College Savings: Where Should You Put Your Money?

College is expensive. And whether your child ends up at a two-year program, a four-year public or private university, or a trade school, there’s a good chance you’ll need a plan to help pay for it. 

The good news? You don’t have to figure it all out at once. The earlier you start saving, the more time your money has to grow—and there are several different ways to save. 

Let’s look at a few of the most common options. 

1. 529 Plans: The College-Savings Workhorse 

What is it? 

A 529 plan is a tax-advantaged savings and investment account designed primarily for education expenses. You can open one for your child, and grandparents, relatives, or even friends can open them too! 

One of the biggest advantages? Potential tax-free growth and withdrawals when the money is used for qualified education expenses. 

And because the money can be invested, you have the opportunity for your savings to grow over time rather than simply sitting in cash.  

One thing to know: there isn't a single federal annual contribution limit for 529 plans. Instead, each state’s 529 plan sets a maximum account balance, which can be quite high. However, there are federal gift-tax rules to keep in mind. In 2026, you can generally give up to $19,000 per year per beneficiary without using part of your lifetime gift-tax exemption. Married couples who elect to split gifts can generally give $38,000 per beneficiary. 

Another bonus: You don’t have to be the only one contributing. A 529 can be a great place for grandparents or other family members to put birthday or holiday money. 

There are also special rules that can allow some unused 529 funds to be used for other purposes, so don’t assume that every dollar has to be spent on tuition. 

Bottom line: If you’re specifically saving for education, a 529 is often one of the first options worth exploring. 

2. 530A Accounts: A New Option for Some Children 

You may also have heard about 530A accounts, sometimes referred to as “Trump Accounts.” 

These accounts are a newer type of long-term investment account for eligible children. Certain children born between January 1, 2025, and December 31, 2028, may qualify for a $1,000 federal contribution. 

For 2026 and 2027, the general annual contribution limit is $5,000 per child. That limit applies to contributions from parents, relatives, friends, and employers combined, with certain exceptions. Employer contributions can be up to $2,500 per year, but they count toward the $5,000 annual limit. The $1,000 federal pilot contribution does not count toward that $5,000 limit. 

Unlike a traditional 529, these accounts aren't designed exclusively for college. The funds are intended to stay invested for the long term and generally can't be accessed until the child reaches adulthood, with specific rules governing how the money can ultimately be used. 

Think of this as another potential piece of the puzzle, rather than a replacement for a 529. 

If your child is eligible, it may be worth understanding how this account fits alongside your other savings goals. 

3. High-Yield Savings Accounts: Simple and Flexible 

Want something a little more straightforward? 

You could open a high-yield savings account specifically for your child's education. 

The advantage is flexibility. Your money isn't tied specifically to qualified education expenses, and you don't have to worry about investment-market fluctuations if you keep the money in a traditional savings account. 

The tradeoff? You generally won't get the same tax advantages that come with a 529. 

A high-yield savings account can be particularly useful if your child is getting closer to college and you want to keep money you're likely to need soon in a more stable place. 

So, Where Should You Start? 

Here's the good news: the best college savings plan is the one you actually use. 

Start by choosing an account that makes sense for your family. Then make it automatic. 

Set up a recurring transfer each month—even if it's a small amount—and let time do some of the heavy lifting. 

For example, $200 a month might not feel like a huge contribution today. But consistently saving for 10, 15, or 18 years can add up to a meaningful amount, especially when investment growth is working alongside your contributions. 

And don't forget that college savings don't have to come entirely from you. Encourage grandparents and other family members to contribute if they're interested. Even small contributions over many years can make a difference. 

One Important Caveat: Don't Forget About Your Future 

There's one college-savings rule we don't want you to overlook: 

Don't sacrifice your retirement to pay for your child's education. 

You can borrow money for college. You generally can't borrow money to fund your retirement. 

If saving aggressively for college means you're no longer saving enough for your own future, it's worth taking a step back and reevaluating the plan. 

Your child will have options—scholarships, grants, work-study, loans, community college, trade programs, and more. 

And that brings us to one of the most important conversations you can have with your child: 

“What are all of our options for paying for school?” 

Encourage them to look beyond the school's advertised price tag. Research scholarships, grants, merit aid, work-study opportunities, community college pathways, and other funding options. 

College is a major financial goal—but it doesn't have to be an all-or-nothing proposition. 

Start where you are. Save what you can. Automate it. And give your money time to grow.