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African-American mother and young teenage daughter taking a selfie and family is planning for her college.
College Planning

Child college fund

These five little steps could help you start a college fund for a baby, which can help secure peace of mind for you and secure higher education for your child.

1. Get an idea of what your child's education will cost in the future

Given a 5% annual rate of inflation on college costs, your child's college tuition, room, and board could easily set you back twice (or even thrice) what you paid for your own college education. You can get a more comprehensive idea of what both two year and four year private and public universities (in-state or out-of-state) will cost in the year that your child will enroll from The College Board's College Costs Calculator.1

2. Calculate the costs of raising a child (or two)

If you're an expectant parent, you might not have a fully-fledged idea of what the costs of regular child care, food, and other necessities will actually run you on a monthly basis. According to Brooking's Institute, the estimated cost of raising a child in a middle class family with two children is a jaw-dropping $310,605.2 CNN Money offers a calculator to help you estimate the costs of raising children. 

3. Start a 529 College Savings Plan

Once you have researched what higher education will cost, and how much having a child will cost you, you'll probably have a good idea of how much you can allot to their college savings each month. A dedicated 529 Savings Plan is one of the most tax-beneficial and efficient ways to build a college fund for baby. A 529 plan provides tax-deferred growth, allowing your investments to grow without having to pay taxes on them. As long as you withdraw money to pay for qualifying education expenses, your withdrawal will be tax-free. If you choose to set money aside in a regular savings account, you could be missing out on these significant tax benefits on your child's college savings.

4. Give yourself a refresher on financial aid lingo

It may not seem particularly urgent, but you should familiarize yourself with contemporary financial aid lingo and make an effort to understand how the college application process works. It's good for parents to have a thorough understanding of what kind of financial aid options are available to both them and their children, just in case that 529 Savings Plan doesn't actually fund itself in 18 years' time, or baby doesn't turn out to be an actual baby genius.

5. Choose the best ways to contribute to you child's college funds account

Doting grandparents, aunts, and uncles might be anxious to assist you with plumping up your baby college fund. If they express an interest in contributing, be sure to inform them about the most tax-beneficial ways to gift money for college. And don't forget to deposit those personal checks into your college fund when birthdays and major holidays roll around.

If you'd like to learn more about starting a 529 College Savings Plan for your baby, or you'd like to ensure you are saving for college in a more efficient way, explore some helpful college-planning articles in the Protective Learning Center.

NOTE:  As of 2018, the IRS has amended the term “qualified higher education expense” to include a limited amount of annual expenses from a 529 Plan for tuition at an elementary or secondary public, private, or religious school.  Source:

2. Brookings Institute, August 2002.


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