Personal Planning

Education Funding: Save for College Without Sacrificing Retirement

529 plans, financial aid strategies, and the right order for funding your family's financial future.

The right order matters: your retirement savings come before college savings. You can borrow for college. You can't borrow for retirement. That said, starting early with even modest contributions to a 529 plan can make a meaningful difference by the time your child is 18.

A 529 plan is a tax-advantaged account specifically for education expenses. Contributions grow tax-free and withdrawals are tax-free when used for qualified expenses — tuition, room and board, books, and now even K-12 tuition up to $10,000 per year.

Financial aid, scholarships, and community college followed by transfer are also legitimate strategies. The Blueprint covers all of this without assuming one approach is right for everyone.

What you need to know

529 plans

529 plans offer tax-free growth and tax-free withdrawals for qualified education expenses. Contribution limits are generous, and many states offer a tax deduction for contributions. You can use them at colleges nationwide.

Retirement first

If you're not maximizing your 401(k) match and IRA contributions, focus there first. College can be funded with loans and scholarships. Retirement cannot. Underfunding retirement to overfund college is a common and costly mistake.

How aid works

The FAFSA calculates aid eligibility based on income and assets. Parent assets are counted at a lower rate than student assets. Understanding how the formula works lets you plan more effectively.

Superfunding a 529

You can contribute 5 years' worth of gift tax exclusions at once — up to $90,000 per beneficiary in 2024 — without gift tax implications. This is especially useful for grandparents or those with significant assets to transfer.

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