Saving for School: Education Planning for Your Family

If you have young kids, college may feel very far away. Right now, you may be more focused on preschool drop-off, sports practices, packed lunches, and finding a missing shoe five minutes before you need to leave the house.

But education costs can sneak up quickly.

For the 2025–2026 school year, average tuition and fees range from about $4,150 for a two-year public college to $45,000 for a private nonprofit four-year college. That does not include every possible cost, and it certainly does not mean every family needs to have everything figured out today. But it does mean that planning ahead can make a real difference.

The good news is that there are several ways families can save for education while also tying that plan into their estate plan.

1. Gifting Trusts

A gifting trust can be used to set aside money or property for children or grandchildren. The trust can be invested and used later for education or other important needs.

One of the nice things about a gifting trust is flexibility. You can contribute regularly, pause contributions, and set rules for when and how the money can be used. This can be helpful if you want to support a child’s future without handing over a large amount of money all at once.

With the right structure, a gifting trust may also help with gift and estate tax planning.

2. Health and Education Exclusion Trusts

A health and education exclusion trust, often called a HEET, is a more advanced planning tool. It can help pay tuition or medical expenses for grandchildren or even great-grandchildren.

This type of trust can be useful for families who want to support multiple generations while also including charitable giving as part of the plan. Because HEETs have special tax rules and usually require a charitable component, they are not for every family. But in the right situation, they can be a powerful option.

3. Education Provisions in Your Living Trust

If you already have a revocable living trust, you can include instructions for education expenses.

For example, your trust can say that funds should be used to help pay for a child’s or grandchild’s tuition, books, housing, tutoring, trade school, graduate school, or other education-related expenses.

This can be especially helpful if something happens to you before a child finishes school. Your trust can provide guidance so the people managing your estate know how you wanted your assets used.

You also get to decide how broad or narrow the education language should be. Some families want the trust to cover only college tuition. Others want it to cover private school, tutoring, vocational programs, study abroad, or other enrichment opportunities.

4. 529 Plans

A 529 plan is one of the most popular ways to save for education. These plans offer tax advantages when the funds are used for qualified education expenses.

There are two main types:

Prepaid tuition plans. These allow you to pay for future tuition at today’s rates, usually for public in-state colleges.

Education savings plans. These allow you to invest money for future education expenses. Funds may be used for tuition, books, computers, supplies, room and board, and certain other qualified costs.

Some 529 funds can also be used for elementary and secondary school tuition, subject to annual limits.

For many families, a 529 plan is a practical, relatively simple starting point.

5. Coverdell Education Savings Accounts

A Coverdell Education Savings Account is another tax-advantaged way to save for school.

These accounts can be used for college expenses, but they can also help pay for elementary and secondary education costs. That can make them useful for families considering private school or other earlier education expenses.

Coverdell accounts do have income limits and contribution limits, so they are usually best viewed as one piece of a larger plan rather than the whole plan.

6. UTMA and UGMA Accounts

UTMA and UGMA accounts allow an adult to manage money or property for a child until the child reaches adulthood.

These accounts are usually easier to set up than a formal trust. The money can be used for the child’s benefit, including education expenses.

The main thing to remember is that once the child reaches the required age, the account becomes theirs. At that point, they can decide how to use the money. That may be perfectly fine for some families. For others, especially if they want more control over timing and use of funds, a trust may be a better fit.

Do Education Savings Affect Financial Aid?

They can.

How education savings are owned can affect how they are reported on the FAFSA and how they count for need-based financial aid. A 529 plan, trust, custodial account, or investment account may each be treated differently.

That does not mean you should avoid saving. It just means the plan should be coordinated carefully, especially if financial aid may be important later.

The Best Plan Is the One That Fits Your Family

There is no one-size-fits-all answer. A family with toddlers may need a very different plan than grandparents who want to help several grandchildren. Some families want simplicity. Others want tax planning, asset protection, or multigenerational planning.

The important thing is to start the conversation early.

Our office can work with you and your financial advisors to create an education planning strategy that fits your family, your estate plan, and your long-term goals. Whether you are planning for preschool, college, trade school, or whatever path your child eventually chooses, a little planning today can make tomorrow much easier.