Saving for your child's college education

A college savings account is a smart way to save for your child’s education. Your Edward Jones financial advisor can help find the option that’s best for you.

Opening an education savings account, saving early and saving often are ideal ways to earmark money for your child’s tuition costs.

A 529 Plan, or the variety of other available education savings accounts (ESAs), can offer tax benefits, too. Some families worry that saving for college may hurt their chances of receiving financial aid. In reality, 529 plans and many other education savings options are considered parent-owned assets, meaning only a small percentage of the savings (less than 6%) are reflected in the financial aid calculation. The key is to identify which account is right for you and when to start saving, while keeping your other financial goals on track.

How much should I save for my child’s college education?

Before diving into what college savings approach is best for you, think about what type of school you want to plan for (private, public, vocational, postgraduate), the associated costs (see the chart below) and how much you want to cover.

Will you pay for all your child’s college expenses? Half of everything? Tuition but not room and board? While there isn’t one right answer, you should decide what works best for your family’s personal and financial situation. Your financial advisor can help you determine how much college may cost, as well as how the savings may affect your other goals.

Source: College Board, Trends in College Pricing 2022, and Edward Jones estimates. Amounts represent one year of education expenses, including tuition and room and board for in-state public and four-year private universities. Community college does not include room and board. Assumes 4% annual inflation rate. Rounded to the nearest $500.

If I don't fully fund my child’s college education, what are other ways to help pay for it?

There are many options for paying for college outside of savings, each with its own set of considerations. Outside of parent contributions and savings, the majority of education funding comes from scholarships, grants and loans. Student income and savings are also meaningful contributors to education funding, including through work-study programs.1

  • Scholarships: Scholarships are offered from a variety of sources and don’t have to be repaid. Only one student of every 300 will receive a full scholarship to college2, but many students will receive partial scholarships.
  • Grants: Grants generally don’t need to be repaid. While scholarships are often merit-based, grants are more likely to be need-based.
  • Federal or private student loans: Loans must be repaid within a certain time frame and incur interest. Some 55% of bachelor’s degree recipients use this option3.
  • Work-study programs: These programs provide part-time jobs for undergraduate and graduate students to help pay for education expenses. How much your student receives in compensation depends on your school and your financial need.

Your financial advisor can show you different ways to save for education and will explain how different ways of investing and borrowing may affect your overall financial strategy.

When do I start a college savings fund for my child?

Once you have the basics down, you and your financial advisor can talk about how much you need to save and work out a plan to help get you there. Keep in mind, time can be one of your biggest assets, so the earlier you begin saving, the better. Staying on track by earmarking a certain amount each month can make a big difference.

One college savings approach many families adopt is to invest a portion of the money that was previously dedicated to day care expenses into a college savings plan like a 529. This chart shows the differences among three savings strategies:

Source: Edward Jones. Calculations assume an annual rate of return of 5.5% through age 8, then 4.5% through age16, and then 3.5% through age 18. Numbers rounded to nearest thousand. This graph is for illustrative purposes only and does not represent any currently available investments.

Where can I save for my child’s college education?

There are a variety of ways to save for higher education. Here are some account types to consider:

  • 529 savings plan
  • Coverdell education savings account (ESA)
  • Savings bonds
  • Taxable investment accounts
  • Custodial accounts (UGMA and UTMA)

Your financial advisor can help determine the best vehicle for your child’s education savings.

Important information:

Hanson, Melanie. “How Do People Pay for College?”, April 23, 2022,

2 Mark Kantrowitz, "Secrets to Winning a Scholarship, 2013"

3 College Board, "Trends in College Pricing and Student Aid 2022