What To Do if You Don’t Have College Savings For Your Kids

Published March 16th, 2022 
Reading Time: 3 minutes
Written by: The Zoe Team


What To Do if You Don’t Have College Savings For Your Kids

Published March 16th, 2022 

Reading Time: 3 minutes

Written by: The Zoe Team

You have children of ages 10-22, but haven’t been able to save for their education. With college a few years away, you want to start saving to help them with expenses and also prepare to apply for financial aid.

If You Don't Have College Savings

Meet Ben and Katie

Ben is a widow and raises his 14-year-old daughter, Katie, by himself. Ben works as a high school history teacher and because of unexpected circumstances (like losing his wife), Ben hasn’t been able to save for Katie’s college education. Although he understands he might not be able to cover Katie’s full college expenses, Ben wants to start a college savings fund to help cover as much as he can, with the support of financial aid.

Where to Start if You Don’t Have College Savings For Your Kids 

These are the steps Jennifer needs to follow to ensure her kids have a debt-free education opportunity:


1. Defining the Goal

Ben wants Katie to go to college and pursue her dream of being an architect. With college being only 4 years away, Ben wants to find ways to save and help Katie with the upcoming expenses.

2. The Savings

Ben specifies he can set aside $150 per month for Katie’s college, so he opens a 529 plan and starts contributing immediately. Although he knows this won’t cover 100% of the cost, he’s determined to start building disciplines today to help set her up for success.

3. Financial Aid

Fast forward to Katie’s senior year of high school. Ten months before Katie is set to start College, in October, she and Ben sit down together to complete the Free Application for Federal Student Aid (FAFSA). This is the holy grail of financial aid application since it talks to federal, state, and school aid offices to determine which, if any, benefits Katie can qualify for.

4. The Tax Credit

Ben also heard about tax credits that could help with expenses, after Katie starts school, Ben should be eligible for the American Opportunity Tax Credit. For the first 4 years of Katie’s college career, Ben can get a $2,500 tax credit for having a dependent who is a full-time student. Ben wants to use this extra money to help with Katie’s expenses.

Resources if You Don’t Have College Savings 

Financial Aid:

College is glaringly expensive but is also thought of as an investment in your future. Nevertheless, the decision to go into debt should not be taken lightly. Federal Student Aid is the obvious place to start in understanding your school financing options. Completing the FAFSA application will initiate the process and outline federal aid that you will be eligible for. Outside of federal funding, there are also private student loans that may be available. Private loans will usually require good credit history and steady income, which makes it difficult for 18-year-olds starting college. But they might offer a lower interest rate to those who have established credit than a federal loan. Both federal or private financial aid can be the right choice in funding education depending on your personal circumstances.

American Opportunity Tax Credit:

Tax credits are incentives the government puts into place to motivate people. Going to college is the desired action because it tends to create more productive contributors to society. When you file your tax return you get paid a tax credit, but there are limitations to this tax credit, of course, like you must be enrolled at least part-time in a higher education program, you can’t have a felony drug conviction, and you can’t make too much income or the credit eligibility goes away. You can only take this credit for 4 years. Your CPA will be able to tell you if you qualify or if you’re a DIY tax reparer, most tax softwares will run the calculations as well.

College Planning in Summary

College planning affects everyone, regardless of your income, savings, or abilities… and there is no one size fits all solution. Education planning looks different depending on your life stage, goals, and financial situation.

  • Starting early produces the best results when it comes to savings.
  • Being resourceful produces the best opportunities when it comes to financial aid.
  • Being diligent produces the best potential when it comes to achieving your goals.

The key is defining what your goal is and then mapping a path to achieve it.

Disclosure: This blog is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.

Ready to Grow
Your Wealth?

Let us connect you with the most qualified wealth planners

Ready to Grow Your Wealth?

Let us connect you with the most qualified wealth planners