529s are a scam: Saving for College Part II

Dear internet,

I have a lot of conflicted feelings about 529s. Surely there must be a better way for people to save money for college that does not involve handing all your hard-earned cash into the hands of private investment firms that charge in many cases, exorbitant fees that far exceed the meager (state) tax benefit. You have essentially no power over how the money is invested (they are all mutual funds?) and yet…Realistically: What are my other options for saving for college? Three come to mind.

 

  1. Savings accounts with .1% interest. Not gonna cut it when the cost of college has risen so dramatically. Have to at least try to beat inflation.

2. Invest the money myself in the stock market. Assuming I make a profit and don’t lose it all (Also a possibility with 529s) I would end up paying 10, 20 percent tax in capital gains. That is a lot.

3. Roth IRA for il bambino, used for educational expenses. Which has to be earned income, so we’ve circled back round to child labor and the early 20th century. Plus, wouldn’t it be better for that Roth IRA to sit for many decades and through the power of compound interest, pay for il bambino’s actual retirement? Future hovercraft rides to the doctor who handles old video game injuries acting up will not be cheap.

Basically, as a middle-class person who does not want their child to enter indentured servitude via college loans, you have to give your money to investment firms who will gamble with that money. In exchange for putting your life savings in their hands, the government generously agrees not to tax you, if you use the money towards qualified educational expenses. And even then, that money might not be enough to cover the rapidly rising cost of college.

How can we not have state-subsidized higher education?* How can people buy into the 529 scam? Because there isn’t really a good alternative.**

 

Yours impecuniously,

 

Daya

 

*I am looking at you, Baby Boomers. Yes, the people who went to college back when it was state-subsidized, who then took that education and got secure, full-time jobs with guaranteed pensions, who then bought houses that triplicated in value or even more.

 

**There is another option, the Coverdell Education Savings Account. Used to be called an education IRA, works like an IRA in the sense that you can invest it in what you want, and then you take money out for educational expenses until the age of 30. Can be rolled into a 529. But, contribution limits are 2k a year. Not very much when private college tuition is 70k a year.

 

 

Saving for college

Dear internet,

So the time has come to save for college. Not for us, thank goodness, when I walked out the doors of my hallowed halls of higher education, I thought, good riddance, I will never take another course again in my life. But, it would be good if il bambino can graduate from the college of her choice without incurring any debt.* A Challenge to be sure, because college costs in the USA are crazy.

yes, some people send their kids to Saturday school to learn the mother tongue in an academic sense, so they may return to their country of origin for a free or almost-no-cost higher education. But plopping a child down in the Old Country with their All Hands Off educational model is a little cruel, considering how the American model of education “Everyone graduates from high school! Even the functionally illiterate!” vs. European model: “We will make it very difficult to graduate even from primary school, then train the public school teachers to discourage/bully/intimidate the poor into dropping out school during the college preparation years. For those wiley ones who make it to the public university, let’s routinely fail students so only the middle to upper middle classes will have the funds and morale to complete college. God save the oligarchy!”*

I digress. 

There are basically two options, the Coverdell education savings account and the 529. I have strong / conflicted feelings about both of them. More later.

yours,

Daya 

*Also college in the US is fun and relaxing. a great way to spend 4-6 years.

204 days

Dear internet,

It has been 204 days since I ate anything from a restaurant or coffee shop. I had an almond croissant and a cappuccino from a bakery this morning sitting on the steps outside in the sunshine and it was glorious.

yours,

Daya

Questions of the day

Dear internet,

I could google these questions, but eh.

  1. Why does my computer fan go into overdrive when I am not watching Hulu but it’s in a tab I’m not using?
  2. When do old people’s voices start to sound old and why is that?
  3. Why can my Apple computer listen in on my conversations  and yet it can’t guess which apple device I want to connect my AirPods to? Like sometimes I have my phone next to my computer. (Don’t we all)  and my AirPods just stubbornly refuse to switch over to my laptop unless I manually change it.
  4. Why is it legal for e-scooters to block sidewalks in DC? Isn’t this an ADA violation?
  5. Why is the voice recognition software that companies use for customer service phone helplines so bad at recognizing words? I mean, I know they got better tech. I can whisper something that sounds like ‘chicken nuggets’ clear across a room where my phone is located, and the next time I log into YouTube on my laptop, I get an ad for Burger King chicken fingers. Can’t our technological overlords do better? Or maybe…they really don’t want people calling customer service lines so they make it intentionally crappy.* 

*We are truly living in the robber baron age.

 

I have spent a lot of time on customer service helplines since I decided to change up some things in my budget. I have spent, conservatively, 5 hours on the phone to do this, including a fun trip to the UPS store to fax a document. My first job involved a LOT of faxing. it was the only way to send things between offices.        

yours,

Daya