How to Save for College


New York Times, December 10, 2018

The estimated cost of putting a newborn through public college 18 years from now is nearly equivalent to buying a median-priced home today for all cash. Saving that much, especially for more than one child, is impossible for most families. Nobody wants their children to start their adult lives saddled with a crippling amount of student debt. But numbers like those can have a perverse effect, paralyzing parents into doing nothing at all. After all, there’s no class in, ahem, college, to prepare us. We aren’t told how to begin and it’s often hard to find any wiggle room in the budget, particularly when you’re already paying a mortgage (or rent), child care, health insurance — and maybe even a student loan of your own. So where should you begin? Right here.

Who Should Save?

If you can afford to save something, you should — every little bit can help.


Don’t think about saving for your child’s future college education if you currently have a pile of high-interest credit-card debt or don’t have any money set aside in an emergency fund. Deal with that first.

Everyone else who can afford to save something should.

The more debatable part of this question is how prioritize saving for your own retirement versus the kiddo’s college fund. There are two common ways of thinking about this that tips the scales toward retirement: You can borrow for college, but you can’t borrow for retirement (though homeowners technically can, with a reverse mortgage). And there’s an often-repeated maxim that saving for retirement before college is akin to the advice given on an airplane: put your oxygen mask on first, before your child. You don’t want to be a burden to your child later. And if you’re well-positioned after they graduate, you can always help with paying your children’s loans.


Ultimately, you’ll need to consider how to balance the two goals of retirement and college saving. Financial planners suggest testing varying rates of savings — for retirement and college — to see the impact of dialing one up and dialing down another. You can play around with online retirement and college savings calculators to get a general sense, or pay a professional financial planner for their time for a more precise outlook.

Note: If you believe saving for college will hurt your eligibility for financial aid, you can safely cast those ideas aside. The truth is, when the federal government determines what you are expected to contribute, your income matters far more than your savings. (And retirement accounts don’t count toward that equation at all, as long as you are not withdrawing money from them).

In fact, if you are looking to tip the financial aid scales in your favor, ask the fertility gods to grant you twins or children close enough in age that they’ll attend college at the same time — that significantly boosts your chances at getting need-based aid, or the types of grants and money that you don’t have to pay back.

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