Introduction: The Education Cost Challenge in 2026
Average 4-year private college cost ~$250k+ (tuition + room/board, inflation-adjusted). Public in-state ~$120k. For families with kids in elementary/middle school, planning now leverages compounding.
Top Vehicle Comparison
- 529 Plans — Tax-free growth/withdrawals for education. State deductions (up to $10k+ in some). High contribution limits ($500k+ aggregate).
- Coverdell ESA — $2k/year limit; broader expenses but income phase-outs.
- Custodial UGMA/UTMA — Flexible but taxable; control shifts at 18–21.
- Roth IRA — For parent; education withdrawals penalty-free (contributions only).
- Trusts — Control + asset protection; complex/expensive.
Investment Strategy Inside Accounts
Early horizon (10+ years): 70–80% equities for growth. Glide path: Reduce risk near
enrollment (e.g., age-based options
in 529s).
Use low-cost index funds/ETFs for broad exposure.
Tax and Aid Impact
529s count as parental assets (5.64% EFS formula). Minimize aid penalty with
grandparent-owned 529s (if possible
post-FAFSA changes).
Integrating with Overall Plan
Balance education with retirement—don't sacrifice one for the other. Model scenarios
to avoid over-saving.
Case Study: Family with Two Kids
Parents saved $300/month in 529s starting age 5. Projected $150k+ per child at 18
(7% return).
Conclusion: Invest Early and Smart
Education funding is a marathon. PRO-MOTION Consulting helps integrate it into
family plans—reach out today.
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