Save for College

The cost of higher education in the United States continues to rise, making early planning essential for families who want to help fund their children's college education. Average annual costs in 2026 break down to approximately $12,000 for public in-state universities, $24,000 for public out-of-state universities, and $55,000 for private universities. Over four years, families face total costs of $48,000 to $220,000 or more depending on the institution. These figures include tuition, fees, room, and board, but do not account for books, transportation, personal expenses, or the opportunity cost of not working full-time during college. The 529 plan is the most powerful savings vehicle specifically designed for education expenses. Contributions grow tax-free at the federal level, and withdrawals used for qualified education expenses — tuition, fees, room and board, books, computers, and internet access — are completely tax-free. Most states offer additional tax deductions or credits for contributions to their state's 529 plan. Unlike Coverdell ESAs, 529 plans have no income limits for contributors and very high contribution limits, typically $300,000-$500,000 per beneficiary depending on the state. The power of starting early cannot be overstated. A family that begins investing $300 per month at birth, earning an average 7% annual return, will accumulate approximately $130,000 by the time the child turns 18. That same $300 per month started at age 5 yields only $82,000 by age 18. Started at age 10, it produces just $50,000. The difference is entirely due to compound growth — the first dollars invested have 18 years to compound, while the last dollars invested have almost none. For families who start late or cannot save enough to cover the full cost, several strategies can close the gap. Merit scholarships, need-based financial aid, work-study programs, and community college for the first two years before transferring can dramatically reduce the family's out-of-pocket cost. The FAFSA (Free Application for Federal Student Aid) should be filed every year regardless of income — many families are surprised to qualify for need-based aid, subsidized loans, or work-study programs. Since 2024, unused 529 funds can be rolled over into a Roth IRA for the beneficiary, up to a lifetime limit of $35,000, provided the 529 account has been open for at least 15 years. This eliminates the historical concern about overfunding a 529 plan — if your child receives a full scholarship, earns enough to pay for school, or decides not to attend college, the funds can still be used for tax-free retirement savings. The 529 can also be transferred to a different beneficiary, including siblings, cousins, or even the contributor themselves for their own educational pursuits.