Thoughts on the TX Tuition Promise Fund?

Updated on August 19, 2009
J.L. asks from Frisco, TX
8 answers

Hi everyone, it sounds like a good idea - invest in your child's college education now and lock in this year's tuition costs, because by the time your child is 18 yo tuition costs could be off the charts... However, the previous Texas Tomorrow Fund is already running out of money, but luckily it's backed by the state so the state will make sure you get what you paid for. This new TX Tuition Promise Fund, though, is NOT backed by the state and instead is through an investment company. Any thoughts about whether this is still a good investment or any suggestions of other college savings investments? Thanks!!

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P.W.

answers from Dallas on

I don't know on this particularly. Maybe there is a good accountant out there. But invest or set up some type of savings plan now. The years fly by and anything you set up will help, if not foot the whole bill. That help could make a huge difference.

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T.F.

answers from Dallas on

We did a 529 plan back when daughter was little. She can go anywhere she wants to go, in or out of state.

I just depends on what your specific needs are and what is right for you.

We believe our daughter will be going out of state so we are prepared for her to go that route. As for us, she wants to study in Itlay for a year and also go someplace like Duke (to follow in dad's footsteps). Of course, who knows how many times she might change her mind, she's only 14 1/2.

We will make sure she does not come out of college in debt. We feel it is our responsibility to provide the best education possible for her.

EDITED: I have never in my 47 yrs of life heard of a professional advising to wait on college savings. That is absurd. I would run away from someone like that. OF COURSE, your retirement is very important and crucial. You can do both. It takes a lot of discipline and hard work. We have worked hard to have our daughter fully funded as well as have our retirement fully funded. We are working on a house/wedding fund for her at this time. We strongly feel an obligation to get our daughter out of college debt free AND to be fully funded ourselves so that she has no worries about us when we get older. I'm sorry, I just had to comment on that after I saw the response to put off saving for college.
Best wishes! They grow up TOO fast

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K.D.

answers from Dallas on

I did not read you other responses. I will tell you that if it isn't backed by the state then I wouldn't do it.

Also, One thing I have been told these last few years buy several people (investors, bankers, attorneys and so forth) Do not worry about saving for your childs college right now, you need to concentrate on your retirement. I have been told by some very smart people to concentrate on my retirement fund, Colleges offer grants, loans and all sorts of ways for our kids to attend college. Retirement on the other hand does not offer help. If your not prepared then what.

In the end when your have retirement and your kids are paying off loans you can then help them pay off what they owe, but you are secure in your old age.

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M.C.

answers from Dallas on

Have you already maxed out your Roth IRA? If not, I'd start with that. Funds in a Roth can be taken out tax-free to pay for dependent college expenses. So you're saving money and investing it, then can decide when the time comes whether it makes more sense for you to use it for education or retirement. If you've already maxed out your Roth, then I'd look into 529 plans. We're in the Oklahoma one, because it's very highly rated, run by TIAA Cref (where we have some of our retirement money, and whom we trust), and I work in OK, so we get a state tax break. If you're not getting the state tax break, though, it's worth looking into the 529 plans in other states, as well, to see which one matches you best. You DON't need to invest in your state's plan, AND you child doesn't need to go to school in that state. The plan is just named for the state where you can get a state income tax break--but since TX doesn't have any state income tax, you should just go with the plan that has the best investment options for you. GL!

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K.C.

answers from Dallas on

According to Dave Ramsey, it's not a good investment, I believe he uses the term "rip-off". You'd be better off investing the money in an educational IRA or 529 plan based on your income level.
http://www.daveramsey.com/etc/cms/saving_for_college_9550...

K. C.
Stay at home Mom to 3 kiddos

L.K.

answers from Dallas on

Try wwww.savingforcollege.com for great info on 529 plans. I have invested in another state plan because Texas didn't have any good options for me. My daughter will not have to go to school in that state, however. It really doesn't matter much which plan you select because it won't limit your options on where your children can go to school. Some states offer their own residents certain benefits (tax breaks) for investing in their plan, but to me, the most important thing was to pick an investment plan that met the criteria I was looking for - needed a mix of investment options, high cap on amount of money that could be funded, the performance of that plan over the years. There are also articles in all the major financial/money magazines comparing the different state plans, and the pros/cons of each.

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C.W.

answers from Dallas on

Max out your retirement contributions first (work, IRA, etc.), and then contribute to college. We've done that and also started a college savings plan for our 9 month old - We've chosen a 529 plan (I believe ours is Utah because it was the best fit for us and highly rated by Consumer Reports - www.consumerreports.org). It may have changed in the last 9 months w/the instability in the market - and they do have some minimum investment requirements for start up (I think the one we chose had a minimum of $2500 on start up) - good luck!

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J.L.

answers from Dallas on

When I looked into this a couple of years ago (my oldest is 3 now) I was told the program was on hold. I admitt I have not checked back into. Hopefully they have worked out some of the kinks...maybe that's why it is through an investment company now?! I will follow your question to see what the other moms tell you. We certainly want to do all we can. We have started savings account for our boys, but but the time they get to college who knows what it will cost. If this program still works it sounds like a great deal!!! Best of luck.
J.

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