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When Should You Start Saving for College Fees?

When Should You Start Saving for College Fees?

Embarking on the journey toward higher education is an exciting yet financially challenging milestone for many American families.

As college expenses continue to rise, it’s important to start planning early to ensure a smooth transition into the academic world.

This article explores the best time to begin saving for college fees, highlighting the benefits of early preparation and viable options for achieving your financial goals.

Whether you’re a new parent dreaming of a quality college education for your children or an adult setting your sights on higher education, there are strategies to tailor your college savings plan to secure a prosperous future.

The Earlier, The Better…

The undeniable truth is that the earlier you start saving for college, the more likely your account will gain in value and grow.

By commencing your college fund early, you gain the advantage of time. A longer investment horizon allows your savings to grow substantially, easing the financial burden when the time comes for college enrollment.

The power of compound interest ensures that even small contributions made during the early years can significantly impact the overall college fund.

…But It’s Never Too Late

Unfortunately, far too many parents are sitting on the sidelines and not saving for college or not saving nearly enough.

According to a 2019 “College Savings: Lessons Learned” study from Fidelity, 42 percent parents of parents wished they started saving for college earlier, and 22 percent wished they had researched more options.

If you haven’t started saving for college early on, don’t fret. While an early start offers more time for growth, it’s never too late to act.

Begin by setting clear goals and committing to a structured savings plan. Every dollar saved makes a difference, and with discipline and determination, you can still build a substantial college fund.

Steps To Follow When Saving For College Fees:

  1. Determine How Much to Save for College Each Month
    To determine how much to save for college each month, consider factors such as projected college costs, inflation rates, and the number of years until enrollment.There is no ‘too little to save,’ especially if you start saving early,” advises David Neuwirth, Senior Vice President, Investments at David Lerner Associates, Inc.

    Use our College Savings Plan Calculator to estimate the required monthly contributions to achieve your college savings target.

  2. Compare Your Options
    Several investment vehicles are tailored to help you save for college expenses. Explore these options to identify the best fit for your financial situation:

    • 529 Plan: Officially known under the tax code as Qualified Tuition Programs (QTP), this tax-advantaged savings plan designed specifically for educational expenses offers growth potential and potential federal and state tax benefits. Almost anyone can open and make contributions to a 529 college savings plan (no income restrictions).
    • Coverdell Accounts (ESAs): Coverdell Education Savings Accounts provide tax-free growth and drawings for qualified education expenses, including primary, secondary, and higher education costs. However, they have a $2,000 annual contribution limit per child.
    • Custodial Accounts: Uniform Transfer to Minors Act (UTMA) plus Uniform Gift to Minors Act (UGMA) custodial accounts allow you to gift money to minors for educational purposes. However, once the child reaches the age of 18 or 21, they gain control over the account.
    • Roth IRA: While primarily used for retirement savings, Roth IRAs offer flexibility by allowing withdrawals for education expenses without incurring penalties.
  3. Don’t Forget About Retirement
    While saving for college is crucial, it’s equally essential to prioritize your retirement fund.Balancing both goals ensures that you have a secure financial future and don’t jeopardize your retirement plans.


The best time to start saving for college fees is now. Early preparation allows your investments to grow and provides a cushion for potential financial challenges.

However, regardless of when you start, every dollar saved contributes to a brighter future for your loved ones.

Explore various savings options, such as 529 Plans, ESAs, custodial accounts, and Roth IRAs, to tailor a college savings strategy that aligns with your financial goals.

And remember, while securing your child’s education is crucial, balancing college savings and retirement planning ensures a solid financial foundation for your family’s future and your own.

Contact us for personalized guidance in building a unique college savings plan.

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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