Saving For College: Start Small, But Start Now

Graduation season provides an important reminder of the high costs of a college education. Sandra Palmer, Head of 529 Distribution at Franklin Templeton, discusses how to finance a college education, how it’s similar to saving for other life goals, and how friends and family can get involved.

With National 529 Day last month and graduation season underway, the cost of education is at the top of many people’s minds. Not to mention the tough environment that we are experiencing right now, with inflation, market volatility, and geopolitical issues creating uncertainty. Given these challenges, many people are considering financial adjustments, new approaches, or reassessing goals. Staying focused despite the day-to-day distractions of the market is never easy, especially during periods of economic uncertainty.

We have found that investors who seek the guidance of a trusted financial professional and remain committed to their investment plans, even when it’s tempting to head to the sidelines, are better positioned to realize their short- and long-term goals.

That being said, we think these challenging times present a good reminder to:

  • Not let emotions drive your decisions
  • Understand your tolerance for risk
  • Consider the big picture
  • Stay the course
  • Work closely with a trusted financial professional

In terms of saving for education, we think it’s important to think of it the same way you’d think about saving for retirement. Student loan debt continues to rise, topping out at more than $1.7 trillion.1This debt burden has caused people to reflect—in our latest “Voice of the American Worker (VOTAW) Survey,” 76% of workers with student debt stated, “I would have planned my education differently if I’d known I would accrue as much student debt as I have.”2 On top of that, less than 1% of college students receive enough grants and scholarships to cover costs, and about 54% of education funding comes from parents.3