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California let me set the date for my kids at 25. Since they were infants when I set them up I had no idea how they would turn out. As an older mom, I wanted to make sure my kids could go to college, and grad school, no matter what.

I wanted to do two things in my case. The parents of that little girl (now grown-up) were incapable of even trying to make a budget, much less following one. They spend money a little faster than it comes in. For example, they have no equity in their house because they borrowed it out to replace a roof one time, an oven another time. They lease their cars instead of buying them because the monthly payments are less that way. I guess they expect to live on social security alone. They have no savings.

I wanted to show them the power of compound interest, and such things, so I set up that account. There was a very good school here, then known as Trenton State. I looked up their tuition at the time, allowed some inflation rate (higher than the government quoted rate), assumed I could make 15% to 18% a year (possible in those days). Based on that, I figured I could put around $850/year in there and she would have enough for four years in college. I later increased that to $1000/year when my investment results went down. Remember Oxford Health Plans?

And I failed both ways. First, it stopped being easy to make that kind of money every year, and the college tuition inflation rate became much greater than I allowed for. Also, later I could no longer make those contributions (after my employer got rid of 14,000 employees, and I was one of them). But over the years, the amount I contributed amounted to around $20,000 and the account ran up to about $45,000.

Second, my friends learned nothing for my example.

As an aside, my oldest started college two weeks before her 18th birthday, so even her account had to be setup as a UGMA-18 account and then we fixed it to be hers when she came home for a break. These accounts go into a kind of limbo three months after they "age out".

I guess the UGMA I set up had different rules. My friend went to college a bit before she was 18 (Born October 10), but as custodian, I could write checks on her account provided they were for her benefit. So they were mainly payable to the college or the the college bookstore. I did not have to change anything to get her money even though she was under 21.

Congrats to your young friend and to you for helping her.

She did the work. All I did was provide about half the money.
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