Broker Check
Education Planning: What Parents can do to Save for College

Education Planning: What Parents can do to Save for College

April 03, 2023

Saving for college can be a daunting task, but it's never too early to start planning. As a parent, there are several ways you can save up for your child's college education. Here are some strategies to consider:

  • Start a 529 plan: A 529 plan is a tax-advantaged savings plan specifically designed for education expenses. It can be used to pay for tuition, fees, books, and room and board. Contributions to a 529 plan grow tax-free, and withdrawals are also tax-free as long as they're used for qualified education expenses.
  • Set up a custodial account: A custodial account is a savings or investment account that's set up for a minor child. The account is managed by an adult, but the funds belong to the child. When the child reaches the age of majority (usually 18 or 21), they can use the funds for any purpose, including college expenses.
  • Save regularly: Even small contributions can add up over time. Set up automatic transfers from your checking account to a dedicated college savings account.
  • Consider a prepaid tuition plan: Some states offer prepaid tuition plans that allow you to pay for future college expenses at today's prices. These plans can be a good option if you're worried about tuition inflation.
  • Encourage your child to apply for scholarships: There are thousands of scholarships available to students of all ages, and many are based on merit or financial need. Encourage your child to apply for as many scholarships as possible to help offset the cost of tuition.
  • Use online tools and calculators to determine whether a school is an affordable option and how much you need to budget, many schools have a net price calculator on their website.

By implementing these strategies, parents can take concrete steps to save for their child's college education. Remember, the earlier you start, the more time your savings have to grow.