5 Steps to an A+ College Plan

financially savvy kids

By K. Bridget Schneider, CFP®, CRPC®
college plan

Imagine your son or daughter receiving an acceptance letter from the trade school or college of their choice.  It is rewarding to witness them start on the path for their adult life.  The only thing that could make you happier is knowing that wherever that school is or what financial aid is offered, you have a plan to secure it. 

Unfortunately, it’s fairly common for parents to put saving for college or other qualified higher education on the back burner.  After all, we’re trying to manage current obligations, save for retirement, and have some fun along the way, too.  But if helping your child with the cost of their education is important to you, it pays to plan ahead.  So, whether they want to seek specialized training for a trade or earn a degree, let’s consider these five steps to an A+ college plan.

Step 1 – Know the Cost

News stories repeatedly report that college tuition plus room and board costs have gone up about 16% over the past 10 years (College Board, Trends in College Pricing and Student Aid 2020).  Earning a college degree can be a good investment.  But the rapid increase in the cost of education coupled with horror stories of unemployed graduates with high student loan debt has many families looking at alternatives to the traditional college plan.  Other choices might include attending a local community college or training for a skilled labor occupation, which may allow the student to earn while they learn. 

Step 2 – Make a Plan

Planning for education isn’t much different than planning for your retirement, except for two considerations.  Education goals typically have a much shorter time to accumulate the needed funds and there may be help meeting the goal from loans, financial aid, and scholarship awards. 

Once you know the potential cost of the education, you’ll need to make some decisions about how much financial support you wish to provide, the amount your child will need to cover, and what financial assistance may be available.  Over the years I have counseled some parents who choose to pay the bill as a way of helping their child get a strong financial start by having no debt upon graduation.  But I have also met parents who believe that their child will have a greater appreciation for the education if they bear some of the cost.  There is no right or wrong plan, but everyone involved should know their expected contribution for a sound plan to be crafted.

There are several helpful resources available from free internet websites to financial advisors who specialize in education planning.  One of my favorite websites to recommend is savingforcollege.com.  This site provides general information on types of accounts that can be used to save for college as well as articles discussing both parent and student loans in addition to ratings for the 529 plans offered by each state.

Step 3 – Determine How Much to Save

After your research, you should have a better idea of the amount that will be your share.  Calculations can be made, considering the time until the funds are needed and the expected rate of return, to determine how much should be saved on a regular basis.  By starting early and benefitting from compound growth, you can accumulate a solid base to use for tuition as well as room and board.  

Step 4 – Decide Where to Save

While there are many types of accounts that can be used for saving, there are three types of specialized college savings accounts. 

Of these, I feel that 529 plans offer the best mix of tax and financial aid advantages.  They have generous contribution limits and offer estate planning benefits too.  The beneficiary can even be changed to another qualifying family member if the original beneficiary doesn’t need the money. 

Step 5 – Monitor Your Progress

Just like your retirement plan, you should monitor your investments for the college plan.  In the early years of saving, while you have a longer time horizon, you may consider being more aggressive.  But as the time for taking distributions to pay for education draws near, the investment allocation should probably shift to be more conservative as you don’t have as much time left to recover any potential losses.  You may even choose to use age-based investment options that automatically become more conservative as your child gets older.  It’s also helpful to monitor your balances, keep an eye on changes in education costs, and track your progress toward your goal.


Following these five steps can help you score an A+ on your college plan.  If you would like to discuss your unique circumstances to begin saving for your child’s education, Connections Financial Advisors can help.  Whether it’s opening a 529 account or determining which investments to use, we want to be your friendly financial guide and ally.         

You may also find it helpful to speak with a Certified Financial Planner™ professional.  Be sure to visit our website today or call us at 217-605-8130.  At Connections Financial Advisors, our mission is to help you make more informed decisions to better your financial position and reduce your financial stress. 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for specific individualized tax or legal advice. 

Prior to investing in 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.

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