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How Can I Save Money for My Child's College Education?

Mary McMahon
Updated May 16, 2024
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Your child's college education is one of the most important things to think about when he or she is young. Many children decide to attend college to receive higher education, and in areas where college is not free for citizens, college tuition can be very high. High tuition is no reason to be denied a college education, and there are a number of options to help parents and children pay for college including grants, student loans, and scholarships. Parents can get a head start by saving money for a college education, and the earlier they start saving, the better. Pro tip - check out free college planning tools for useful advice and tips.

If your family is wealthy, you may choose to establish a trust fund for your child's college education that will collect interest and mature when the child turns of age. You can also designate how the trust fund is used, specifying for example that it must be used on college and professional school and that the funds cannot be disbursed unless the child proves that he or she is enrolled in and attending college. Many banks and investment firms also work with parents to establish college funds which increase in size due to wise investments or periodic deposits of funds from other locations. You may want to consider working with an investment firm to save money for a college education, allowing professionals to make sensible stock investments with your money, and exchanging those stocks for cash and bonds when the child is older.

If you have less money, you can still set aside money for your child's college education, because even a small amount of money will help a great deal. Find a bank that offers high-interest rates on savings accounts or certificates of deposit, and start an account for your child's college education with as much money as you can. Try to account for the college fund in the household budget, depositing funds every quarter to slowly swell the total of the savings account. Depositing even $1,000 US per year in a high-interest account can result in a sizeable chunk of money by the time the child is 18. You might be able to get a special interest rate for a college education fund by agreeing to restrictions on when and how frequently funds can be withdrawn, which will also encourage you to save the money rather than spending it.

Be aware that when applying for financial assistance, college funds are taken into account. Some families shelter their college savings to increase the number of grants that they will receive and make up the balance with a college fund rather than loans. If the college fund is being taken into account in a calculation of financial aid for your child's college education, the child can still qualify for merit-based grants and scholarships, so encourage him or her to apply for this type of assistance. Great scholarship resources include websites like Scholarship Institute that not only help students identify potential scholarships but also provide additional resources on how to navigate the application process. If possible, you might be able to save part of the college fund to help the child get a good start in life, using it as a down payment for a house or to help a child move to a new city to pursue a career.

Planning for your child's college education can be a daunting task, but with the right strategies, it is achievable. From setting up a 529 plan to considering prepaid tuition plans, there are numerous ways to secure your child's future. Remember, it's not just about saving money but also about ensuring your child is academically prepared. Investing in SAT test prep can significantly increase their chances of securing scholarships, further easing the financial burden. With careful planning and foresight, you can ensure your child's college education is well-funded and their future, bright.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
By anon320636 — On Feb 18, 2013

Parents need to have their head examined. College tuition, room and board, cars, etc. are not legally required or even recommended if you want your kids to ever be self-sufficient. Why should they ever work if mom and dad will buy them everything they want?

Smart kids are saving money on college tuition by taking CLEP tests. Their parents who are going back to school are saving money by taking them, too.

By anon207215 — On Aug 19, 2011

What is wrong with people? We bring children into the world and then get angry at them and the system because we have to provide for them and plan for their future. Yes, no one is legally holding you responsible to provide for your child's education, but why should they? It's something you should want to do!

Don't we want them to do just as good or better than us? Don't we want them to have more opportunities and choices then we did? Or are we angry and bitter because no one help us out growing up and we feel "hell, let them struggle and go in debt just like I had to"? Someone said in an earlier post, "ask them this: are they willing to pay for your retirement when it comes time for you to retire?" You are the parent and they are the children! You are to supposed to take care of them. They aren't supposed to take care of you!

I'm not saying don't save for retirement, but why do we feel that if we save for our children's education we'll be left high and dry and they won't appreciate it. If you raise them right and taught them well they will and you'll see the investment.

So yes, save for your retirement and plan for it but take care of the children and give them a foundation they can build on. Let's not shortchange them just so we can live comfortably in old age and die.

By anon93738 — On Jul 05, 2010

Adult children are responsible for their college education if they wish to pursue education beyond high school. Kids today have a sense of entitlement and have now found ways to stay on their parents' payroll now into their mid-late 20's.

Old school we were already responsible for ourselves and our children. College should be more affordable and student loans should be more readily available. Government student loans would make default highly unlikely if you garnish future earnings of the student. Come on: let's teach our kids to be responsible adults.

By anon29854 — On Apr 09, 2009

American's are not legally responsible for paying for their children's education. However, as a parent of two young children, I do plan on saving and paying for as much as their education as possible. My parents didn't save a dime for me and I will be paying student loans for many years because of that. I would like to be able to afford my children the opportunity to *not* start their lives off 50, 60, 70 or 100,000 dollars in debt.

In Canada, (where you are from) the cost to attend college is extremely affordable if not free.... here in the US, our government does not hold a high enough value on education (as it claims to do), and also the high and often prohibitive cost of education creates a kind of social hierarchy where those who grew up poor (like myself) will never be able to afford college and will stay poor. However, if you save for college for your children, they have at least a chance to break that socio-economic barrier and have the opportunity to have a better life than their parents did, which I hope we all want for our children.

Sure, children should know the value of hard work, and I will require that my daughters work and contribute to their education as it is their own future. I am a firm believer that one who does not invest in their own future does not have a true interest in it and therefore will not care if they succeed or fail. *But* I do not see anything wrong with parents saving up for their children's education.

As parents, we "sign up" for the job. We wanted these children, therefore we must understand that we will have to make a significant financial investment in them. Food, clothing, healthcare, interests, and education. If you don't plan on providing these things to your children then who do you expect to??? Taxpayers??

Taxpayers do not care about your children, you do!!! Tax payers did not give birth to your children, you did!!! Tax payers did not raise a bright young individual who aspires to become a doctor, you did!!! You should be proud of that and with that, you should be happy to share the cost of education to see that dream come true.

By anon25634 — On Feb 01, 2009

I think that parents should pay for their child's education. Why would any parent make their kids get loans while they are in college? They are just making there adult life start off in debt. They will be paying those loans off for the next 30 years after they graduate. Parents should start putting money into accounts when their children are young, accounts that are for education only. Why shouldn't parents take care of their responsibilities? When you become a parent your job does not end when he turns 18. You are his or her parent until the day you or they pass on. If you take care of your responsibilities while they need *you* then they will take care of you when *you* need *them*. If not, then they will just stick you in a nursing home and make you you there.

By anon24085 — On Jan 07, 2009

Hello, I am Canadian and wonder why Americans feel it imperative to pay for their children's college tuition?? Let them pay for it themselves!!!

I can understand helping out the first year... but come on! I paid for my entire university, my brother paid for his, and my sister also paid for hers!! So did nearly everyone I went to school with!

I don't think it is the responsibility of the parent to pay for the grown up child's education!!! I earn a very good living as a dentist, and have no intention of paying for my childrens entire university career!

By bigmetal — On Feb 24, 2008

there is no way that legally, you are obligated to put your child through college. as of age 18, they are legal adults, and therefore responsible for themselves. you are responsible for keeping them in school until i think, 16? i'm not sure about that. if they are pressuring you to pay for college, ask them this: are they willing to pay for your retirement when it comes time for you to retire? all the financial advisors say to put retirement saving before college saving because it is so much easier for the child to pay for college then it is for you to pay for retirement. how about they do it the old fashioned way, and work hard, save money and get student loans? that's what i did!

By fylan — On Feb 23, 2008

Can someone tell me, please, if parents are legally responsible to provide their child a college education?

or...Are parent(s) obligated to provide child with a college education?


how can a child force a parent to pay for college education?

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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