3 Biggest Mistakes Parents Make Saving for College

Courtesy of JJ Thompson & Ledoux Brands

Courtesy of JJ Thompson & Ledoux Brands

Parents around the country have just sent their kids back to school. And many are breathing a sigh of relief. A quiet house again. Gold.

But if you’re a parent who plans to help pay for your child’s college one day, now is the time for action. Because, well… do you know much some colleges cost these days? You may want to cover your eyes. (And if you’re the parent of a college-bound high school senior, you have other worries as it’s now time to file the FAFSA and CSS Profile college financial aid forms).

Cost per year:1

  • Duke: $69,291
  • University of Texas, Austin $46,105
  • Princeton: $62,494
  • UCLA: $56,856

With so much money at stake, here are 3 of the biggest mistakes parents make as they save for their kid’s education.

1.) Parents don’t start soon enough

The earlier you start saving, the better. But remember, it’s their college — not yours. You still have retirement to keep in mind. So a more realistic goal is to save up one-third of the expected college cost. For an estimated low end and high end of your savings goals, refer to the chart below found at

2.) Parents don’t save at all

There are a lot of families who haven’t saved at all. With all the other costs of raising a child, it’s completely understandable. So if you haven’t started, you’re not alone. In fact, according to the College Savings Foundation, just over half are actually putting money away for their child’s education. Less than half have more than $5,000 saved.3

However, the downside of not saving enough is that you or your child may have to borrow money which could delay your retirement and/or saddle your child with a lot of debt after graduation.

To minimize borrowing, you should plan ahead to use alternative strategies that can cut down the time to getting a degree. These include AP tests in high school, taking summer courses while in college, and studying abroad.

3.) They’re saving in other accounts

Some parents say they don’t need a 529 plan because they’re saving in a brokerage account. But one huge difference between a brokerage account and a 529 is ­­— taxes. With a 529 the money grows tax free and comes out tax free (sort of like a Roth IRA but for college expenses). Unlike a traditional brokerage account, you’ll pay no taxes on any dividends or interest you earn.4 Also, when you start making withdrawals you pay no tax on the capital gains as long as the money is being used for qualifying educational expenses. And in some states, you’ll get an additional tax break on your income taxes if you use your state’s plan.5

The takeaway

While it’s back to school time, you may want to consider how to handle your child’s future college costs. A 529 college savings plan is a good way to help, but it pays to start early. It’s also important to remember that there are ways to get loans for college, but they don’t exist for retirement. So keep your priorities in mind.

One last thing, don’t look at those college costs for too long, it’ll hurt your brain.

If you’d like an objective second opinion about your finances or help putting together a family funding plan for college, please reach out to Steve Stanganelli, CFP®, CRPC®, AEP® of and Clear View Wealth Advisors, LLC. Call or email

(1) Based on 2017-2018 out-of-station tuition, fees, room and board found here: