Back-to-School Planning: Making College Savings Part of the Conversation

As families settle into a new school year, the focus often shifts to homework, activities, sports, and everything else that comes with getting back into a routine. But for parents, back-to-school season can also be a good reminder to take a step back and think about the bigger picture, including how you plan to pay for college.

The cost of higher education can feel overwhelming, especially when you’re trying to balance saving for college with other financial priorities like retirement, a mortgage, or everyday expenses. The good news is that you don’t need to have the entire plan figured out today. Starting early and having a strategy can make a meaningful difference over time.

Start With What You Can

One of the biggest misconceptions about college savings is that you need to make large contributions to make progress. In reality, consistency can matter more than the amount you contribute at any one time.

Whether you’re putting away $50 a month, making annual contributions, or adding money for when you receive a bonus or other financial windfall, establishing a habit of saving can help you build toward your long-term goal.

It’s also important to remember that college savings should fit into your overall financial plan. Saving for your child’s education is a meaningful goal, but it shouldn’t necessarily come at the expense of our own financial security, particularly retirement.

Understanding 529 Plans

For many families, a 529 education savings plan can be an effective tool for setting aside money for figure education expenses. Contributions can grow tax-deferred, and withdrawals used for qualified education expenses are generally tax-free at the federal level.

529 plans can also offer flexibility beyond traditional four-year college expenses. Depending on the circumstances, funds may be used for certain qualified expenses related to eligible educational programs, including some K-12 and apprenticeship expenses.

Because tax rules and individual circumstances can vary, it’s important to understand how a 529 fits into your broader financial strategy before deciding how much to contribute.

Don’t Let The “What Ifs” Stop You From Saving

Parents sometimes hesitate to save for college because they aren’t sure what their child’s future will look like. What if they receive a scholarship? What if they choose a less expensive school? What if they don’t attend college at all?

These are reasonable questions, but they don’t necessarily mean you should avoid saving altogether. There are options available for unused 529 funds, including changing the beneficiary to another eligible family member. Recent rules changes have also created additional flexibility in certain circumstances for rolling some unused 529 funds into a Roth IRA, subject to specific requirements and limitations.

The key is to build a plan that gives you flexibility rather than trying to predict exactly what your child will do 10 or 15 years from now.

The Bottom Line

You can’t know exactly what college will cost or what path your child will ultimately take. What you can do is start planning, save consistently, and give yourself as much flexibility as possible.

As another school year begins, consider adding one more item to the back-to-school checklist: take a fresh look at your college savings plan. A small step today can help put your family in a stronger position for the years ahead.