5 Financial Steps to Conquer College Costs

Dave Becker |

By Dave Becker, ChFC®

Attending college comes with a hefty price tag. If you’re feeling overwhelmed by college costs, you’re not alone—many families are unsure about where to start.

But there are solutions. With proactive planning and the right strategy, you can successfully navigate the financial maze of affording a college education. 

We at Keystone Wealth Management want to share our knowledge about how you can afford college.

1. Research College Costs 

The first step of the college costs journey is to collect pertinent data.

Although there have been some promising indicators recently that costs are slowing, the historical data of college tuition is startling.

Some of the cost can be offset with financial aid, but, unfortunately, many students graduate with an enormous student loan debt.

Of course, the costs of tuition and student loan debt will differ per university attended, room and board, and other expenses; regardless, it’s best to start researching now.

Here are a few additional resources you can use to look up more data:

2. Build Your Savings

The time is now to start saving money for college. The earlier you start, the more you can enjoy the benefits of compound interest. By waiting, your savings amount will be lower, but at least you’ll be saving something.

Even if your budget is already too tight to add another line item, try to set aside the minimum. Remember, even a small amount is better than nothing. 

Investing in your child’s future is a noble endeavor. Whether you can contribute a large chunk of your bonus or just a few dollars here and there, try to remind yourself that it’s all for an important reason.

3. Explore Your Savings Options

The good news is that there’s more than one way to save money for college.

One of the more common methods is by contributing to a 529 plan, an education savings plan designed to encourage saving for future education costs. Money contributed to a 529 plan grows on a tax-deferred basis.

The two main types of 529 plans are prepaid tuition plans and college savings plans; both offer tax advantages as long as you’re saving for qualified education expenses.

You can also use Roth IRAs to save for upcoming college costs. While not specifically designed for college savings, Roth IRAs are useful because your contributions can be withdrawn anytime and for any purpose. Plus, money you save inside an IRA won’t impact your financial aid eligibility.

4. Divide Your College Costs

It’s true that some people are able to pay college costs with the funds in a single savings account. But for most people, that’s not a reality. One way to work around this is by breaking down your costs into three parts.

The first part of this strategy is to start saving before your kid(s) head off to college. Starting early helps to build a solid base to use for tuition and room and board. 

The second part is to plan on paying for about one third of college costs while your child is attending college. You can accomplish this through a combination of scholarships, grants, a part-time job, or family contributions.

The third and final part of this strategy is to rely on a student loan which you or your child can repay after they graduate. Try to optimize the first two parts to keep student loan debt low.

5. Monitor Your Progress 

Monitoring the investments you set up for your child’s college education is critical for making progress toward your goal.

When you start saving, you should be more aggressive with your investments. But as college gets closer, you should switch your investment allocation to be more conservative. Some 529 plans do it for you automatically by offering age-based investments that progressively get more conservative as your child ages. 

It’s also helpful to keep your eye on your balances to see how they compare to fluctuating college costs. It’s a constant juggling act—but an important one.

Take Control of Your College Costs

If the process of saving for your child’s college feels daunting, Keystone Wealth Management can help. We’ll calmly explain your savings options, including 529 plans, to show you how you can optimize your money to send your loved one to college.

If you already have a 529 plan in place, we have the qualifications and experience to help you manage the investments in your account. We aim to get you on track toward your goals—and keep you there.

To learn how to start saving for college costs, you can contact us by emailing dave@keystonewealth.com or calling (319) 883-3096. I look forward to hearing from you!

About Dave

Dave Becker is owner, financial advisor, and Chartered Financial Consultant® at Keystone Wealth Management, a full-service financial advisory firm based in Waterloo, Iowa. The firm offers a wide range of financial products and services to individuals, business owners, and corporations to help them pursue their financial goals. As a fiduciary, Dave always places his clients interests above all else. He enjoys simplifying the complex and helping clients move toward their goals and ultimately financial freedom.

Dave provides clear and concise communication, something his clients highly value. After graduating from Illinois State University in 1998, he immediately started helping others with their financial planning. In 2003, he earned the CERTIFIED FINANCIAL PLANNER™ designation (which he voluntarily resigned in February of 2023) and the Chartered Financial Consultant® designation in 2005. Over the span of his career, Dave has guided his clients through some of the most dynamic and uncharted situations for investors, including the burst of the dot.com bubble and the subsequent correction from 2000-2002, the 2008 financial crisis, a global pandemic and interest rates at 41-year highs.

Dave, his wife, Staci, and their four children (Christian, Anna, Carson, and Jonah) reside in Cedar Falls, Iowa. In addition to his work responsibilities, Dave has also volunteered at school, coached soccer and robotics, served as a trustee at church, led a Cub Scout pack, and cheered his kids on in everything they do. He has always said that he makes his best investments at home. In his limited spare time, he also enjoys watching college football and Formula 1 racing. To learn more about Dave, connect with him on LinkedIn.