When you think about saving for college, you probably picture children and teenagers. Yet higher education opportunities go beyond children — and paying for education can be a challenge at any age.

According to the College Board,¹ tuition and fees can vary widely by type of institution and location. Moreover, the prices that universities may quote in promotional materials do not always include costs of room and board, transportation or other living expenses.

Because higher — and continuing — education can be expensive, everyone may want to consider building a college savings strategy. Let’s look at what you might want to think about when saving for college and lifelong learning opportunities, including advanced degrees, job training or certifications.

When should I start saving for college?

As with any savings strategy, the earlier you start, the more time your money has to potentially grow in value through compounding interest or capital gains. When you consider college for children, the ideal time to start saving is when a child is born.

However, the early years are often a challenging time for parents. Childcare costs, a tighter budget if one parent leaves the workforce, and the everyday expenses of life with a child can make it hard to prioritize savings that won’t be needed for some time.

Even if you can only set aside a few dollars a month in the earliest years of your child’s — or your grandchild’s — life, do so. As your earning potential increases, you can increase your contributions and build on that early start.

If you’re saving for an older child, yourself or a partner, the best time to start is now. Review your budget and look for ways you can save — then set those funds aside for your education goals.

»Tip: Use a college savings calculator² to help determine how much you need to save. Put dedicated savings aside separately from your emergency fund or any other savings goal you have.

How can I pay for college?

College financing typically falls into four categories: scholarships, benefits, loans and savings.

Scholarships
Many schools, employers, and community groups sponsor scholarships ranging in value from a few hundred dollars to full tuition. A scholarship is a grant that you don’t have to pay back, although you may have some tax liability.

Obtaining a scholarship can be very competitive and may require significant academic prowess and achievement. If you’re determined to take on as little student debt or spend as little as possible, researching and applying for scholarships can be worthwhile.

VA benefits
For eligible members of the military and veterans, VA education benefits³ can cover three to four years of higher education. In some cases, unused education benefits may transfer to a spouse or dependent child.

Veterans who qualify for the GI Bill may also be able to use part of your entitlement to cover test fees⁴ for employment-related licensing or certification. Funds may also be used to cover certain on-the-job training or apprenticeship costs.

Financial aid
Many students use student loans to afford college. The process starts with filling out the Free Application for Federal Student Aid (FAFSA) form. You can find the form and instructions at StudentAid.gov.⁵

Savings
Next to large scholarships, savings accounts are one of the better ways to pay for college — especially if you want to avoid paying interest on student loans. You can save in a traditional account or investments, and there are special college savings options that offer tax benefits in exchange for rules about how you spend the funds.

The best-known of these tax-advantaged options is the 529 plan. Investing early in a 529 may help your savings keep up with — or even outpace — college cost increases. You can use funds in a 529 account at any higher education institution that receives financial aid, including some universities overseas, as well as community colleges, technical or trade schools, art and music schools, vocational and certificate programs and continuing education courses. You can find eligible schools⁶ on the Federal Student Aid website.

There are different types of 529 plans⁷ for education savings and prepaid tuition. In general, 529 education savings plans offer more flexibility in terms of the age of the student, the timeline they have to use the funds, and the ability to transfer unused funds to another family member.

As of January 2024, beneficiaries of 529 plans that have been in place for 15 years or more can transfer assets from the 529 plan to a Roth IRA. Note that the transfer is subject to the beneficiary’s annual IRA contribution, and the beneficiary must have annual income equal to or greater than the contribution amount. The transfer is subject to a lifetime maximum of $35,000.

If you want to change your investment options in your 529 plan, you can generally only do so twice per calendar year for your existing contributions. However, you can change your investment options at any time for future contributions, or when you change the account’s beneficiary.

Before you decide about what kind of 529 plan or other plan to choose, it’s a good idea to discuss it with a trusted financial advisor and get recommendations for your situation and goals.

»Tip: Qualified expenses that 529 accounts can be used for include more than just college tuition and fees. Off-campus housing, food and meal plans, books, supplies and computers also qualify. Vocational and trade school tuition and fees — as well as some elementary and secondary private school tuition — may qualify as well. Before making contributions or withdrawals for K-12 educational expenses you should understand your state's rules and how those funds will be treated for tax purposes.

Is it worth it to go into debt to pay for college?

Before you borrow money for college, it’s wise to evaluate the potential pros and cons of student loan debt.

Of course, college offers benefits beyond earning potential, including personal development and the opportunity to connect with friends, mentors and professional network peers that you might not otherwise meet.

That said, the numbers matter too. And on average, college degree holders earn far more than those without degrees.

The National Center for Education Statistics found that the 2022 median annual income⁸ for fully employed adults aged 25-34 was:

• $80,200 for master’s degree holders
• $66,600 for bachelor’s degree holders
• $41,800 for high school diploma holders

If you need to borrow money, make loan repayments a top priority after graduation. You’ll save interest over the life of the loan and potentially avoid having to make loan payments while trying to save for your own children’s college.

»Tip: If you graduate with funds left in your 529 account, you can use up to $10,000 of that money to repay your student loans.

What about advanced degrees or other professional training?

Continuing education is an investment in you, whether you’re going back to school for an advanced degree, getting a specialized certificate, adding to your job skills or completing a degree you weren’t able to finish when you were younger.

As a working adult, you may have college funding options that aren’t available to most teenagers starting college. These might include:

• Federal tax credits⁹ for eligible students who aren’t claimed as dependents.
• Tuition assistance or reimbursement from your employer.

Ask your company’s HR department about possible tuition help and reskilling programs.

The takeaway

Much like buying a house or funding your retirement, paying for college — and any higher education or career training — is a big investment. Developing an ongoing relationship with a dedicated financial advisor can help you reach your goals.

Curious to learn about saving for college? RBFCU Investments Group and our financial team are ready to talk with you about options that fit your budget, family size and your long-term education goals.