How Do You Plan To Bankroll Your Kid's College Education?


In your first link (pub 970 ch 8) is a list of the exceptions for paying the 10% penalty. It’s towards the bottom and start with

Exceptions. The 10% additional tax doesn’t apply to the following distributions.

BUT, as always, consult a qualified tax professional for further/correct details.


I just had my first child six month ago. I do not plan to save for her education. I’m not even a little concerned that she wouldn’t use the 529, but I’m more concerned about her having college paid for. Without getting into too much detail about my experience because it will definitely come off as bragging, suffice it to say I left college with no debt. I imagine college will either be wildly more expensive or free when my daughter is ready. So, my thought is that I’ll bribe her. If she focuses on certain degree programs, such as STEM, I will pay xx% based on grades. A’s are worth 100%, and it decreases from there. She is, of course, welcome to choose something else and do it on her own.

I know it’s an n of 1, but my biggest concern is that if college is just paid for, she’ll go for whatever whim she has at the time and leave with no debt and no education.

On the topic of 529s, were I to have one, my biggest regret would be that I didn’t start one a decade before she was born. Since a 529 can be transferred to another person, you can start one under your own SSN and then transfer it to your child after birth.


@LivingRichCheaply I feel like I am officially done with going to school. I got my master’s degree while working full-time a few years ago. It’s safe to say, I’m never going back :slight_smile: I hadn’t thought of a future grandchild! Our little girl is only 7 - imagine how much could be in there if we let it grow until a grandchild would be ready to go to college! Hopefully we won’t have a need to figure out an alternative. Thanks for sharing!


We prefer to ski… AKA Spend Kids Inheritance.
Suck it up kids and welcome to the big bad world of financial responsibility.


529 accounts have too limited investment options. I prefer to save in cash accounts.


I have 4 kids and use the Nevada 529 (through Vanguard) even though I live in the NE part of the country. To me, its the best savings vehicle to fund your child’s education. Our first kid was born in 2009 and the investment returns over the past 9 years have been significant.

I see your concern about your child not going to college. As long as you’re fully funding retirement and other retirement goals, I would save an amount necessary where you can cash flow the difference if they decide to go to college. If to decide not to go, then you can always change the beneficiary to a niece, nephew, or grandchild.

For example, if your child needs $200,000 to go to school over 4 years, but you can cash flow $100,000, then save $100,000 in a 529. Again, you can always change the beneficiary if your kids decides to forgo college.


529, which I opened a month or so ago after he was born (he’s 8 weeks and a day today!).

I plan on putting any money that can reasonable considered “his” into it (mostly birthday and Christmas money). I’ll probably put other money into it as well.