College Savings Month: Building a Brighter Future Starts Today
September feels like a fresh notebook, the clean slate of a new school year. For many families, the back-to-school season is a reminder of the bigger academic journey ahead, one that often leaves many parents asking: Am I doing enough to prepare for their future education? That is why September is officially College Savings Month, a national nudge to take a closer look at how we are preparing for one of the biggest investments in our children’s lives: their education.
Why It Matters
The cost of higher education continues to climb. According to the College Board, the average cost of a four-year degree at a public university (including tuition, fees, and room and board) can surpass six figures. How much of that would you like to cover for your child or grandchild? The earlier you begin saving, the more your dollars can grow, and the less you will need to lean on future debt.
The Classic Choice: 529 College Savings Plans
Most parents have heard of 529 Plans, and with good reason. They allow contributions to grow tax-free when used for qualified expenses. In addition, some states offer deductions or credits for contributions. It is a powerful strategy, but it is not the only one.
Beyond the 529: Other Smart Strategies
Here are additional ways families can save for education, depending on their goals, risk tolerance, and financial circumstances:
1. Roth IRAs (Parents or Kids)
- Parents can use their own Roth IRA, or open one for a working teen.
- Contributions and conversions (not earnings) can be withdrawn tax-free for education expenses.
- Bonus: If not used for college, the funds remain a powerful retirement tool.
2. Custodial Accounts (UGMA/UTMA)
- Great for families who want flexibility.
- Assets can be used for more than just education (first car, wedding, or business startup).
- Downside: Assets legally transfer to the child at age of majority, which can affect financial aid.
3. Taxable Brokerage Accounts
- Offer maximum flexibility with no restrictions on withdrawals.
- Potential for long-term growth if invested wisely.
- However, no special tax breaks compared to 529s.
4. Scholarships, Matching, and Employer Benefits
- Many companies now offer college savings incentives, including contribution matching into 529s.
- It is also wise to proactively build a strategy that includes scholarship planning, not just savings.
#ProTip: College savings strategies go far beyond the basics. From 529s or Roth IRAs to creative planning tools, there are layers of opportunity that can strengthen not only your child’s education fund but your entire family wealth plan.
Education Is About More Than Tuition
When you think about college savings, are you really just thinking about money, or are you asking: How to give your kids the confidence to dream big without worrying about financial burdens? College savings is more than a financial exercise. It is about preparing your children to dream boldly and pursue their ambitions without unnecessary financial burdens. Even small amounts saved consistently can make a big impact. And children who know there is a plan in place for them are more likely to carry that confidence into their studies.
Getting Started This September
If you’re not sure where to begin, here are a few questions to ask and easy steps to get started:
- What percentage of costs would you like to cover?
- Set a goal: Decide what percentage of college costs you would like to cover.
- Which strategies best fit your family’s financial picture?
- Diversify strategies: A blend of 529s, custodial accounts, and investment accounts may be the right mix.
- Can you automate contributions so saving becomes routine?
- Automate: Make savings as routine as school drop-off.
- Are you reviewing your plan annually as tuition and markets shift?
- Review annually: Tuition rises, markets fluctuate, and your plan should adjust accordingly.
- Review annually: Tuition rises, markets fluctuate, and your plan should adjust accordingly.
A Fresh Start for You, Too
This September, as the school year begins, let it be your reminder that planning for college is also planning for peace of mind. Whether through a 529 or another vehicle, the earlier you start, the more prepared you will feel.
Education opens doors. A thoughtful financial strategy ensures those doors stay wide open.
If you would like to explore how these strategies could fit into your family’s wealth plan, our team at IAS Wealth Management is here to help you design a solution tailored to your goals.