The Best Time to Start a Financial Plan is Now

by Tricia Bush, CPA, CFP^® Owner, AAA Advisory LLC

Should i pay for my kid’s college?

As a financial advisor, this is a question that comes up often. But interestingly, it doesn’t always start as a question. Sometimes, it begins as an assumption, something parents feel they’re supposed to do. Other times, it’s a vague sense of responsibility, paired with uncertainty about where to begin.

What I always try to do in these conversations is pause and reframe the discussion. Instead of asking how to pay for college, we first ask: Should you pay for it at all?

There isn’t a one-size-fits-all answer. But one of the most important (and often overlooked) considerations is the behavioral impact on your child. When someone else is footing the bill, the experience, and the decisions surrounding it, can look very different than when they have some “skin in the game.”

Let’s walk through three common approaches, along with the pros and trade-offs of each.

Option 1: Fully Fund Your Child’s Education

There’s no question that being able to fully fund your child’s college education is an incredible gift. The most obvious benefit is that your child can start adulthood without student loan debt, which can be a major financial advantage.

However, there are some important considerations.

When students aren’t financially invested, they may not approach decisions with the same level of intention. Are they choosing a school based on long-term value, or short-term preference? Are they fully engaged in their studies, or does the lack of financial responsibility reduce their sense of urgency?

Another critical factor is your own financial stability. Funding a child’s education should never come at the expense of your retirement. There are loans available for education, there are no loans available for retirement. Stretching yourself too thin financially can also create stress at home, which ultimately impacts the entire family.

If you are in a strong financial position and choose this route, one approach I often recommend is to delay the “gift.” Let your child go through the process, applying for scholarships, comparing schools, understanding the cost, and even exploring loan options. Then, if you choose, you can step in later to help pay down or eliminate the debt. This preserves the learning experience while still providing financial support.

Option 2: Contribute Partially

For many families, this is the most balanced approach.

Rather than covering the full cost, you set clear expectations around what you will contribute, and your child is responsible for the rest. This can take many forms:

    A fixed dollar amount.

    A percentage of total costs.

    Performance-based contributions (for example, maintaining a certain GPA).

This structure creates a partnership. Your child benefits from your support but still has meaningful responsibility in the process.

It also introduces important real-world financial skills, budgeting, evaluating return on investment, and understanding debt, before they fully enter adulthood.

Option 3: Your Child Funds 100%

At first glance, this option can feel extreme, especially given the rising cost of higher education. But it can also be incredibly empowering.

I’ll admit, I may be a bit biased here, as I paid for my own education. That experience shaped how I approached my career, finances, and long-term planning. It pushed me to choose a path that would allow me to be self-sufficient and intentional about my future.

There is real value in that ownership.

That said, this approach comes with an important caveat: not all debt is created equal. Taking on significant student loans without a clear plan can create long-term financial strain.

A college degree, by itself, does not guarantee financial success. What matters is the combination of education, career planning, and a strategy for managing (and ideally minimizing) debt.

For students taking this path, it’s essential to:

    Research career outcomes and earning potential

    Compare school costs carefully

    Understand loan terms before borrowing

    Actively pursue scholarships and grants.

How to Save: Understanding 529 Plans

If you decide that contributing to your child’s education makes sense for your family, one of the most effective tools available is a 529 plan.

A 529 plan is a tax-advantaged investment account specifically designed for education savings. Here’s how it works:

    Contributions are made with after-tax dollars, but the investments grow tax-free.

    Withdrawals are also tax-free, as long as they’re used for qualified education expenses.

Qualified expenses include:

    College tuition and fees.

    Room and board (for students enrolled at least half-time).

    Books and required supplies.

    Certain K–12 tuition (up to certain limits).

    Trade schools & apprenticeship programs.

Recent rule changes have made 529 plans even more attractive. Beginning in 2024, unused 529 funds can potentially be rolled into a Roth IRA for the beneficiary, subject to certain limits and conditions. This creates a powerful backup plan, if the money isn’t used for education, it can still jumpstart your child’s retirement savings.

For those in Maryland, there’s an added benefit. You may be eligible for a state income tax subtraction of up to $2,500 per beneficiary, per account owner. For example, a married couple with two children could potentially deduct up to $10,000 in contributions annually.

Final Thoughts

At its core, this decision isn’t just financial, it’s personal. It’s about your values, your financial capacity, and the kind of lessons you want to pass on to your child.

Disclosure: This article is for educational purposes only and is not intended as financial advice. Every financial situation is unique, and you should consult with a qualified professional before making decisions regarding your specific circumstances.