Stories

When Saichi Oba talks about the 529 college savings plans that he and his wife created for their children, he recalls a college fair he once attended.

A financial planner was speaking to a group of about 100 parents. The planner asked, “How many of you want your children to go to college?” Nine out of 10 parents raised their hand.

Next, the planner asked: “How many of you have done something to help your child get ready for college?” Six or seven hands went up.

Finally, the planner asked: “Of all of these things you’ve done to help, how many of you have started saving money for your child’s college education?”

One person raised their hand.

“I remember sitting in that room thinking, ‘Man, I haven’t even started saving money yet,’” Saichi said.

“And then I just started thinking about it more … this is a milestone of how you prepare your child for college. You make sure education is valued; you make sure they do their homework; you make sure if they’re going to a four-year school they sit for the SAT or the ACT.

“These are all things that you need to line up and prepare yourself for, and the easiest one, quite frankly, was the 529 plan.”

The power of saving

Saichi, who works for a university in student enrollment and strategy, knows the power of education. As does his wife, Connie, who teaches at an elementary school. They also know the power of saving.

“It was part of a conversation that my wife and I have had with our children, probably since they were old enough to understand our words,” Saichi said. “College was an expectation for our children. Saving for college is just one of those activities that people who want to send their children to college do, just like helping prepare for the SAT is one of those activities families typically support on the path to college.

“Well, saving for college just happens to be the one that I understood as almost a linchpin for college attendance. I knew it was something I had to do if we wanted our children to go to college, so they kind of married up together and we started saving.”

Saichi and Connie opened 529 college savings plans for their children Elizabeth, Kekuewa and Lupua when they were 7, 4 and 2, respectively.

They contributed to their children’s accounts when they could, and they encouraged their kids to save their own money as well.

“They understood as they got older that we were saving money for them to go to college,” Saichi said.

“When my son was a sophomore, he was in an economics class at his high school, and his teacher said, ‘How many of your parents set aside money for you to go to college?’ And my son said maybe about four or five kids raised their hands, and he was one of them. And the economics teacher was telling them the value of the money that they were setting aside now and what it would turn into as an investment when they’re in college, and then he was trying to draw the parallel to their own success later on.

“And I remember him telling me there were only four other people that raised their hand in that entire room, and I could tell it made an impact on him.”

No 529s when Saichi and Connie attended college

Saichi was an athlete and received support to attend college to play football, which helped with his higher education expenses. He eventually did take out loans to finish his post-graduate studies.

Connie’s family helped her with some of her college expenses, but she also took out loans to finish her degree in education.

“My wife took out more loans than I did; she relied on taking out loans and working, so we very much embodied what we thought the way through college was: You kind of pay your way by taking out some smart loans and also working.

“The 529 college savings plans, to be very clear, fit with the philosophy my wife and I have, which is we were going to help our children, but we weren’t going to pay for everything. They would have to help themselves.

“In practical terms, what the 529 does when college starts – for anybody in their first year of college – it helps so you’re not so overwhelmed by all the costs that you immediately see as a freshman. We knew what we had in 529 savings, we knew what they had saved in summer employment, we knew whatever financial aid or scholarships they had, and so it was easy for us to start every year, especially as freshman, and say, ‘OK, for example, you’re going to take $3,000 from your college savings account, and you’re going to move it to the university to pay for these fees and your room.’

“You’re going to then take some money out of your own savings account, and you’re going to use that for your spending money.’ And so it sort of all works together, but quite frankly, the underpinning of it all, is my wife and I believe strongly in education. But we also believe that the children had to pull themselves up and contribute along the way. Otherwise, it would be far less meaningful to them.”

And it has worked … just like they planned

In 2016, Elizabeth graduated with a degree after four years of undergraduate work and then continued her schooling after that to obtain an MBA.

“She used all of her 529 savings for her four years, and I think there was even a little left when she started her MBA, so she literally used all of her 529 funds,” Saichi said.

“She took out a very small loan her last year for the MBA program because her college savings plan had basically been depleted, so she needed a little money to finish her degree, but it was nominal, with no undergraduate loan debt.”

Kekuewa is half-way through his undergraduate degree, while Saichi and Connie’s youngest child, Lupua, is a sophomore in college, so there is money remaining in their 529 accounts.

“Even if they have to take out student loans to finish, the 529 savings are very much instrumental (in keeping debt as low as possible). In our case, they delay the need to take out loans, if you need to. We didn’t need to do it the first several years for my son or at all for our oldest daughter. So that’s what’s really good about the 529 program, too, is you have resources. You can put off loans if you’re going to need them down the road, which I think always helps.”