Seeking Advices: Savings Strategy for College with Anticipated, but Not Guaranteed, Parental Support?
Hoping to get this forum's perspective on a (positive) situation I am trying to work through and I figured some folks here may have experienced something similar.
I (38m, sole income earner in HH, income variable $400-$500k, VHCOL) have two kids (3 & 1). My wife and I both attended private colleges that were fully paid for, which is something we both are extremely grateful for and have planned to provide for our children as well should they so choose. Accordingly, we opened up 529 plans for both kids at birth, and have been funding them pretty aggressively on a montly basis with the hopes of these accounts being at/near fully-funded for 4 year private college tuition by early 2040s (targeting final balance in the $375-400k range for each kid - tuition trends suggest it may be higher in which case we'd dip into general savings). Our eldest's account has ~$75K, our youngest's has ~$30k in it.
A positive wrinkle emerged today - In speaking with my dad today, he shared that he & my mom would like to "pay for all (or close to all) of our grandkids college tuitions". This would be funded through an inheritance he is set to receive from his dad (early 80s, pretty unhealthy guy). It's highly unlikely my grandfather lives another 10+ years, but in the event he were still alive by the time my kids go to college (or for whatever reason the money is no longer available), my parents would likely still wish to contribute some amount, but presumably not at the full boat amount. He shared that, for tax purposes, they would intend to directly pay for tuition vs gifting us the money and have us pay. I don't know much about that, but stands to reason to me.
This was of course a lovely surprise, but it does have me reconsidering our savings approach. With the likely majority/all of college costs covered, having huge 529 accounts seems sub-optimal. However, with the uncertainty of not knowing how much my folks may be able to contribute, it would be foolish to stop saving altogether for college.
What I'm currently thinking is to continue the same monthly recurring investments for each kid, but putting them into taxable brokerage accounts (likely something simple and tax efficient like VOO/VXUS 80/20 split). In the event that my parents are unable to support with tuition, we have the 529 accounts that will cover part of the cost tax free, and cover the balance of the cost from these brokerage accounts and take the tax hit then. In the event they are able to cover the costs, we can open up roth accounts for each kid, use it to help them pay for grad school, etc.
With all that said - does that seem like a good approach? This is a pretty major development for us and trying to figure out the best approach.
Thanks!