The Importance of Late-Stage College Savings

With a child already in high school, you may be thinking: Is it too late to make a difference by starting or continuing to save now? The simple answer is — it is not too late. Even in these last few years before high school graduation, every dollar you set aside now can make a real impact — in reducing debt, in easing stress, and in providing your child with more options when the time for college or other forms of career training rolls around.

Here are six reasons why it makes sense to start or continue contributing to a 529 plan account — even though it may feel late in the game:

1. The Value of a Dedicated Account: Given how expensive the high school years can be, it’s easy to get sidetracked and to divert available funds to other purposes. Unlike a general-purpose banking or investing account, a 529 plan account provides a dedicated place for your education dollars. Starting or continuing to make 529 plan contributions in these high school years keeps those funds separate and protected for their intended purpose, helping to avoid your education dollars being absorbed by other costs.
2. Peace of Mind: These years are not only busy but can also be quite emotional. Having a savings plan — and sticking with it — can help bring you a sense of calm. Even making modest contributions on a consistent basis can serve as a valuable reminder to you that you’re actively preparing for what comes next. This can help put your mind at ease and help you to feel a bit more confident about the future.
3. Others Can Help: Having a 529 plan account opened and active enables others to lend a hand by making their own contributions to the account as well. Keep in mind that there will be at least several more birthdays and several more holidays, and other gift-giving occasions during your child’s high school years. Friends and extended family may welcome the opportunity to contribute to your child’s 529 account if you invite them to do so. And don’t forget that some employers are offering to make one-time or ongoing contributions to employees’ 529 accounts. It’s definitely worth asking if your or your partner’s employer would be willing to do so.
4. The Message You’ll Send: The value of the 59 account is not simply in the funds accumulated. The behavior you are modeling is important as well. When your child sees the effort you (and perhaps others) are making, it teaches them about the importance of setting priorities and taking consistent steps to reach goals of all sizes. The habits you model today can shape how they handle their own objectives and finances for years to come. This can be as valuable as the accumulated funds themselves.
5. Preparation for the Unexpected: Let’s face it. Life can be unpredictable. Anyone can encounter unexpected circumstances during any phase of life. Saving in a dedicated 529 account can help you to be better positioned to weather whatever comes your way, without derailing your child’s education plans. Whether you encounter issues involving aging loved ones, unanticipated job loss, a change in relationship status, illness, or some other form of setback, your child will have the funds you’ve previously saved to rely upon. And conversely, when that unexpected raise, inheritance, or tax refund comes your way, you’ll have a destination set up to receive those funds.
6. Celebration versus Dread: Before you know it, your child will soon be opening acceptance letters or emails. Instead of dreading this moment in time, imagine your relief in knowing you’ve done all you could to be as financially prepared as possible—even at the 11^th hour. Having funds available will allow you to celebrate with your child and more confidently evaluate various school options together.

 Conclusion:

You won’t regret saving what you can between now and college drop-off day. Every dollar you can contribute to your child’s 529 plan account is a dollar they won’t need to borrow and repay with interest. Even a short runway of consistent saving can add up to a portion of costs covered, loans reduced, and stress minimized. And this can provide freedom for both of you in the long run.

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