College Fund for Kids: How to Save & How Much

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If you thought college tuition was high when you were younger, costs today for public in-state and out-of-state schools and private schools have increased two to three times since 2002.

And there doesn't appear to be a slow-down anytime soon as schools expand amenities and services to remain competitive.

As the chart below shows, college tuition has increased significantly in the last 20 years, more so than any good or service other than hospital care.

Higher education tuition since 2002

Line graph showing the price of tuition for in-state, out-of-state, and private colleges and universities steadily increasing each year from 2002 to 2022, with 2022 being more than double the 2002 price.

Variables Impacting Your Costs

Even if your child won't be a freshman for another 5, 10 or 15 years, it's really important to start saving and investing now. The sooner you start planning the more prepared you’ll be when those tuition bills arrive.

The first question is what type of school your student may attend? In addition to the three types in the chart above, community colleges and trade schools are great options that can lead to challenging, well-respected, and well-paying jobs. Also, both likely require shorter-term attendance, which could reduce costs§.

Before we get into tuition and associated costs, there will be expenses incurred even before the first day of school. This saving for college calculator can help you budget for expenses faced while applying.

How Much to Save for College?

After the type of education and school have been narrowed down, you can begin figuring out potential costs. In addition to tuition, there'll be room and board, transportation, books, supplies and other expenses to consider.

Fortunately, there are some steps to help take the sting out of college costs:

  • Consider community college
  • Look for high school and college credits
  • Consider filling out the Free Application for Federal Student Aid (FAFSA)
  • Look for discounts and scholarships
  • Some schools may reduce costs based on need if you negotiate
  • Consider online courses

You'll also decide what portion of the costs you'll cover. Will your child shoulder some of the burden? Will scholarships and grants be available? Can relatives provide some support? How much college debt is worth taking on? Here's a Huntington college savings calculator that might help find out how much it'll take to save for a college education.

Ways to Save for Kid's College Fund

There are numerous options at your disposal to prepare for that college fund, including educational savings plans and prepaid tuition plans that can be purchased directly from a state or financial advisor.

A Section 529 college savings plan (aka 529 plan) is a good one to seriously investigate. It's a tax-advantaged account that can be used in some states to pay up to $10,000 for educational expenses from kindergarten through 12th grade, and with no maximum for college through graduate school, including apprenticeship programs.

The primary tax benefit is that withdrawals are tax-free if used for qualified education expenses. And to make it extra easy, setting up a 529 plan is designed for the do-it-yourselfer. Generally, a 529 may have little to no impact on other financial aid and will be of more help than a hinderance. Also, new changes to FAFSA (as of Oct. 1, 2023) eliminates what once was a 'financial aid trap' for 529s held by grandparents#.

Here's a list of the 529 college savings plans in the states with Huntington presence:

Plan Name Tax benefit for in-state contributors? Minimum contribution
Colorado CollegeInvest Yes $25
Illinois Bright Start 529 Plan Yes $0
Indiana CollegeChoice 529 Yes $10
Kentucky KY Saves 529 No $25
Michigan Michigan Education Savings Program Yes $25
Minnesota MN Saves Yes $25
Ohio Ohio's 529 College Advantage Yes $25
Pennsylvania PA529 Yes $10
West Virginia SMART529 Yes $1
Wisconsin Edvest Yes $25

A Coverdell education savings account has a few more restrictions than a 529 plan, but unlike a 529, can cover costs beyond tuition.

Other options to consider to help pay for education expenses:

  • Put money into eligible savings bonds
  • Start a Roth IRA
  • Put money into a custodial account
  • Invest in mutual funds
  • Take out a home equity loan

Here's another Huntington calculator to help you determine what investments to use to save for college, which includes 529s and Coverdells.

Connect with Huntington's Advisory Resource Group

Setting up 529 plans and others are designed for the do-it-yourselfer. Huntington Financial Advisors can no longer open 529 Plans for clients as of Jan. 1, 2023, but can provide some guidance and assist with the other options to consider. Please be aware that Change of Dealer requests and additional deposits for 529 Plans are no longer accepted. If an addition needs to be made, customers should send checks directly to their plan sponsor.

For 35 years, Huntington Financial Advisors have been providing prompt, personal service to clients like you for moments that matter. We offer meaningful advice and can create a plan that is designed to focus on your key priorities to help achieve your goals. Call Huntington's Advisory Resource Group at 800-530-1690 to learn more or use Advisor Connect to find an advisor who's a good match for your unique position.

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The information provided in this document is intended solely for general informational purposes and is provided with the understanding that neither Huntington, its affiliates nor any other party is engaging in rendering financial, legal, technical or other professional advice or services, or endorsing any third-party product or service. Any use of this information should be done only in consultation with a qualified and licensed professional who can take into account all relevant factors and desired outcomes in the context of the facts surrounding your particular circumstances. The information in this document was developed with reasonable care and attention. However, it is possible that some of the information is incomplete, incorrect, or inapplicable to particular circumstances or conditions. NEITHER HUNTINGTON NOR ITS AFFILIATES SHALL HAVE LIABILITY FOR ANY DAMAGES, LOSSES, COSTS OR EXPENSES (DIRECT, CONSEQUENTIAL, SPECIAL, INDIRECT OR OTHERWISE) RESULTING FROM USING, RELYING ON OR ACTING UPON INFORMATION IN THIS DOCUMENT EVEN IF HUNTINGTON AND/OR ITS AFFILIATES HAVE BEEN ADVISED OF OR FORESEEN THE POSSIBILITY OF SUCH DAMAGES, LOSSES, COSTS OR EXPENSES.

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Kerr, Emma and Wood, Sarah. Sept. 13, 2022. A Look at College Tuition Growth Over 20 Years. U.S. News & World Report. Retrieved April 25, 2023.

Chamlou, Nina. April 12, 2023. Why Is College So Expensive? Affordable Colleges Online. Retrieved April 25, 2023.

§ Finance Online. 2023. 98 Trade School vs College Statistics in 2023: Education Cost & Job Outlook Analysis. Retrieved April 25, 2023.

Flynn, Kathryn. July 26, 2022. Does a 529 Plan Affect Financial Aid? Saving For College. Retrieved April 25, 2023.

# Flynn, Kathryn. July 26, 2022. What to Know About the 529 Grandparent Loophole & New FAFSA. Saving For College. Retrieved April 25, 2023.

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