College fund tips

This Little Piggy Goes to College: 4 Steps to Start a College Fund

By Lacey Frazier

College grads walk off the stage with almost $17,000 in student loan debt on average—yikes.1 But college grads will also earn about $1,248 weekly compared to the $746 that high school grads earn.2 So college could pay off in the long run… that is, IF you can plan ahead to avoid as much debt as possible. It’s never too early to help yourself, your kiddo, or your boo start saving for college and turn your piggy bank into an investment. Here’s how.

Put yourself first

Putting ourselves first is hard to stand by. But it’s important to get your debts and finances under control before contributing to a college fund. Okay, gut check time! Before we start saving for college, let’s first:

  1. Create a budget. This will help you track what you’re already spending.
  2. Save money wherever you can. Every little bit counts!
  3. Establish an emergency fund. Aim for 3-6 months’ worth of living expenses.
  4. Pay off debt (except a home mortgage). Racking up interest on your debts while putting money away doesn’t make sense.
  5. Work towards saving for retirement. Again, every little bit counts, especially with the power of compounding interest. See if your employer matches for a company 401(k) plan, or consider investing in a Roth IRA. Work with a financial advisor if you aren’t sure which option to choose.

Explore college and career options

“Higher education” doesn’t mean the same thing to everyone. It could be college or career school, for-profit or non-profit, funded by the government or by a religion.3 Before diving head-first into any track, consider the options so you know approximately how much to save.

  • Free online courses. Skills-based courses like computer training or contact tracing can jumpstart a new career or revive an old one with very little investment. Just time.
  • Apprenticeship. This one actually pays! Apprentices earn money while they learn on the job. Think: electricians, plumbers, and carpenters.
  • Certificate or license. You’ll pay per test for these and the cost varies by state. Or they may even be free in some high schools or as part of a government-funded career program.4 Think: food handler’s permit, commercial driver’s license (CDL), cosmetology license, or GED®.
  • Trade or technical school. If you want to get a certificate or license but need some training to do well on the test, this is where you go. The cost for this training is usually about $33,000.5
  • Community or junior college. These are typically run by the state government where you live and offer two-year Associate degrees for careers like occupational therapy assistants, paralegals, or registered nurses. The total cost is about $9,400 if you live off campus.6
  • State college or university. Also run by the state government, these colleges usually offer tons of different options for earning a four-year bachelor’s degree. The total cost is about $14,600.6
  • For-profit college. These can be two-year or four-year schools but they are run by a business instead of a state government. The total cost at a four-year school is about $22,700.6
  • Private, religious, or liberal arts college. These colleges are funded by donors and usually offer smaller class sizes than a state college. The total cost (not counting scholarships or grants) is about $41,100.6

Start saving early with the right account

Best case scenario, we would start our college funds at birth (or earlier, if possible). Seems crazy, right? After saving up some cash, you could earn interest on that money or even get some special tax breaks. So research the best return interest, minimum balance fees (if any), and possible automatic contributions. Check with a banker or financial specialist to find out the best option for your situation. Then, see how your money grows.

  • Savings account. An online bank savings account will typically pay more in interest than regular banks—some as high as 1.6% or more.7 Keep in mind this is annual percentage yield (APY), which is how much you’ll earn in one year on top of the amount you contribute.
  • Money Market Account. This is really similar to a savings account but might offer higher APY and the ability to write checks or charge purchases to a debit card connected to the account.
  • 529 College Savings Plans. This is an investment account you can set up in your own name with a child as a beneficiary. You can make automatic, recurring contributions from a bank account. Money grows tax-free and is withdrawn tax-free for specific education expenses. Plus, some states offer tax deductions or credits for these plans.8
  • 529 Prepaid Tuition Plans. Exactly as it sounds: you basically lock in today’s tuition rates. These typically apply to state colleges and universities, but some private colleges might participate in the Private College 529 plan.8
  • Coverdell Education Savings Account. Another investment account where money grows tax-free and is withdrawn tax-free. Money can even be used on elementary and high school costs including uniforms and tutoring. This has to be used before the child turns 30.8
  • Uniform Transfer/Gift to Minor Act (UTMA or UGMA). This is basically an investment account that an adult can set up on a minor’s behalf.9 It’s more flexible for the child, but it also counts as income when it comes to qualifying for financial aid.
  • Roth IRA. This flexible investment account allows you to save for retirement while reserving the option to use the funds for a child’s college tuition or to help pay down student loan debt later on.8

Tip: Make saving easy by automatically sending a small percentage or a set amount of money from each paycheck directly to savings.

Encourage alternative gifts

Making regular contributions to a college savings account isn’t always possible. Unknown expenses pop-up: the dishwasher breaks, car breaks down, hot water heater goes out—life happens! But a savings fund is crucial in order to benefit from college without crushing debt. The key is starting early and contributing often. And when you can’t, maybe friends or family can pitch in instead of gifting yet another weird, regiftable t-shirt.

  • Checks or cash. Always a classic, just tell your loved ones in person about your college dreams. Then deposit any monetary gifts (no matter how small) into your college savings fund.
  • GoFundMe. From 2014-17, over 130,000 GoFundMe campaigns raised $60 million for college costs.10
  • Kickstarter. For those with an entrepreneurial spirit, start a business on Kickstarter and any proceeds go to the college fund.
  • Facebook. This is a simple way to advertise and collect donations for any cause, including education.
  • Givers can use gift cards to contribute money towards a 529 plan or a student loan.
  • Share a code with friends and family so they can put money towards a 529 plan.
  • U.S. Savings Bonds. Givers can buy paper or electronic gift bonds with very low risk compared to other investments. Once they cash the bonds, recipients may be able to spend the money on certain college expenses without paying taxes on the income.

Hope for the future

Hooray! Finances are in order. The path is charted. College fund is started. People are contributing. Cha- ching. Even though surprise expenses happen almost every day, we can manage with some preparation and the right resources. Be sure saving doesn’t interfere with paying any current bills. Then watch as the little piggy bank transforms into a college degree.


1 Staff. (2019 November). Trends in Student Aid 2019. Retrieved from CollegeBoard:

2 Staff. (n.d.). Unemployment rates and earnings by educational attainment. Retrieved from U.S. Bureau of Labor Statistics:

3 Staff. (n.d.). Your Education After High School. Retrieved from U.S. Federal Trade Commission:

4 Staff. (n.d.). High school equivalency. Retrieved from CareerOneStop:

5 Staff. (n.d.). University, Community College, or Trade School: Which Makes the Most Economic Sense? Retrieved from Value Colleges:

6 Staff. (2020 May). Price of Attending an Undergraduate Institution. Retrieved from National Center for Education Statistics:

7 Giorgianni, A. (2018 February 16). Earn More on Your Savings Account at an Online Bank. Retrieved from Consumer Reports:

8 Bernard, T. (n.d.). How to Save for College. Retrieved from The New York Times:

9 Staff. (n.d.). UGMA & UTMA Custodial Accounts. Retrieved from Finaid:

10 Vivanco, L. (2017 February 16). More students turn to GoFundMe to raise money for college costs. Retrieved from Chicago Tribune:

Lacey Frazier
Read more from Lacey
Growing up in a family with four very active and involved kids, money was often tight. I was raised to be smart with money by picking up tips on how to spend wisely, pinching pennies where I can, and finding good deals. I love a glass of good wine and a plate of greasy tacos as much as I enjoy sharing the lowdown on getting the most out of every hard-earned dollar. Cheers!

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