Starting to save for college later than planned can feel overwhelming, but it’s never too late to make meaningful progress. Whether your child is a few years from high school graduation or already applying to colleges, there are still practical steps you can take to help fund their education.
From creating a targeted savings plan to exploring financial aid, scholarships, and flexible loan options, this guide offers actionable tips for parents who are playing catch-up on college savings without compromising their overall financial well-being.
Key Points
• Even if you’re beginning your college savings journey later than planned, taking proactive steps now can still make a significant impact on your child’s education funding.
• Opening a 529 plan offers tax advantages and flexibility, allowing your savings to grow tax-free when used for qualified education expenses.
• Engaging extended family members to contribute to the college fund and encouraging your child to apply for scholarships can bolster savings efforts.
• While saving for your child’s education is important, it’s crucial not to neglect your retirement savings, as there are more options to finance education than retirement.
• If financial assistance is needed, parents can apply for a Parent PLUS Loan through the U.S. Department of Education or a private student loan through banks, credit unions, and online lenders.
Getting a Late Start With College Savings
According to the College Board, the average cost of college tuition and fees for the 2024-25 school year for in-state, public universities was $11,610, and the cost of private universities averaged $43,350 per year.
And that doesn’t include housing expenses, transportation costs, books, supplies, or anything else needed during that time.
So, what do you do if you’re late getting started?
Use the One-Third Rule
When figuring out how to pay for college, consider the one-third rule. This strategy involves saving enough money to cover one-third of the total cost of college expenses, planning to pay another third out of your current income, and relying on student financial aid for the final third. If you can save more than one-third, go for it. But if you can’t, at least you have this one-third plan as a baseline strategy.
Explore Scholarships
Another strategy could be to get the entire family to participate in this savings quest. Your child can play a big part, in fact, by performing well academically and then exploring which schools offer scholarships. Your child could also ask family members to donate to their college fund as a birthday or holiday gift.
Recommended: SoFi’s Scholarship Search Tool
Save With a 529 Plan
One way to save for college expenses is with a 529 plan, which is a qualified tuition plan that is sponsored by state governments, state agencies, and educational institutions. The two types of 529 plans are prepaid tuition plans and education savings plans. At least one type of 529 plan is available in each of the 50 states, plus in the District of Columbia.
Prepaid Tuition Plans
Prepaid tuition plans allow you to prepay tuition at participating colleges and universities at today’s rates. These credits can then be used for tuition payments in the future, but usually do not cover additional college expenses, such as housing.
If your child ends up attending a college or university that isn’t part of the prepaid tuition plan, the money you’ve invested will transfer over to the chosen college, but you’ll have to pay tuition at today’s rates.
Education Savings Plans
Education savings plans involve opening an investment account with funds available for college expenses.
When you withdraw funds from a traditional 529 savings plan, they can be put toward college tuition, fees, room and board, textbooks, and more. You can even use the funds to pay for K-12 tuition, if needed. Investment choices can include mutual funds, exchange-traded fund portfolios (ETFs), bonds, CDs, and short-term reserves.
What if you have a financial windfall, perhaps through an inheritance or large bonus? You can actually contribute up to five years’ worth of contributions in year one of your 529 plan, which would give you the opportunity to front-load your savings and take greater advantage of tax-free growth of your account.
Finally, here’s a question that’s sometimes asked about this strategy: When is it too late to start a 529 plan? The answer: If your child hasn’t yet started college, it’s not too late to take advantage of this type of plan.
Recommended: Benefits of Using a 529 College Savings Plan
Explore Student Loans
Parents looking to help their child pay for college often consider student loans as part of the overall financial strategy. The two main options for student loans for parents are Parent PLUS Loans and private student loans.
Parent PLUS Loans
Parent PLUS Loans are available through the U.S. Department of Education. These loans are taken out in the parent’s name and can cover up to the full cost of attendance, minus any other financial aid the student receives. While credit history is reviewed, income requirements are generally flexible, and repayment can be deferred while the student is enrolled at least half-time. However, interest begins accruing right away, and the responsibility for repayment lies solely with the parent borrower.
Private Student Loans
Private student loans are another route parents may take, either by cosigning on a loan in the student’s name or borrowing directly through a private lender offering parent student loans. These loans are credit-based, so strong credit and income are typically needed to qualify for the best rates. Some families may prefer private loans for their potentially lower interest rates or flexible repayment terms, though federal protections like income-driven repayment plans or forgiveness programs are not included.
💡 Quick Tip: New to private student loans? Visit the Private Student Loans Glossary to get familiar with key terms you will see during the process.
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More Tips for Parents Starting Late
If you’re getting a late start to saving for your child’s college education and want to make college more affordable, here are four tips to consider:
• Encourage your child to take advantage of advanced placement (AP) credits during their junior and senior years of high school, as many colleges will count those as college credit hours. The more credits your child starts with in college, the fewer they may need to take and pay for during college years.
• Explore what grants are available for your child. Grants for college are funds that don’t need to be paid back.
• Help your child apply for scholarships. School counselors can often help with this endeavor and, by doing so, your child can go after opportunities that may be lesser known.
• Consider using digital options for expensive textbooks. If your child rented all their textbooks from a library in digital form, you could potentially save thousands over a four-year period.
The Takeaway
Starting late on college savings may feel daunting, but it’s far from a lost cause. By taking proactive steps — such as setting up a 529 plan, involving family in contributions, and encouraging your child to seek scholarships and part-time work — you can still make meaningful progress toward funding their education. You can also take out a Parent PLUS Loan or private student loan to help your child pay for college.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
FAQ
Is it too late to start saving for my child’s college education?
No, it’s never too late to begin saving for your child’s college. Even if you’re starting later than planned, taking proactive steps now can still make a significant difference in managing future education expenses.
What are some effective strategies for late starters to save for college?
Late starters can focus on maximizing savings by setting up dedicated college savings accounts, such as 529 plans, which offer tax advantages. Additionally, involving extended family in contributing to these accounts and encouraging your child to apply for scholarships can further bolster college funds.
Should I prioritize saving for college over my retirement?
While saving for your child’s education is important, it’s crucial not to neglect your retirement savings. There are various options to finance education, including loans and scholarships, but fewer alternatives exist for funding retirement.
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