Prepaid tuition or College Savings Plan?

[goldpaws]

I know nothing about prepaid tuition, so I'm not going to discuss it.
Do I think you will be a bad mother by not putting money away? No, not at all. You don't even know whether your son will want to attend college later. he may pursue a career that pays well & doesn't require college but does require brief training (i.e. LVN, dental assistant, real estate agent - all of these pay well but dont necessarily require a college degree)

I will say college tuition and boarding has risen substantially over the last few decades. Your son should be able to account for his money when it comes time for him to 'grow up'. There's nothing like spending your own hard earned money versus spending someone else's money. Not that a job is in order, but he should learn to budget or have a tuition allowance that requires making ends meet just a little bit. Trying to save while spending a lot is hard. Some lessons are only taught through a little manipulation because they are unimaginable otherwise.

My parents have saved up under my name and periodically dump savings in, sometimes thousands, other times only hundreds, at a time, depending on my grades or behavior. I see nothing wrong with traditional college savings provided there is consistency. Just placing a thousand or two in there and forgetting about it is not college savings. Interest is also something to think about. The earlier you can earn interest on the money, the better. Over a long period of time, it really does add up. Also, never using the money as spare cash is important. My parents put a down payment on their first real house with my sister's college fund in the early 90s. try not to touch it at all costs.

I don't recommend money markets..but CDs can be great, especially since rates can change and you can lock in for short or long periods of time and then choose to renew either with the same rate or better

Private colleges are nice but unless your son is truly gifted or is really extroverted (or really wants to try new things such as traveling instead of sports), it's not necessarily the way to go. Most students go to public, 4 year state universities and turn out well. Some find their way with sports or academic scholarships. Some even find federal or state financial aid.

Also, going to a community college for the first 2 years does have its advantages. If there's one in your town, then that's a great advantage for your son. not only does it have smaller classes/has a smaller campus but can be cheaper (plus the boarding factor is gone). There's also the factor of acceptance at a larger school for transferring that may have ties with the community college. For example, those who go to Blinn College right out of A&M are able to transfer to A&M without any or few problems. it can be an easy transition, compared to other "nightmare" transfers.

Ultimately it is your decision at this point. when your son is older you can let him manage a portion of his college savings. Of course, steering him in the right direction is a great idea when doing that but can be a priceless "supervised" lesson in investing. My parents saved to one particular place for a period of time and that was a permenant move. After I decided I no longer wished them to invest that particular way, partly because I realized I would graduate college at 18, partly because the returns were bad, we (yes i said we) looked at other options. I went for secure, low risk type investing with better interest rates (CDs) instead of a not-doing-anything with low interest "gift to minors act" money market account.

whatever you end up doing, dont forget to read all fine print, analyze all perspectives, and think ahead.
I also want to add my mother brings her calculator to ALL financial discussions/meetings. Don't just trust the banker or the investor salesperson/brokers.
their computers spit out numbers that are correct but they might not be numbers that really matter. My family found this most true during mortage lending discussions where a substantial amount of time and money is involved