As a financial planner working with high-income millennials, one of the most common questions I get is: “How much should I save for my kids’ college?”
It’s a fair question, but here’s the thing—there’s no one-size-fits-all answer. College planning isn’t just about running numbers or picking the “best” savings vehicle. It’s deeply personal and requires you to think through your own experiences, values, and what you want for your children’s future.
I’ve found that the families who feel most confident about their college planning strategy are the ones who take time to reflect on these six key questions. Let’s walk through them together.
1. What was my personal experience with college?
Before you can plan for your children, you need to understand your own college story. Were you fully funded by your parents? Did you receive partial support and take on some debt? Or did you navigate college entirely on your own through loans and work?
Commentary: Your experience shapes your perspective more than you might realize. Parents who had their education fully funded often feel an obligation to do the same for their children. Those who took on debt might want to spare their kids from that burden—or they might believe the responsibility taught them valuable lessons about money and hard work. There’s no right or wrong answer here but acknowledging your bias may help you make intentional decisions rather than emotional ones.
2. What did I learn from my experience?
This goes deeper than just whether you had financial support. Think about the lessons your college experience taught you about money, responsibility, and independence.
Commentary: I’ve worked with clients who are grateful their parents made them contribute to their education because it taught them to value their degree and take ownership of their choices. Others wish they’d had more support so they could have focused on academics rather than working multiple jobs. Some found that having everything paid for left them unprepared for financial responsibility after graduation. Understanding what you learned—both positive and negative—can help you design an approach that builds the character traits you want to instill in your children.
3. How might my children’s situation be different?
Your kids are growing up in a different world than you did. College costs have changed, career paths look different, and the value proposition of higher education itself is evolving.
Commentary: This is where many parents get stuck in the past. Maybe you went to state school when tuition was significantly lower, or perhaps you attended an expensive private university when job prospects were more predictable. Your children might pursue careers that require different educational paths—from traditional four-year degrees to trade schools, coding bootcamps, or entrepreneurial ventures. The key is staying flexible and recognizing that the “college experience” your child needs might look nothing like yours.
4. How much will it cost when my child is ready for college?
This is where we get into the numbers. Tuition costs can range from about $30,000 annually for in-state public schools to $60,000+ for private universities. But here’s the reality for many millenials—these costs will likely be significantly higher in 15-18 years when your young children are college-aged.
Commentary: I typically use a 5-6% inflation rate for college costs when projecting future expenses. This means if you have a newborn, you’re looking at potentially $60,000-$80,000 annually for in-state public education and $120,000+ for private schools. These numbers can feel overwhelming, but remember—you don’t necessarily need to fund 100% of these costs. The goal is to understand the full picture so you can make informed decisions about how much you want to cover.
5. If I overfund or underfund, what will happen in each scenario?
Let’s consider the potential outcomes of both approaches.
Overfunding scenarios:
- Your child receives scholarships or chooses a less expensive school
- They decide college isn’t for them
- You have excess funds in a 529 plan
Underfunding scenarios:
- Your child needs to take on student loans
- You’re forced to pay out of cash flow during college years
- Family financial stress during their college years
Commentary: Overfunding isn’t necessarily a bad problem to have. Unused 529 funds can be transferred to siblings or relatives, used for graduate school, or even withdrawn (though you’ll pay taxes and penalties on earnings). Recent changes also allow unused 529 funds to be rolled to a Roth IRA under certain conditions. Underfunding, on the other hand, often means either your child takes on debt or you’re scrambling to cover costs from your current income during what could be your peak earning and saving years.
6. What vehicle(s) should I use to get there?
Once you’ve determined your savings goal, you need to choose the appropriate account type:
529 Education Savings Plans: Offer tax-free growth and withdrawals for qualified education expenses.
Custodial Accounts (UTMA/UGMA): Offer more flexibility in how funds can be used, but no special tax advantages for education and have potential financial aid implications.
Regular Investment Accounts: Offer more flexibility, but you’ll pay taxes on gains and no special education benefits.
Commentary: For many of my clients, 529 plans are frequently chosen because of the tax advantages and recent expanded usage rules. However, if you’re unsure about funding education specifically, or if you want funds that could be used for other purposes (like helping with a down payment on their first home), a regular investment account might be a better fit. The key is trying to match the vehicle to your specific goals and family values.
The Bottom Line
College planning is one of those areas where there isn’t a “perfect” approach. What matters most is that your strategy aligns with your family’s values, financial situation, and long-term goals.
Some families I work with decide to fully fund four years at any school their child chooses. Others set a specific dollar amount and tell their children they can use it however they want—whether that’s community college plus state school, a trade program, or contributing to an expensive private education. Still others focus on teaching financial responsibility by covering a percentage and expecting their children to contribute through scholarships, work, or reasonable debt.
The most important thing is making an intentional decision based on thoughtful consideration of these questions rather than defaulting to what you think you “should” do. Your college planning strategy should feel authentic to your family’s values and sustainable within your broader financial plan.
Any discussion of taxes is for general information purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax or accounting advice. Clients should confer with their qualified legal, tax and accounting advisors as appropriate.
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