How to Save for Kids’ College With Multiple Children

Written by Andrew Pentis

November 25, 2020November 25, 2020Big Money DecisionsFeatured, Save for College1069Andrew PentisAmanda GarciaSEO

Updated on 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:

Encouraging your kids to apply for scholarships and perhaps earning their own income to put toward the cost of college
Looking into the possibility of gaining college credits while in high school, perhaps via AP classes or dual enrollment
Talking about the high cost of private, four-year universities and considering attending a two-year community college before transferring

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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