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Why I Started Saving for My Kids' College Before They Were Born

By Maurie Backman – Updated Feb 6, 2020 at 2:30PM

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It’s never too early to start a college fund.

Student debt is currently a $1.59 trillion problem. Granted, that's spread out over nearly 45 million borrowers, but it's an issue that only seems to be getting worse. 

Back in 2009, total U.S. student loan balances totaled $721 billion, but as our Student Loan Debt Statistics for 2019 highlight, that figure has climbed steadily over the past 10 years. In fact, the average student loan borrower left college with $28,650 in student loans in 2017. That's a lot of debt to carry into young adulthood. 

A pregnant woman sitting cross-legged on the bed and cradling her belly.

Image source: Getty Images

It's because of statistics like these that saving for college has always been on my radar -- that, and the fact that I was forced to take out loans myself because my parents didn't have much money to contribute to my education. Even though I worked throughout my studies, I still needed loans to bridge the gap between the money I had access to and what college tuition cost. 

Now, I was pretty fortunate in that I was able to pay off my student loans fairly quickly (though doing so required a number of sacrifices). But I'll still admit that I wasn't thrilled to graduate college with a pile of debt hanging over my head. And so when my husband and I had been married for a couple of years and started talking about having kids, I made one very important move: I opened a college savings account for them. 

It's never too early to save for college

It may seem kind of crazy to set money aside for college for children who haven't even entered the world, but there's a reason I did so: The longer the window you have to save, the more time you give your money to grow. 

As a case in point, I began setting money aside for retirement in my early 20s because I wanted to give myself many years to invest my savings and grow my IRA balance into a larger sum. With college, I figured that if I waited for my kids to be born before starting an education fund, I'd be limiting myself to an 18-year window per child, so I opted to give myself a small jumpstart. 

Initially, I housed all of my kids' college money in a traditional brokerage account. The downside of this is that I didn't get any tax breaks on that money, and any gains in that account were taxable year after year. With a 529 plan, by contrast, your gains are tax-free provided you use your money for qualified education purposes, and that's a potentially huge amount of savings. But 529s impose penalties if you withdraw funds for non-education purposes, and since my kids didn't exist at the time, I figured a traditional brokerage account was a better option, as it offered more flexibility. 

I've since opened 529s for all of my children, but I still have a good part of their college money in that same brokerage account. That way, if one of my kids decides not to go to college, or gets a fantastic scholarship, we all have options.

Most people don't go to the extreme of starting a college fund before their kids are born, but I'm really thankful I did. Not only was it easier to save money when I wasn't paying for child care and other kid-related expenses, but at this point, I already have a nice little sum socked away, which takes the pressure off a bit. And most importantly, I can sleep well at night with the knowledge that I really did do everything in my power to help my kids avoid the burden of student debt.


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