Saving for College - Start Early or Wait

College might feel like a distant milestone for your child—but when it comes to saving for their education, time is your greatest ally. With the rising cost of tuition and the unpredictability of financial aid, starting early can make a significant difference in reducing future debt and financial stress. Even small, consistent contributions can grow into a meaningful college fund over time.

If you save $20 a week from the time your children are born until they graduate from high school, you will save $27,000 at a 4% interest rate. If the savings is increased to $50 a week, you will save $68,000 over the same period of time.

If you are able to save $2,000 annually starting from the age of 1, you could have $80,893 by the time your child is 18 (with an 8% investment return annually). Even if you don’t start saving until your child is 7, you will have saved $40,991. Every dollar saved early will only decrease your children’s later dependence on loans, grants, or scholarships to pay for their education. While these options are used regularly by college students, they are not necessarily the best choices to pay for college.

For example, the interest on loans will only increase the overall cost of the loan and lengthen the repayment time frame. While grants and scholarships may sound nice, you cannot expect them to be a guaranteed part of your children’s college financial planning.

Options such as our College Savings Account and Coverdell Education Savings Account simplify the process of saving for college. Talk with a financial planner about what type of college savings plan fits best with your family’s current finances and future plans.

While it may seem early to think about college when your child is just learning to walk, the financial benefits of starting now are undeniable. Every dollar saved today is one less your child may need to borrow tomorrow. With a variety of savings tools available, there’s a strategy to fit every family’s budget.