Earlier this week, Greg wrote a post asking how much input parents should have in their child’s choice of major if they are paying for their college education. Should a parent push toward programs that are in high demand, such as a degree in information systems? Or, should parents simply let their children follow their desires? There was a great discussion with a lot of well thought out answers on all sides of the issue.  While Greg focused on a very specific situation, there is a legitimate question of whether or not parents should be saving for college at all.

This topic seems to stir up all kinds of controversy in the personal finance blogosphere and from moms and dads with differing opinions. On one hand, certain parents may feel that they need to put their own retirement saving first and saving for college should come last, after all of the other puzzle pieces are in place.  Some parents may have taken out student loans themselves and feel like their kids should do the same.  Maybe they feel that it will give them some “skin in the game” and that they could learn from the added responsibility.

Another group of parents that I know feel that it is their absolute responsibility to pay for their kid’s college in its entirety.  Some parents plan their retirement and life plans around being able to pay for their kid’s college – either by paying as they go or by taking on all of their child’s student loans after the fact.  This group of people seems to feel a real obligation toward saving for college for their children, often putting their own goals and interests on the back burner in order to foot the bill.  This may mean delaying retirement or carrying debt much longer than they had intended.

I have to admit that my philosophy falls somewhere in the middle.  Why does it have to be all or nothing?  It certainly doesn’t, and I am trying to find a balance between reaching my own goals saving for college for my children so they don’t owe a bazillion dollars to FedLoan.  I truly think it’s possible to stay on the fast track to retirement while still saving for college.  Here’s how we are doing it.

Saving for College Tip #1: Start Early

Both of my kids have had college savings 529 plans since they got their social security numbers.  Obviously, starting early has put time on our side.  We are hoping that their investments perform well and that the extra years they have to grow will benefit us in the long run.

Saving for College Tip #2: Start Small

In our particular plan, the smallest monthly contribution we can make is $25 per account….so that is where we started.  $50 per month (for two kids) was fairly easy to fit into our budget at first…and as our income continues to grow we keep adding to that amount.  Once we are mortgage debt free in 3 years, we will really jack up our college savings.  Just remember that something is better than nothing!

Saving for College Tip #3: Add Bonus Money

My kids always get money and gift cards for Christmas.  All Christmas and birthday money goes directly into their 529 accounts with no questions asked.  I “buy” gift cards from them.  For instance, last year they both got about $80 of Walmart gift cards for Christmas from various family members.  I deposited $80 in each of their 529 accounts that month (on top of my regular contribution) then used the gift cards to buy groceries.  They didn’t need anything from Walmart!!!

Saving for College Tip #4: Research the Tax Incentives

My state offers a 20% tax credit on the first $5,000 that I contribute to my children’s 529 in any given year.  This means that if I contribute $5,000 to their accounts I get $1,000 back in my state tax return that year….this giving me a 20% return on my money up front.  This is a great incentive for me since I plan on at least partially funding my children’s college anyway.  Why not get an instant return on my investment?  It’s a win-win.

Saving for College Tip #5: Try Not to Feel Overwhelmed

It can be stressful and overwhelming to read about projected college costs and begin to plan for them.  Don’t feel like saving for college for your children is out of your reach.  Just remember that anything that you save will be appreciated and put to good use.

If you really want to feel less overwhelmed about the price of college, calculate what the price would be without any financial aid or tuition, and then see what it is with the financial assistance. This alone should make saving feel somewhat less overwhelming.  It will certainly help to check out financial aid and tuition online to see if you qualify for even more assistance. Every bit adds up, and even a seemingly tiny scholarship can make a difference when it is time to start paying back those loans.

When it comes to your kid’s college, there are many different payment philosophies. Honestly, I don’t think that there is a “wrong” or “right” answer.  I have mixed feelings about it because we know people who are all over the spectrum.  We have friends who are drowning in student loan debt, and we have friends whose parents paid so they got drunk all day during school.  It’s hard not to take other’s experiences into consideration when deciding for ourselves…..but overall, I think that saving something is much better than not saving for college at all.

We decided when we had kids that we wanted to at least help them pay for college, and we truly hope to pay for all of it.  Since our kids are only 3 and 1, it’s impossible to know what the future will hold.  Either way, I know that we will be happy that we have saved something. Hopefully the stars will align and we will be able to save enough so that they can get through school without any loans.