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When should I start saving for my child’s education?

It’s never too late to save, but the sooner you start, the better. Starting early can give you a big boost thanks to the power of compounding – reinvesting earnings to generate their own earnings, and so on.

So, even if you can only save a small amount each month, over time that money has the potential to grow into a nice savings earmarked for your young scholar’s future education. 

How much should I save?

How much depends on a lot of factors – like where your child goes to school – public or private, in state or out of state – and how much financial aid your child gets. You can’t base your calculations totally on today’s college costs, either because, on average, tuition has increased at about twice the rate of inflation.* To get a better feel for projected costs, this would be a good topic to discuss with a qualified financial professional – like your COUNTRY Financial representative.

In the meantime, our college calculator can  help you get a ballpark figure.

Aren’t financial aid and scholarships available for most students?

It’s true – the typical student can generally get financial aid to help pay for part of their college education. Unfortunately, it probably won’t cover the total cost. And, at least part of the aid will probably come in the form of loans.

Don’t count on scholarships, though. Only about 5.5 percent of students receive scholarship money.1

What’s the best way to save?

Like most financial goals, saving for a child’s education depends on your situation. Fortunately, there are a number of choices available to you. The most common are:

Contact a local COUNTRY Financial representative to help you decide which choice may be best for you.

What happens if I open an education savings plan for a child who doesn’t end up going to college?

Two common types of education savings accounts are Coverdell Education Savings Accounts and 529 college savings plans. Money in a Coverdell can be used for qualifying primary, secondary, and accredited post-secondary education expenses until the child turns 30. Money in a 529 can be used for qualifying accredited post-secondary education expenses only, but there’s no age limitation.

For either of these account types, if the funds won’t be used for educational expenses of the named child, you‘ll have two basic options:

  1. The account can be re-designated to another family member without tax consequences, including to:
    • Other children in the family, including stepchildren
    • Grandchildren
    • Parents and stepparents
    • Nieces and nephews
    • First cousins
    • Aunts and uncles
    • Spouse of the designated beneficiary
    • Spouse of any of the above


  2. The account can be closed any time, with the balance distributed for non-educational expenses. The earnings will be taxed as income at the time of distribution and a mandatory 10 percent federal tax penalty will be imposed. The penalty is waived in the event of the death or disability of the beneficiary, or if the beneficiary receives a scholarship.

This is not a complete description. Contact a COUNTRY Financial representative about important differences, retrictions, limitations, etc.

What if I withdraw money from a retirement account to pay for college expenses – will it count toward financial aid?

Yes. In most cases, the entire withdrawal (principal and earnings) counts as income on the following year’s aid application.

Before you resort to this, though, remember – you can take out loans for a child’s education. You can’t get a loan for retirement, so if possible, avoid this temptation.

1 The SmartStudentTM Guide to Financial Aid accessed June 6, 2014

The information contained herein is general and should not be considered legal or tax advice. Laws of particular state and your particular situation may significantly affect the general information presented herein. The availability of the tax or other benefits mentioned above may be conditioned on meeting certain requirements. State tax deductions mentioned here may only be available if you invest in a 529 plan offered by the state in which you reside. You should consult your attorney or tax advisor regarding your specific legal or tax situation.

Investing involves risk; loss of principal is possible.

Registered Broker/Dealer offering securities products and services: COUNTRY® Capital Management Company, 1705 N. Towanda Ave, PO Box 2222, Bloomington, IL 61702-2222. tel (866) 551-0060. Member FINRA  /SIPC

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