement has higher priority.

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Alex:

Hmmm, Sergey, opening 529 assumes the presence of a child!  Did we miss something??  Are congrats in order??

Alex:

We created two 529 accounts a few months ago, wrote off part of the contribution in last year's GA taxes, too.  I don't think you can spend that money on private school, but any college-level education and expenses (rent, etc.) qualify.  Go to their website, it's all described in great detail.  There are several investment options there too, depending on the risk level you are comfortable with.

http://www.gacollegesavings.com/index_home.html

Thanks Alex!

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Anutik:

If you haven't already done so, you can read up on the best 529 plan on the Clark Howard's website - http://clarkhoward.com/topics/529_guide.html - there is also an option with a Coverdell account (which can also be used to pay for private school up to 12th grade), but there is a limit of contribution. 

You may also want to look into U-Promise - you can register your credit cards, and have your friends and family register theirs; certain purchases will qualify for a contribution at no out of pocket cost for you.

There are also 529 credit cards that contribute a % of what you spend into a 529 account.  Fidelity offers one.

Thank you Anutik! Coverdell seems to be what I need in a short term. 529 with correct estimation looking promising for a long term. I will also check U-Promise. Sounds like a good idea.

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Bagel Roll:

Hopefully GA will continue the HOPE scholarship and if the kid goes to school locally the savings are all extra :)  I had a free ride at University of Georgia (ok, so it's not Harvard... but it's a good school) and Lanier Technical (paramedic certify - they'll pay for that ON TOP of covering a 4 year bachelor program!)  It was easy as pie... maintain 3.0 gpa and you're set :) 

Thank you Bagel Roll! I will check HOPE as well. Looks like enough reading for a workday

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_Sergey_:

Then $80-$100K * inflation rate seems about right.

I disagree with you now. I think $36,000 ($2,000 * 18) is right amount. If you contribute more, it will be after tax. You can do same investment in any other after tax accounts without risking 10% penalty because of overestimation.

So I think smart way to invest for college is $36K over 18 years in 529 and rest up to whatever in regular after tax investment account, like Vanguard. Am I right?

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