Education Funding Doesn't Happen in Isolation
Decisions about how much to save, where to save, and how to pay for education can affect your cash flow, taxes, retirement planning, and other financial priorities.
Our role is to help you understand those connections and make informed decisions based on your family's circumstances.
How We Can Help
Depending on your needs, we can help with:
- Estimating future education costs and evaluating funding goals
- Reviewing 529 plans and other education savings options
- Evaluating potential contribution amounts based on education funding goals
- Considering the potential tax implications of different funding strategies
- Evaluating how education expenses fit alongside retirement and other long-term goals
- Reviewing available resources for paying tuition and other qualified education expenses
- Thinking through trade-offs between savings, current cash flow, borrowing, and other available assets
When appropriate, our financial planners can also work alongside tax professionals to consider how education funding decisions fit within your broader tax and financial picture.
529 Plans and Education Savings
We help clients evaluate 529 plans and other resources available for education expenses. Depending on your situation, this may include:
- Evaluating existing 529 education savings plans and prepaid tuition plans
- Determining potential contribution amounts based on your education funding goals
- Reviewing investment allocations within education accounts
- Identifying qualified education expenses
- Considering available tax benefits and their limitations
- Reviewing custodial or other accounts intended for education
- Evaluating the role of taxable savings or other assets
The appropriate approach depends on your goals, existing savings, time horizon, tax circumstances, and other financial priorities.
Paying for College
As college approaches, planning often shifts from accumulating savings to determining how expenses will actually be paid.
We can help you evaluate potential funding sources, including:
- 529 plan assets
- Current income and cash flow
- Taxable investment accounts
- Other savings
- Scholarships and grants
- Student or parent borrowing, when applicable
We can also help evaluate how and when different resources may be used. The appropriate combination depends on your family's resources, priorities, tax situation, and other financial goals.
Finding the Right Balance
For many families, the question isn't simply how to save more for education. It's how much to allocate toward education while continuing to make progress toward retirement and other important financial goals.
There is no single approach that works for every family. We help you evaluate the available choices, understand their potential advantages and limitations, and develop an approach that reflects your priorities and financial circumstances.
Whether you're starting to save or preparing to pay tuition, we can help you evaluate education costs, available resources, and the trade-offs involved within the context of your broader financial plan.
Schedule a ConversationEducation Funding FAQs
How much should I save for my child's college education?
There isn't one appropriate savings amount for every family. The amount depends on factors such as your child's age, the type and cost of education you're planning for, existing savings, expected future contributions, and how much of the total cost you intend to fund.
We can model different assumptions and funding levels to help establish a savings target that fits within your broader financial plan.
Is a 529 plan the best way to save for college?
A 529 plan may be an effective way to save for education, but whether it is appropriate depends on your circumstances.
529 plans offer certain federal tax advantages when funds are used for qualified education expenses, and some states may offer additional tax benefits. We consider available tax benefits, investment choices, contribution levels, anticipated education expenses, and how a 529 plan fits with your other assets and goals. State-specific benefits and rules may also be relevant.
Can a 529 plan be used for expenses other than college tuition?
529 plans may generally be used for a range of qualified education expenses, subject to applicable federal and state rules. Certain uses outside traditional college tuition may also qualify.
Because the rules and tax treatment can change, the applicable requirements should be reviewed before taking a distribution.
Should I prioritize college savings or retirement?
The answer depends on your resources and priorities. For many families, both goals need to be considered together.
We can model the impact of different education and retirement savings levels so you can understand the trade-offs before deciding how to allocate your available cash flow.
What are the tax considerations when saving or paying for college?
Tax considerations can vary depending on how you save for education, the accounts you use, how withdrawals are made, and your individual circumstances.
Our financial planners can work alongside tax professionals to consider relevant tax issues when evaluating education funding decisions. This may include the tax treatment of 529 contributions and withdrawals, available education-related tax provisions, and the potential tax consequences of using other assets to pay education expenses.
Tax laws and individual circumstances can change, so specific tax decisions should be evaluated based on the rules and facts applicable at the time.
What happens if we've saved too much in a 529 plan?
Several options may be available for unused 529 assets, depending on the circumstances and applicable rules. These can include changing the beneficiary, retaining the account for future qualified education expenses, or potentially using other options permitted under current law.
The tax consequences and requirements vary, so the available options should be reviewed before making a change or distribution.
Can you help if my child is already approaching college?
Yes. Planning for education isn't limited to families with young children.
As college approaches, the focus often shifts toward determining how tuition and other expenses will be paid, which accounts to use, how withdrawals should be coordinated, and how those decisions affect cash flow, investments, taxes, and retirement planning.