According to Fidelity Investments’ 2024 College Savings Indicator study, 74 percent of parents have started saving in 2024 compared to 58 percent in 2007, when the study was first conducted.¹ This suggests that saving for education remains a key priority for many families.

Some parents open education savings accounts like 529 plans as soon as their child is born. Other families don’t start seriously contributing until their child is in middle school, and college is just a few years away. Though every client is different, the sooner you can start discussing education planning, the better.

From General Goals to a Detailed Plan

Education funding goals, like many financial goals, are a moving target. When their children or grandchildren are young, your clients may only have a general idea of what they want to fund. Begin by heading in the direction of that general goal, making the financial decisions today that will get them closer to their future education funding needs. As the child’s college years approach and their goals become more specific, the picture of their financial needs will become clearer.

Think of it like using a microscope. You use the broad focus knob first, then do micro-adjustments. This approach allows you to iteratively refine your clients’ education funding strategy over time, ensuring it aligns with their evolving goals and needs. Here, we’ll outline what to discuss with your clients at the different phases of their education planning journey.

As Early as Possible

The further out the child’s college years, the broader the planning can be. If the educational expense is still year’s away, start by getting a general sense of what your client’s wishes are. Explore their answers to questions like:

• How many educational goals will they be funding?
• Do they want to cover the full tuition or just a portion of it?
• What about other expenses, such as housing and textbooks?
• Do they intend for their child to take out loans to cover a portion?
• Do they wish to fund both undergraduate and graduate education?
• Have they considered the implications of attending public or private universities?

This will help you estimate future costs so you can set an initial goal amount. From there, you can discuss college savings strategies and evaluate their current assets to see what can be allocated towards the goal. Be sure to emphasize the importance of staying disciplined and consistent with their savings contributions over time to avoid falling behind.

Financial planning technology that allows you to model different scenarios will be a useful tool in these discussions. When clients can see the impact that different choices, such as paying for full tuition versus partial tuition, will have on the rest of their financial goals, they will be able to make decisions with confidence.

Three to Four Years Before College

As the child’s college education gets closer, their goals will become more specific and so will their funding plan. A student in their early high school years may not have a specific university in mind yet, but your client will likely have a better understanding of the possibilities based on their grades and interests.

This is a time to re-evaluate their cash goal, make any necessary adjustments to their plan, and discuss the possibility of additional funding options, such as financial aid, scholarships and grants, work-study programs, and loans.

One to Two Years Before College

Your focus in the final year or two before your client’s child begins college will center on the more granular details, such as cash flow planning, withdrawal strategies, and tax implications. This will help ensure that they are well-prepared to have the necessary funds available when tuition payments are due.

You can also revisit the additional funding options you may have discussed previously, such as financial aid, scholarships, or loans. By exploring these avenues now, you can help your clients bridge any remaining gaps in their education fund, providing a comprehensive financial plan that supports their child’s upcoming college journey.

Initiate Education Planning Conversations with Confidence

Crunching the numbers is the easy part of the education planning conversation—the real challenge is in fostering an open dialogue with your client about their expectations, priorities, and how much they can realistically afford to contribute without derailing other goals like retirement. To learn more about how to start this discussion with your clients, check out the article How to Start the College Money Talk.

Sources:

1. Fidelity Investments. “2024 College Savings Indicator.” 2024.

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