Back to School & Beyond: Planning for Education Costs – With Shannon Avery AAMS® and Kolby Madison

October 27th, 2025

Back-to-school season often brings a mix of emotions depending on your stage of life. For students, it’s the excitement of seeing friends and diving back into learning. For parents, it’s the relief of routine returning after long summer days. For others, it’s the kickoff of football season, with all the highs and lows that come with it.

However, beyond the excitement, this time of year also serves as a reminder of something bigger: education is a journey, and every stage, from preschool to higher education, comes with important decisions and significant financial considerations.

Whether your child is stepping into kindergarten, navigating middle or high school, or preparing for life after graduation, the choices ahead can feel overwhelming. Is community college the right stepping stone? Should they attend a four-year university—nearby or across the country? Or perhaps a trade or vocational program is the best fit?

While no one can predict precisely where each young scholar’s journey will lead, one thing is sure: education has a cost. And planning for that cost early makes all the difference.

The Cost of Higher Education

Here’s a look at some national averages: (as of 2025)

Community College

• In-State Tuition (Public, annual average): $5,099
• Out-of-State Tuition (Public, annual average): $8,784

(Room and board vary, as many students live at home.)

Public University

• In-State Tuition, Room & Board: $29,910 per year
• Out-of-State Tuition, Room & Board: $49,080 per year

Trade & Vocational Schools

• Tuition range: $5,000–$15,000
• Public programs: $4,000–$8,000
• Private/for-profit programs: $16,000–$20,000+
• Specialized programs: Can exceed $20,000–$30,000 total

(Again, room and board vary as many students live at home or study online.)

Keep in mind, these figures do not include books, supplies, and additional fees. Actual costs vary significantly by state, institution, and program.

Saving for Education

If those numbers make you uneasy, you’re not alone. The good news? There are strategies to help manage these costs—and the earlier you begin, the more options you’ll have.

Every family’s situation is unique, so it’s important to discuss your goals with a trusted financial advisor. Ensure your advisor provides more than just one option. As the client, you deserve to see a range of tools and strategies so that you can make a confident and informed decision.

If you’re only ever talked about a single solution, how can you know whether it’s the best fit for your family? Maybe a 529 plan is the right choice, but how does it compare to using a standard brokerage account, a Coverdell ESA, or even a high-yield savings account earmarked for education? Each has its own strengths, tax considerations, and flexibility.

A good advisor will walk you through the pros and cons, explain how each option impacts your overall financial picture, and help you evaluate trade-offs. That way, you aren’t just accepting a “one-size-fits-all” answer—you’re empowered to make the decision that aligns best with your long-term goals.

One of the most common tools families lean on is the 529 Education Savings Plan, which we’ll explore in more detail below.

What is a 529 Plan?

A 529 plan is a tax-advantaged savings account specifically designed [1] for education expenses. Named after Section 529 of the Internal Revenue Code [2], these plans offer flexibility, tax benefits, and the ability to grow with your child’s educational journey.

Key Features of a 529 Plan

• Account Setup: Anyone (parent, grandparent, guardian) can open an account for a student beneficiary.
  
• Investment Growth: Contributions are invested in portfolios that can be tailored to risk tolerance or the student’s age.
  
• Tax Benefits: Money grows tax-deferred, and withdrawals for qualified education expenses are tax-free.
  
• Qualified Expenses: Cover tuition, fees, books, supplies, room and board, certain K-12 expenses, apprenticeships, and even some student loan repayments.
  
• Flexibility: Beneficiaries can be changed, and funds can be used at eligible institutions nationwide.
  
• Contribution Limits: While there are no annual contribution limits[1], lifetime maximums vary by state (often $235,000–$621,000+).
  
• New Benefits: Some unused funds may be rolled into Roth IRAs under certain conditions.

529 Plans & Financial Aid

A common question is how 529 accounts affect financial aid. The impact is typically minimal, but ownership matters:

• Parent-Owned Plans: Counted as a parental asset on the FAFSA, reducing aid eligibility by about 5.64% of the account’s value.
  
• Student-Owned Plans: Counted as a student asset, which can reduce aid more significantly (up to 20%).
  
• Grandparent-Owned Plans: Starting with the 2024–2025 academic year, distributions no longer count as student income on the FAFSA, eliminating the aid penalty. (Some schools using the CSS Profile may treat this differently.)

In summary, while 529 plans may modestly affect need-based aid, their tax advantages and flexibility generally outweigh the drawbacks, especially when owned by parents.

Final Thoughts

Education is one of the most valuable investments a family can make. The costs can feel intimidating, but with thoughtful planning and the right tools, you can set your student up for success without sacrificing your own financial well-being.

Back-to-school season is more than just new backpacks [1] and sharpened pencils; it’s a reminder to look ahead, plan intentionally, and make sure your family is prepared for the journey from kindergarten through college, trade school, or beyond.

Resources:

[1] Back to School Renovation Ideas for the New School Year | Red Box. https://www.redboxlondon.com/blog/back-to-school-renovation-ideas-for-the-new-school-year/

[2] What is a 529 Plan? The Ultimate Parent’s Guide. https://joerobert.com/articles/what-is-a-529-plan

[3] section 529 college savings plans | North Star Policy Action. https://northstarpolicy.org/tag/section-529-college-savings-plans/

[4] College Savings Strategies: 529 Plans and Other Options. https://www.gh2benefits.com/college-savings-strategies-understanding-529-plans/

[5] Back to School Renovation Ideas for the New School Year | Red Box. https://www.redboxlondon.com/blog/back-to-school-renovation-ideas-for-the-new-school-year/