Five ways to make college planning less painful

by Badgley Phelps | Jul 07, 2016

It’s hard to picture your little one heading off to college, but that bittersweet day will be here before you know it. And if your child is in middle or high school, don’t blink! Whatever the age of your child or the stage of your planning, here are five tips to make paying for college less painful.

1. Decide on a family philosophy  

As with anything, the first step is to define your goal. Are you funding for private or public? Graduate school? What percentage do you plan to pay for—and what are the rules of the gift? Will funding change if the child doesn’t achieve a minimum GPA or finish within a minimum timeframe? Surely goals and rules will evolve with time, but it’s important to have an idea of your financial goal. People talk a lot about saving without having clearly defined the amount they’re saving for.

2. Get started early

Start big or small, just get going today, whether you’ve just changed a diaper, removed training wheels or teared up at a high school football game. We love this easy-to-follow article from Motley Fool about the big benefits of compound interest: “…simply socking away one lump sum and leaving it could turn $1,200 into nearly $40,000 over 40 years. Not only have you earned interest, but you've earned interest on your interest.” Surely you won’t be saving for college for 40 years, but it’s a good illustration of the effect of compound interest–when you save early, you make interest on your interest.

3. Get the 411 on the 529

If you haven’t researched a 529 plan, now’s the time. 529 plans are operated by a state or educational institution, and offer incentives (tax and otherwise) to ease the burden of saving for college.

According to the IRS, the main advantage of a typical 529 plan is: “Earnings are not subject to federal tax and generally not subject to state tax when used for the qualified education expenses of the designated beneficiary, such as tuition, fees, books, as well as room and board. Contributions to a 529 plan, however, are not deductible.”

Our planning team has the expertise to partner with you in navigating the many options and features of the different 529 Plans available to your family. We can help you plan ahead to ensure that college expenses are funded along with your other family financial goals.

4. Involve your kids in saving

As kids get older, it’s time to get them involved in saving for their own future, too. The more they are invested financially, the more they will understand the impact of their college decision and associated costs—and the more meaningful the rewards will be.     

5. Keep the lines of communication open

The most important tip for planning for college is to talk with your kids. Start the conversation early about your family’s philosophy on college and paying for it. Talk about your personal experience and how your upbringing and family conversations impacted or didn’t impact your own college decision.

In the words of Frank Bruni, author of the book, “Where You Go Is Not Who You'll Be: An Antidote to the College Admissions Mania,” “College is a singular opportunity to rummage through and luxuriate in ideas, to give your brain a vigorous workout and your soul a thorough investigation, to realize how very large the world is and to contemplate your desired place in it.”

With proper planning, that luxurious opportunity doesn’t have to mean a vigorous workout on your wallet—though we can’t guarantee that sending your child off to college won’t tax your tear ducts.

Ready to get started with college planning? We can help. Contact us today.


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