Financially Preparing Your Child for College

A friend recently shared that their child had just been accepted to their dream school, Northeastern University. Great news, right? Except for one problem… the price tag. All in, tuition and expenses came to $96,000 per year, and they ultimately decided it just wasn’t feasible.

Another friend reported that their child chose a local state school over a private school. Tuition? $18,000 a year. They will also live at home to save another $18,000 in room and board. A smart financial move, but still, a big commitment.

Whether your child ends up at a state school or a private university, one thing is clear: college costs continue to climb. So, how do you prepare?

Like any big financial goal, the earlier you start financially preparing for college, the better. Whether your child is in diapers or already in middle school, now is a great time to lay the foundation for a solid college savings strategy.

How Much Should You Save for College?

A good rule of thumb is to try to cover about one-third of your child’s total college costs through savings and let investing do the rest. For example, putting away $150 per month from birth, with a 10% average annual return, could grow into approximately $160,000 when they’re ready for college. That could cover four years at an in-state public university. (That’s $41,400 in contributions over 23 years, with the rest coming from compound growth.)

Want to save more? Here are three practical ways to start:

1. Open a 529 Plan Investment Account

A 529 plan is one of the most effective and tax-efficient tools for college savings. Your money grows tax-deferred, and withdrawals for qualified education expenses are tax-free. Many states also offer tax deductions or credits for contributions. Bonus: Recent rule changes now allow you to roll up to $35,000 in unused 529 funds into a Roth IRA—perfect for leftover funds or flexible planning.

2. Explore an Educational Trust to Pay for College

If you’re looking for more control, consider an educational trust. This strategy allows you to set specific terms, like requiring a certain GPA or attending a four-year college. It can also be a smart estate planning tool if you’re planning to gift significant funds for education.

3. Automate and Diversify Your Savings for College

Consistency is key. Even small amounts like $100/month can add up over time. Automating your contributions keeps the momentum going, and a diversified investment strategy within your 529 plan can help maximize growth in the early years, then shift to more conservative options as college nears.

Want help figuring out the right plan for your family? Let’s talk. At Fox Hill Wealth Management, our 360° planning process helps families align education goals with broader wealth-building strategies, from tax efficiency to legacy planning.