Saving for College
Build an education fund without sacrificing retirement
How 529s, custodial accounts, and Coverdells really work, how college savings affect financial aid, and how to build a realistic plan.
4 lessons · about 29 minutes total · 100% free
Saved on this device only — no account needed.
1. The 529 plan, explained
The 529 is the account most often built specifically for education savings, and its big draw is tax-free growth when the money goes toward qualified school costs. This lesson explains what a 529 actually is, the two flavors (education-savings vs prepaid-tuition), the state-tax deduction many states offer, what counts as a qualified expense — including the newer K-12, apprenticeship, and student-loan-repayment uses — and the penalty that applies when money comes out for something else. A worked example shows how tax-free compounding can quietly outgrow the same savings in a regular account.
8 min read
2. Custodial accounts and other ways to save
A 529 isn't the only container for education savings, and it isn't automatically the right one. This lesson lines up the main alternatives — UGMA/UTMA custodial accounts (which the child legally owns once they reach adulthood), Coverdell ESAs, plain taxable brokerage accounts, and U.S. savings bonds — and compares them on the three things that actually differ: who controls the money, how it's taxed, and how flexibly it can be spent. A side-by-side comparison table is the centerpiece, followed by a worked example contrasting a 529 with a custodial account for the same goal.
7 min read
3. Saving without hurting financial aid
A quiet worry stops some families from saving at all: will the money I set aside just get subtracted from financial aid? This lesson explains how the aid formula actually treats savings — why parent-owned assets and student-owned assets are weighted very differently, why a custodial account in the child's name can reduce aid more than a parent-owned 529, how income usually matters more than assets, and the structural fact that retirement accounts are generally left out of the calculation. It's purely descriptive: how the formula works, not what anyone ought to do.
7 min read
4. Building a realistic college plan
Knowing the accounts is the easy part; building a plan that fits a real budget is where it gets practical. This closing lesson covers right-sizing the goal (you do not have to fund 100% of college), why many families weigh retirement before college funding, automating contributions so willpower isn't required, using a sinking-fund mindset to make a big number feel small, and what actually happens to leftover 529 money — changing the beneficiary or rolling a limited amount into the child's Roth IRA. A worked example builds a monthly contribution plan from a realistic target.
7 min read