Part Three: Planning for Education
Planning for a child or grandchild’s education is one of the most meaningful and often discussed goals for many families. For some, it involves deciding how much parents want to contribute. For others, it reflects the reality that college costs have become a major part of today’s financial planning. We encourage families to address the topic early rather than assume costs will ease over time. Based on historical trends, early preparation is key. A four-year private college education can cost around ~$400,000 today, and for babies born now, that number could grow to nearly ~$850,000.
You’re likely familiar with 529 education savings accounts, which remain one of the most effective ways to prepare for future education costs. These plans offer valuable tax advantages, as contributions grow tax-free and withdrawals are also tax-free when used for qualified education expenses. For many families, establishing a 529 plan is the first and most straightforward step toward building a college funding strategy.
Families often use their annual gift exclusion (currently $19,000 per year) to fund their 529 contributions without any gift or estate tax concerns. A powerful feature of 529 plans is the ability to “superfund” the account and front load 5 years of contributions at once. In 2025, that means up to $95,000 per individual or $190,000 per couple.
Education funding can also serve as a bridge for multi-generational family engagement. Grandparents often find it to be a meaningful way to participate in their grandchildren’s future and a natural entry point for family conversations about wealth and values. What begins as a discussion about funding college often opens the door to broader planning topics and helps families move past what can otherwise feel like an uncomfortable conversation about money.
That said, a 529 plan may not always be the best fit for every family. For those with more significant estates, paying tuition directly to an educational institution can be an even more efficient strategy. Under current tax rules, direct payments for education and medical expenses do not count against the annual gift tax exclusion. This can make sense for parents or grandparents with substantial wealth who want to support loved ones without affecting their lifetime gifting limits.
Because there are multiple ways to fund education, the most important step is to start the conversation early. Whether the discussion happens within your household or across generations, establishing clarity on goals and expectations ensures that your education plan aligns with your family’s broader financial picture and helps set the next generation up for success.