Graduation Season Is a Reminder: It’s Never Too Early to Invest in a Child’s Future

This time of year has a way of making families pause and reflect.

Maybe you’re watching your kindergartener proudly walk across a tiny stage in a paper graduation cap. Maybe you’re celebrating a high school senior preparing for their next chapter. Or perhaps you’re a grandparent sitting in the audience watching a grandchild earn a college degree and wondering where the years went.

Graduation season is filled with milestones, memories, and an important reminder: the future arrives faster than we expect.

 

The Reality of College Costs

For many families, the biggest challenge isn’t deciding whether education is important — it’s preparing for the cost.

According to the Education Data Initiative, the average total cost of college now exceeds $38,000 per student annually when tuition, housing, books, transportation, and other expenses are included.

Those numbers can be even higher depending on the type of institution. Recent data shows average annual tuition alone is approximately $11,950 for public in-state universities, $31,880 for public out-of-state schools, and roughly $45,000 for private colleges.

When families consider that many students attend school for four years or more, future education costs can quickly become one of the largest financial goals they will face outside of retirement.

The challenge becomes even greater when inflation is considered. Education costs have historically risen over time, meaning families with young children may be planning for expenses that look very different a decade from now.

This is one reason education planning often benefits from starting early. The longer a savings strategy has to work, the greater the opportunity to build resources gradually rather than relying on large contributions later.

 

What Is a 529 Plan?

529 plans have become one of the most widely used education savings tools in the country.

A 529 plan is a tax-advantaged investment account designed to help families save for future education expenses. Earnings within the account grow tax-deferred, and qualified withdrawals for education expenses are generally federal income tax-free.

These plans can often be used for a variety of education-related expenses, including college tuition, books, housing, certain apprenticeship programs, and other qualified costs. Recent legislative updates have also expanded flexibility for some unused funds under specific circumstances. Under current rules, certain unused 529 assets may be eligible for rollover into a Roth IRA for the beneficiary, subject to requirements and limitations.

Over the past several years, 529 plans have become increasingly popular among families seeking a dedicated strategy for education savings. At the end of 2024, Americans held more than $508 billion in 529 plan assets across approximately 17 million accounts nationwide.

 

The Power of Starting Early

One of the greatest advantages of a 529 plan is time.

The earlier savings begin, the longer contributions may have the opportunity to benefit from compounding growth. Even modest monthly contributions can potentially grow into meaningful resources over many years.

Many families assume they need to make large contributions to make an impact. In reality, consistency often matters more than perfection. According to recent data, families contributing to 529 plans save hundreds of dollars per month on average, gradually building education funds over time.

Starting early may also help reduce the pressure of trying to fund education costs during a child’s high school years, when competing financial priorities often arise.

 

For Grandparents: A Meaningful Way to Leave a Legacy

For many grandparents, education planning represents more than financial assistance.

It can be an opportunity to create a lasting legacy.

Many grandparents want to help future generations succeed but aren’t always sure how to do so in a meaningful way. Contributing to a grandchild’s education savings can be one way to support their future while aligning with broader family and estate planning goals.

In recent years, 529 plans have also become more flexible from a planning perspective. Certain grandparent-owned 529 plans may have limited impact on federal financial aid calculations, and under current federal rules, some unused funds may eventually be eligible for rollover into a Roth IRA for the beneficiary, subject to requirements and limitations.

For grandparents who value education, family, and long-term stewardship, these accounts can become part of a thoughtful legacy strategy.

 

What If My Child Doesn’t Go to College?

One of the most common concerns families have about 529 plans is what happens if the beneficiary decides not to attend college. Fortunately, today’s 529 plans offer more flexibility than many people realize. 

Funds can often be used for qualified trade schools, vocational programs, apprenticeship programs, and other eligible educational expenses. If one child doesn’t need the funds, the account owner can generally transfer the beneficiary designation to another qualifying family member, such as a sibling, grandchild, or even themselves. 

Additionally, recent legislation allows certain unused 529 plan assets to be rolled into a Roth IRA for the beneficiary, subject to specific requirements and lifetime limits. These expanded options help ensure that funds set aside for education can continue supporting a family’s long-term financial goals, even if plans change along the way.

 

Education Planning Shouldn’t Happen in Isolation

While saving for education is important, it should be considered within the context of a broader financial plan.

Retirement planning, tax planning, estate conservation strategies, investment management, and education funding all compete for financial resources. Focusing too heavily on one goal at the expense of another can create unintended challenges down the road.

For example, many parents are surprised to learn that borrowing for education may be possible, while borrowing for retirement generally is not.

That’s why education savings decisions are often most effective when they’re integrated into a comprehensive financial strategy that considers a family’s complete financial picture.

 

Looking Ahead

Whether you’re celebrating a kindergarten graduation, preparing to send a child off to college, or cheering on a grandchild as they receive a diploma, graduation season serves as a powerful reminder that time moves quickly.

The financial decisions made today can help create opportunities tomorrow.

If education funding is one of your family’s goals, now may be a good time to review your current savings strategy and determine whether it aligns with your long-term financial plan.

After all, investing in a child’s future is about more than paying for school—it’s about helping create possibilities for the next generation. Contact us at Capital Growth for all of your education saving needs and to answer any questions you may have.