How to Save for Kids’ College With Multiple Children

 November 25, 2020
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The average American mom raises 2.4 children, according to the Pew Research Center. And unless she has a favorite, she’ll likely strive to have each of her children attend college.

If you find yourself parenting a full household, learn how to save kids’ college costs by following these five steps:

1. Start saving as soon as possible
2. Set monthly and long-term goals
3. Treat each child’s savings uniquely
4. Ask for help with contributions
5. Apply for financial aid to fill in the gaps

1. Start saving as soon as possible

If you want to learn how to save for kids’ college expenses, you’re probably already aware that the cost of education has long been rising. The average price of tuition and fees for a private four-year school in 2020 was $32,410, according to the College Board. And that figure doesn’t include extras such as room and board.

To meet climbing costs, it’s wise to begin saving up as soon as possible for your kids, rather than waiting until the last minute to pay for college.

There are many ways to sock away funds for the future. Many consumers see 529 college savings plans as the best way to save for kids’ college costs, but education savings accounts and Roth IRAs are helpful alternatives. Make sure you evaluate all of your college-savings options before picking the best one for your family.

With 529 plans, it’s best to open an account for each of your children, as you’re not allowed to make withdrawals for someone other than the beneficiary.

If your kids are more than four years apart in age, however, you could get by with one 529. You can change the beneficiary once your oldest child has graduated.

2. Set monthly and long-term goals

Once you’ve opened your accounts, it’s time to set a goal. Your financial advisor, if you have one, could model out the amount you might need by the time your children reach college age.

You could also consult a college savings calculator, such as Charles Schwab’s handy tool. It’ll take your monthly or yearly contribution, plus other details, and spit out your potential savings in the years to come.

As your kids grow older, rely on specific schools’ net price calculators to figure out how much your family might have to cover based on your Expected Family Contribution (EFC). If you can’t find the calculator for your prospective school online, ask its financial aid office for the link.

When it’s time to buckle down, scour your budget to make room for monthly contributions to each child’s account. You might send a greater percentage of your contribution to your older child’s account and later make up the difference for your younger child down the road.

3. Treat each child’s savings uniquely

Focus on contribution amounts more than account balances, and treat your kids’ savings as unique but equally important goals.

For example, you might contribute equal amounts to each account but choose more aggressive investment strategies for your younger kids. After all, they have more time to ride the market’s highs and lows before reaching college age.

Older children’s savings might be better off with a conservative investing style. Typically, 529 savings plans come with age-based investing options that match your kid’s freshman year with the maturity date of your savings. That type of plan could make managing your savings easier.

When your oldest is approaching their late teens, re-evaluate their use for the funds. Maybe they’re planning on applying to lower-cost trade schools, for example. In cases such as this, you could transfer their unused education funds to a younger sibling who’s intent on attending a more expensive four-year school. That’s one of the ways to transfer 529 funds without incurring a penalty.

4. Ask for help with contributions

Even if you know how to save for one kid’s college, the process can be burdensome. When you add siblings to the mix, the task becomes progressively harder to accomplish.

If you’ve figured out a monthly contribution amount within your budget but don’t see a clear path to your long-term savings goal, consider other ways to grow the funds.

One popular strategy is to ask family members and friends for 529 plan donations on birthdays. You might ask your kids’ grandparents to contribute more often if they’re financially able. Gift of College is one way for family and friends to get involved.

Year-end tax refunds, employer bonuses, and other windfalls could also be contributed to meet your long-term goals.

5. Apply for financial aid to fill in the gaps

As each child approaches their final year of high school, ensure your family completes the Free Application for Federal Student Aid (FAFSA). It opens the door to grants, scholarships and federal student loans.

All of your savings to this point will be captured by the FAFSA and will affect your EFC — the amount of money you’ll pay for college out of pocket.

Thankfully, the FAFSA will give you a break for having a larger family and for having multiple kids in college.

