Service 05 — Fee-Only · Fiduciary · Minnesota

College Savings

529 strategy, financial aid planning, and cash flow analysis so your children's education doesn't compromise your retirement.

$36K
average annual cost of
a 4-year public university
01 Investments02 Retirement03 Tax Planning04 Insurance05 College Savings06 Home Purchase07 Emergency Fund08 Budgeting09 Other Goals
Planning PrincipleEvery dollar coming into your account has a purpose. Retirement comes before college — you can borrow for tuition, not for retirement.
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You can borrow for college. You cannot borrow for retirement.

Many parents feel a strong pull to sacrifice retirement savings for their children's education. That instinct is understandable — and financially backwards. A parent who depletes their retirement to pay for college shifts their own financial dependency onto that child later in life.

The optimal approach funds both. It starts a 529 plan early, manages financial aid eligibility, and sets a clear college budget that leaves retirement contributions intact.

529 — What Goes In
After-tax contributions
MN state deduction up to $3,000/yr joint
Grandparent contributions allowed
Tax-free growth over 10–18 years
Rollover to Roth IRA (SECURE 2.0)
529 — What Comes Out Tax-Free
Tuition, fees, books, supplies
Room and board
K–12 tuition up to $10,000/year
Apprenticeship program costs
Student loan repayment up to $10K
Monthly Savings Needed — By Years Until Enrollment
To fully fund 4 years at a public university · 5% tuition growth · 6% return
What You're Actually Saving TowardCollege costs compound faster than inflation
Projected 4-Year Total Cost
$36,000/year today growing at 5% annually — by years until enrollment

Financial aid strategy starts years before the application.

The FAFSA calculates Expected Family Contribution from income and assets. Retirement accounts are excluded entirely. Taxable brokerage accounts count against you. Where assets are held — and which income year falls in the FAFSA base period — can significantly affect aid eligibility.

These decisions need to be made years before the application, not in the fall of junior year when nothing can be changed.

New FAFSA rules changed grandparent 529s.Under SECURE 2.0, distributions from grandparent-owned 529 plans no longer count as student income on the FAFSA — removing the main planning disadvantage of that structure and opening new flexibility for multi-generational college funding.