Tips to save for and pay for college

A mom and daughter sitting on a couch together smiling at each other, holding a laptop and a cell phone

It is never too early to plan for college expenses.

Planning for college can be a lot like planning for a vacation, where you and the potential college student answer questions such as “Where should I go? How much will it cost? Where will I get the funds to pay for it?” But planning to pay for college might seem daunting, so you may tend to put it off. To help pave the way to a smoother planning process, we break down paying for education into some key steps.

1. Assume that you will need college funds at a future date.

If your children are young, you may not yet be thinking about college, especially if they are still in diapers. However, it could be helpful to make some assumptions, for example, that your two children will attend a four-year college when they each reach the age of 18. That gives you some targets around which you can create a savings plan.

2. Estimate how much you might need per child for a four-year education.

An online search can give you average costs for a four-year university, for both public and private universities. Unless you have a more specific amount in mind, use those averages to set the dollar amount for your education savings goal. You may want to plan for the more expensive choice, and then when the day to attend college actually arrives, if you overestimated, that will be a pleasant surprise if you have more than you may need.

3. Set up a college savings fund for your child, children, or grandchildren.

College savings can be accumulated in many forms, including a savings account, a certificate of deposit or a 529 savings account, to name a few.

You may be asking yourself, “Should I set up a 529 account if I don’t really know if my kids will go to college or not?” The 529 account owner is allowed to transfer the account savings to another beneficiary who is a family member. In some circumstances, a 529 account can also be used for elementary and secondary (high school) tuition. So that may remove some hesitation to set up this specific type of education savings account.

4. Explore additional sources for education funding.

It is likely your education fund savings will not cover all the costs associated with attendance at a four-year university. There are a multitude of sources of money to help pay for it — loans, grants, and academic or athletic scholarships are just a few. Even if a parent thinks their income may disallow financial aid, parents of college-bound students should fill out the FAFSA (Free Application for Federal Student Aid)1 every year so that consideration can be given to whatever types of aid may be available for their children. And complete the FAFSA early in the process because funds for grants and scholarships are typically on a first come, first served basis.

5. Use the money you saved or sourced to pay for college.

When the first tuition bill arrives, having made and fulfilled your savings plan can help to make the payment process go smoothly.

Now that you have the outline, put it into action. And if your kids end up not needing that money to pay for their education, take that dream vacation, pay for that wedding, or supplement your retirement savings account using the money you worked so diligently to save. Be sure to understand the options you have for any 529 accounts that you may have funded. The earnings on 529 account funds may be taxed and penalized if the funds are not used for education.


1. Check the FAFSA website for federal, state, and individual college FAFSA application deadlines — they are all different.

Wells Fargo & Company and its affiliates do not provide tax or legal advice. This communication cannot be relied upon to avoid tax penalties. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed.

Please consider the investment objectives, risks, charges, and expenses carefully before investing in a 529 savings plan. The official statement, which contains this and other information, can be obtained by calling your financial advisor. Read it carefully before you invest.