  • FAFSA: Your dollar-figure EFC is divided by the number of kids in your household. With two daughters less than four years apart, for example, an $18,000 EFC would be split into $9,000 for each child while they’re in school.
  • CSS Profile: Used primarily by private colleges, it may be less accommodating than the FAFSA. According to Goal Investor, your EFC could be decreased by about a third for each college student in the family.

As you’re completing the FAFSA and potentially the CSS Profile, don’t go it alone. You might know how to save for your kids’ college expenses, but they should too.

Consider collaborative strategies with your children, including:

The best way to save for kids’ college attendance is likely a mix of multiple strategies, a combination that’s unique to each family. Find what works for your family and consider a major bonus: You could avoid having to borrow federal and private student loans.

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1 Important Disclosures for College Ave.

CollegeAve Disclosures

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

  1. As certified by your school and less any other financial aid you might receive. Minimum $1,000.
  2. Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
  3. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 9/15/2022. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.

Earnest Disclosures

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 3.47% APR to 13.03% APR (excludes 0.25% Auto Pay discount). Variable rates range from 2.80% APR to 11.69% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

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4 Important Disclosures for Edly.

Edly Disclosures

1. Loan Example:

  • Loans from $5,000 – $20,000
  • Example: $10,000 IBR Loan with a 7% gross income payment percentage for a Senior student making $65,000 annually throughout the life of the loan.
    • Payments deferred for the first 12 months during final year of education.
    • After which, $270 Monthly payment for 12 months.
    • Then $379 Monthly payment for 44 months.
    • Followed by one final payment of $137 for a total of $20,610 paid over the life of the loan.

About this example

The initial payment schedule is set upon receiving final terms and upon confirmation by your school of the loan amount. You may repay this loan at any time by paying an effective APR of 23%. The maximum amount you will pay is $22,500 (not including Late Fees and Returned Check Fees, if any). The maximum number of regularly scheduled payments you will make is 60. You will not pay more than 23% APR. No payment is required if your gross earned income is below $30,000 annually or if you lose your job and cannot find employment.

2. Edly Student IBR Loans are unsecured personal student loans issued by FinWise Bank, a Utah chartered commercial bank, member FDIC. All loans are subject to eligibility criteria and review of creditworthiness and history. Terms and conditions apply.

5 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  • Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of September 1, 2022, the 30-day average SOFR index is 2.23%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the prime rate plus 9.00%.
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    Undergraduate Rate Disclosure: Variable interest rates range from 3.25%-10.35% (3.25% – 9.69% APR). Fixed interest rates range from 4.24% – 10.59% (4.24% – 9.93% APR). 

    Graduate Rate Disclosure: Variable interest rates range from 3.75%-9.90% (3.75% – 9.68% APR). Fixed interest rates range from  5.22% – 10.14% (5.22% – 9.91% APR). 

    Business/Law Rate Disclosure: Variable interest rates range from 3.75%-9.35% (3.75% – 9.16% APR). Fixed interest rates range from 5.20% – 9.59% (5.20% – 9.39% APR).

    Medical/Dental Rate Disclosure: Variable interest rates range from 3.75%-9.02% (3.75% -8.98% APR). Fixed interest rates range from 5.18% – 9.26% (5.18% – 9.22% APR). 

    Parent Loan Rate Disclosure: Variable interest rates range from 3.25%-9.21% (3.25% – 9.21% APR). Fixed interest rates range from 3.96%-9.50% (3.96%-9.50% APR).

    Bar Study Rate Disclosure: Variable interest rates range from 6.58%-11.72% (6.58% – 11.62% APR). Fixed interest rates range from 7.39% – 12.94% (7.40% – 12.82% APR). 

    Medical Residency Rate Disclosure: Variable interest rates range from 5.67%-9.17% (5.67% – 8.76% APR). Fixed interest rates range from 6.99% – 10.49% (6.97% – 10.08% APR).

6 Important Disclosures for Funding U.

Funding U Disclosures

Offered terms are subject to change. Loans are made by Funding University which is a for-profit enterprise. Funding University is not affiliated with the school you are attending or any other learning institution. None of the information contained in Funding University’s website constitutes a recommendation, solicitation or offer by Funding University or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.