As the school buses start rolling again and families settle back into fall routines, many parents are reminded that college isn’t as far away as it once seemed. Whether your child is starting kindergarten or their senior year of high school, now is a great time to revisit your college savings strategy. A proactive plan can make a significant difference when tuition bills arrive – and can help protect your retirement savings down the road.

Top 5 Must Do’s for College Savings

Define your savings goal: Decide how much of college costs you want to cover.
Leverage 529 plans¹: Tax-free growth and potential state tax deductions make them a top choice.
Start early and automate: Small, consistent contributions compound over time.
Review investment choices: Start aggressive and get more conservative as college gets closer. Consider an age-based portfolio offered by the state 529 plans.
Review annually: Adjust your plan as your child gets closer to college.

Start with a Goal

Before choosing where to save, first decide how much you’d like to cover. Do you plan to pay 100% of tuition and fees, or do you want your child to have some skin in the game? Setting a target allows you to work backward and calculate how much you need to save monthly or annually. Online college cost calculators can help estimate future expenses, factoring in inflation.

529 Plans: The Gold Standard

For most families, a 529 plan is the go-to tool for college savings. These state-sponsored accounts offer tax-deferred growth and tax-free withdrawals for qualified education expenses such as tuition, room and board, and textbooks. Many states also offer tax deductions or credits for contributions.

Tips for getting the most out of a 529 plan:

Start early: Even small contributions can grow significantly thanks to compounding.
Automate contributions: Monthly deposits make saving more manageable.
Review investment choices: As your child nears college, consider a more conservative allocation to preserve capital, or choose an age-based portfolio.

Other Savings Options

While 529s are powerful, they’re not the only option:

Coverdell Education Savings Accounts (ESAs): Allow for tax-free growth and can be used for K-12 expenses, but have lower annual contribution limits.
Regular Investment Accounts: Provide flexibility with fewer restrictions but no tax benefits.

Each option has pros and cons, and many families use a combination to balance flexibility, tax efficiency, and control.

Don’t Forget Financial Aid

Saving for college doesn’t necessarily mean missing out on financial aid. Many aid formulas prioritize parental retirement assets and home equity less than you might expect. A strong savings plan often reduces the need for high-interest student loans, which can be a gift that keeps on giving.

Take Action This Fall

Back-to-school season is a great reminder to review your college savings plan. Consider scheduling a financial planning check-in to confirm you’re on track, discuss the right savings vehicles for your situation, and adjust contributions as needed.

Important Disclosures

¹Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing. (19-LPL)

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