Key Takeaways

• • • • • • • • • • Start saving for your child’s college or training as early as possible.
                    
                  • Align education savings with your overall financial plan.
                    
                  • Use tools like 529 college plans in Indiana and other options to maximize savings.

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  Investment products mentioned within this blog are not obligations of nor guaranteed by Lake City Bank, are not FDIC insured, are not a deposit, and may involve risk, including possible loss of principal.

  The time to start saving for your child’s college—or other training—is now, regardless of their age. Plans for college savings often feature tax advantages and avenues for grandparents and others to contribute. Read on for information and tips to help cover education expenses.

  What to Think About When Saving for College

  Before focusing heavily on college costs, make sure your broader financial plan is in good shape. Saving for your child’s future education should complement—not compete with—your financial stability.

  Start by making sure you have:

  • An emergency fund for unexpected expenses
  • A plan to manage or reduce debt
  • Retirement savings in progress

  Taking care of these priorities ensures you can support your child without putting your own financial future at risk.

  Define Your Family’s Approach to College Costs

  Every family approaches saving for college differently. Some parents plan to cover most education expenses, while others expect their child to contribute through savings, work or financial aid.

  Think about what aligns with your values and financial situation. Setting expectations early can help guide decisions around saving for your child’s college and managing future college costs.

  Applying for financial aid is also an important step. Aid packages can significantly reduce out-of-pocket expenses and influence which schools are the most affordable options.

  College Isn’t for Everyone

  College isn’t the only path to a good career and a solid financial future. Many individuals excel in hands-on learning environments rather than in the college classroom.

  Demand for skilled tradespeople is high, especially as the baby boomers in skilled trades retire. Many trades like plumbing, welding and electrical work can’t be replaced with AI or other technology, which translates into a stable career and job security.

  Opportunities abound for those who want to keep learning and build skills (outside of traditional college) and/or get right to work and build a future on the job. Trade schools, certificate programs and apprenticeships prepare students for careers in:

  • Plumbing
  • Electrical work
  • Automotive repair
  • Cosmetology
  • Welding
  • Carpentry
  • HVAC installation and repair

  Keep an Open Mind About Where to Start College

  Even if your child plans to attend a four-year college, there are ways to manage college costs strategically.

  Starting at a community college and transferring later can significantly reduce overall expenses. It’s also a practical option for students who want to explore different academic paths before committing to a major.

  Flexibility in where and how your child begins their education can make a meaningful difference in long-term costs.

  Ready, Set, Start Saving for College

  Plenty of tools can help you save for your child’s future education.

  529 College Plans in Indiana

  529 plans are tax-advantaged plans offered by states to help families save for future education expenses. Withdrawals are tax-free when you use them for qualified education expenses ranging from tuition to room and board.

  Indiana’s plan, called Indiana529, can be used at most accredited higher education institutions in the U.S. and some abroad. Savings can be used for qualified education expenses at two- and four-year colleges, graduate schools, vocational/technical schools and registered apprenticeship programs. Covered education expenses include:

  • Tuition
  • Fees
  • Books
  • Room and board
  • Computers and course-related software

  Money in the account can be used for anything (not just college expenses), which helps if your child incurs expenses outside normal college costs. Since taxes on these accounts can be complex, consider speaking with a financial or tax professional before opening one.

  Coverdell Education Savings Account (ESA)

  Coverdell ESAs are another option for saving for education expenses, though they come with lower contribution limits and stricter eligibility requirements compared to 529 plans.

  Roth IRAs

  Roth IRAs are generally used for retirement savings, but they may also provide flexibility for education expenses. Contributions may be withdrawn at any time without taxes or penalties, and earnings may be used for qualified education expenses without the 10% early withdrawal penalty, though taxes may apply. Roth IRA contributions are limited and subject to income eligibility requirements. Investment options within a Roth IRA vary and may include products such as CDs or other investments.

  Custodial Accounts

  Custodial accounts are accounts established under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA) and managed by an adult for the benefit of a minor child. These accounts may be held at a financial institution or brokerage firm and can include a range of assets, such as savings products or investments. Ownership transfers to the child when they reach the age of majority, which varies by state (typically 18, 21, or 25).

  Depending on the financial institution and investment selections, Roth IRAs and Custodial Accounts may hold either FDIC-insured deposit products or non-deposit investment products.

  Start Early, Stay Flexible

  Saving for your child’s future education and training can fit into your budget when you carefully consider the options and choose the tools that work for you.

  Investment products mentioned within this blog are not obligations of nor guaranteed by Lake City Bank, are not FDIC insured, are not a deposit, and may involve risk, including possible loss of principal.