Planning Ahead for Education Costs: Strategies Every Family Should Know

Paying for education used to mean stashing away a little money when you could and hoping scholarships or financial aid would fill in the rest. These days, the numbers tell a different story—and so does the pressure. Families are navigating not just higher costs, but also more options: public vs. private, in-state vs. out-of-state, traditional college vs. trade school, gap years, graduate programs, and more.

And while it’s true that the price tags have grown, the path to paying for education doesn’t have to be overwhelming or mysterious. With a bit of structure and a few smart strategies, families can start building an education plan that supports their goals without sacrificing financial stability. It’s less about perfect timing and more about intentional progress.

Why Education Costs Keep Rising (and What That Means for Planning)

It’s no secret that education is expensive, but the rate of increase over the past few decades has outpaced inflation—and for many families, incomes haven’t kept up.

According to the College Board, the average cost of tuition and fees for a four-year public in-state college for the 2023–2024 academic year is $11,260, while private nonprofit colleges average $41,540. That doesn’t include room, board, books, or travel. Over four years, a family might be looking at $100,000–$250,000 per student, depending on the path.

Of course, very few people pay that full sticker price. Financial aid, scholarships, grants, and school-specific discounts can reduce the cost significantly. Still, the starting point is high enough that planning early—and with flexibility—is key.

Start With a Vision, Not Just a Number

Before diving into savings vehicles or comparing tuition charts, it helps to get clear on your family’s values and vision when it comes to education. Not every path will look the same, and that’s okay.

Ask yourself:

• What role do we want to play in paying for our child’s education? All of it? Some? Just the essentials?
• What kind of educational experience feels right—academically, socially, financially?
• Are we open to alternative timelines (e.g., community college first, or a gap year to work and save)?
• What conversations should we be having with our kids about their role in this plan?

Getting clear on your “why” will help you make smarter financial choices that align with your actual goals—not just what you think you’re supposed to do.

Start Early—Even if It’s Small

The earlier you start saving, the more time you give your money to grow. Compound interest is a quiet but powerful ally.

Let’s say you start saving $100 per month when your child is born. With a 6% annual return, you’d have over $38,000 by the time they turn 18. Double that to $200/month, and you’re looking at $76,000+.

But here’s the thing: even if you’re starting late, it’s not too late. Many families don’t begin saving until high school, and that money still matters. Every dollar saved is one less dollar borrowed.

The important part is consistency—not perfection.

Choose the Right Savings Tool for Your Goals

There’s no one “best” way to save for education, but some tools offer clear advantages. Let’s break down the most commonly used options.

529 Plans

These are state-sponsored investment accounts specifically for education expenses. The main benefits:

• Tax-free growth and withdrawals when used for qualified education costs
• Can be used for college, K–12 tuition, apprenticeships, and even student loan repayment (up to a limit)
• High contribution limits
• May offer state tax deductions or credits depending on your state

You don’t have to use your state’s 529 plan, either. Some states offer better investment options or lower fees than others.

Coverdell Education Savings Accounts (ESAs)

These work similarly to 529 plans but with lower contribution limits ($2,000/year per beneficiary) and income eligibility caps. They allow broader investment choices and can be used for K–12 and college expenses.

Custodial Accounts (UTMA/UGMA)

These accounts allow you to save or invest in your child’s name. They’re more flexible than 529s (can be used for anything), but they come with a few trade-offs:

• The money becomes the child’s when they reach a certain age (usually 18 or 21)
• Assets are counted more heavily in financial aid calculations
• Investment gains are subject to taxes

Regular Brokerage Accounts or Savings Accounts

If you’re unsure whether your child will go to college—or you want more flexibility—these accounts offer full control. Just note that they don’t come with the tax advantages of 529s or ESAs.

Don't Forget to Talk About Financial Aid (Yes, Even If You Think You Won’t Qualify)

A lot of families assume they make too much to qualify for financial aid, but it’s always worth filling out the FAFSA (Free Application for Federal Student Aid). Many schools require it for all types of aid—including merit-based scholarships, work-study, and even some private loans.

Here’s what FAFSA helps determine:

• Eligibility for federal grants (money you don’t repay)
• Student loan limits and interest rates
• Work-study program eligibility

Completing the FAFSA doesn’t obligate you to borrow—it just opens the door to potential resources.

And here’s a fact worth remembering: according to the National Center for Education Statistics, 83% of full-time undergraduate students received some form of financial aid during the 2021–22 school year. That’s not just need-based—it includes merit aid and institutional support, too.

Scholarships Are Real—and Worth the Effort

It’s easy to assume scholarships are only for valedictorians or athletes, but that’s not the case. Scholarships exist for nearly every interest, background, or unique quality. Some require essays. Others are as simple as filling out a short application or submitting a creative project.

Encourage your student to treat scholarship applications like a part-time job. Even earning $500 here and there adds up—and could reduce future loan debt or let them work fewer hours while in school.

There are platforms like Fastweb, Going Merry, and local foundations that offer access to dozens of opportunities. And don’t overlook community organizations, religious groups, or employers—many offer scholarships to members or employees’ children.

Keep the Conversation Going as Kids Get Older

Education planning isn’t just a financial task—it’s a family conversation. As your kids get older, involve them in the process in age-appropriate ways.

Talk about:

• What things cost (in real numbers, not vague guesses)
• What you’ve saved—and what’s expected from them
• The difference between loans, scholarships, grants, and work-study
• How different college choices affect financial aid, tuition, and living expenses

This helps set realistic expectations and teaches financial literacy along the way. By the time they’re applying to schools, they’ll understand the stakes—and the opportunities—a lot better.

Think Beyond Just Tuition

College costs include more than just tuition. Room and board, transportation, books, health insurance, and living expenses can add tens of thousands of dollars to the overall bill.

It’s helpful to do a net cost calculation instead of just focusing on tuition. Many schools offer net price calculators on their websites, which show your estimated cost after aid and scholarships are factored in.

If your child’s looking at an out-of-state school, don’t forget to factor in travel costs and holidays. And if they’re staying local or commuting, you may want to budget for transportation and help at home.

Don’t Put Retirement on the Back Burner

This one might sound counterintuitive, but hear it out: prioritizing your retirement doesn’t mean you’re shortchanging your child’s education. It’s actually a key part of sustainable financial planning.

Unlike college, retirement doesn’t come with scholarships, grants, or affordable loans. If you drain your retirement savings to cover tuition, you may end up relying on your children financially later—which is exactly what most families are trying to avoid.

If you can do both—great. But if you’re choosing between maxing out a 529 or your IRA, retirement should generally come first. It's the foundation that keeps everything else stable.

Your Next Financial Step

• Open a 529 or education savings account if you haven’t already—it takes less than an hour and can grow tax-free.
• Use a college savings calculator to estimate how much you might want to save based on your family goals.
• Start the education conversation with your child. Keep it honest, age-appropriate, and encouraging.
• Set up monthly auto-transfers to your education savings—even small amounts add up over time.
• Bookmark a few scholarship platforms (like Fastweb or Going Merry) and encourage your student to explore options early.

Paying for Education Wisely

The truth is, most families don’t have everything figured out from day one. They make decisions over time—adjusting the plan, recalibrating expectations, and finding creative ways to bridge the gap. That’s not failure. That’s progress.

Planning ahead for education costs doesn’t mean having a perfect roadmap. It means choosing to stay engaged, ask good questions, and take small steps toward a bigger goal. And it’s okay to change your mind or shift your strategy as life happens.

The real win? Giving your child the gift of opportunity—without sacrificing your own financial stability or peace of mind. That’s a version of success every family can work toward.