Young Parents Prepare for College: Part 3

toddler paying for college

How do young parents prepare for college?  Heck, the kids may not even be out of diapers yet and you start hearing voices inside your head.  Is that your conscience or (in my case) a toddler calling out Daddy at 3 AM wanting to play with his trains?

As a member of the Greater Newburyport Mothers and Families Club, I often contribute to the club newsletter and blog.  Recently, I saw a posting by a member parent voicing a concern that many of us can relate to all too well.

She writes:

We have two kids right now and are thinking about a third. One of our big issues however is college. We have 529 plans for our children right now and if we save the way we are planning on saving we should be able to pay for their two educations. Adding a third though adds another education to pay for. Do we just plan on our kids taking out loans? Are there other savings vehicles out there that are working well for you? I guess I am just wondering if we are thinking too much into this and if planning on paying the entirety of college for our kids is unrealistic, or if there are others who are planning doing so.

Paying for college is right up there with buying a home as one of the largest investments most families will ever make. And for young families (like mine) it is certainly a BIG concern.  I’ve posted on this same topic as part of an ongoing series that still is relevant today:

The good news is that you have time to plan. And it really is never too early (or too late) to plan. This is exactly what I do with clients when preparing a college funding plan that integrates with their other goals.

Part of that plan is figuring out not just whether, how much and where to be saving for college but how to lower the cost WHILE BALANCING the goal of your retirement. It may be unrealistic to pay for 100% of the cost. Even if you have (or will have) the money saved, do you really want to pay full sticker price? There are few folks I know who pay full price for anything and buying a college education is no different.

529 Plans are only part of the issue. Balancing tax strategies, cash flow, choice of loan sources and MOST IMPORTANTLY … College Selection (becoming the Big Fish in the proverbial Small Pond to maximize aid — need and/or merit) are all part of the mix.

529 Plans are not the only or best way to handle the savings side. And with 52 plans to choose from, which one is right for you? There are UGMA/UTMA accounts which may be helpful for other goals as well. There are Coverdell ESAs but they have their own restrictions. For maximum flexibility, you can consider revocable trusts for the benefit of the minor child. Depending on your ages and health, cash value life insurance may make sense (but skip the Gerber Plan).

These are topics I address in my blog at as well as my e-newsletter the College Ed Xpress. And finding specific solutions for parents is exactly what I do in my financial planning practice (without the sale of insurance, annuities or investments).

Stay tuned as we explore the alternatives – including UGMA / UTMA accounts, Coverdell ESAs and living trusts – and how I worked these into a plan for one young Newburyport area couple.