Investing in Your Child's Future Education

Father Daughter Book

It may seem like a far-off task, but investing in your child’s future education is a matter of now.

Even if your little one is still in diapers, it’s time to take the steps to consider how to invest in your child’s college education or fund your child’s education at a variety of primary or secondary schools.

The path to investing in your child’s future education does not have to be complicated. We answer four questions below that can help guide you on a smooth road to higher learning for your little one.

The big question: How early is too early to start investing?

Short answer: It’s never too early. For the average parent, paying for private K–12 and college expenses can come with quite the price tag. The average annual tuition for K–12 private education in North Carolina is $9,362, according to Once it gets to the collegiate level, that average annual cost more than doubles for institutions across the country. It can be overwhelming to think about, but if you break it down over your child’s formative years, it may be easier to digest at what point savings would work for your family.

For example, if you want to contribute about $20,000 a year for each year of college, you’ll want to have $80,000 in their education account to reach that goal. Using those metrics, you could create a set of benchmarks as your child grows older.

  • Plan to have about $22,000 saved by the time your child turns 5.
  • Plan to have about $44,000 saved by the time your child turns 10.
  • Plan to have about $66,000 saved by the time your child turns 15.

Use the NC 529 College Savings Calculator to search the actual costs of colleges your child may be interested in attending and tailor your investing goals to meet their needs.

What are the best ways to invest for education?

529 Account – An NC 529 Account is a great start to investing in your child’s future education. The NC 529 Plan is a tax-advantaged way for parents to save and invest for education. NC 529 funds can be used for two- and four-year colleges, K–12 tuition, student loan payments, and other eligible education expenses.

With the NC 529 Plan, you have a variety of investment options with a range of strategies, from conservative to aggressive. You can choose one or more options based on whatever mix meets your investment objectives and risk tolerance.

Deciding how much money you want to invest in your child’s account is up to you. Currently, contribution limits for 529 accounts are set at $16,000 per year for single people and $32,000 per year for married couples. Parents and grandparents can also “superfund” the account by making five years’ worth of contributions at once.  

Savings Bonds – Savings bonds are an option for investing in your child’s education. U.S. Savings bonds are federal tax-deferred and state tax-free. Those who own bonds are investing in interest-earning bonds backed by the full faith and credit of the U.S. government.

One drawback to this investment is that there’s a maximum limit of savings up to $10,000 per year, per owner, per type of bond. Also, if bond proceeds are not spent on tuition and fees, interest earned will be included in federal income and subject to tax.

Coverdell Education Savings Account – A Coverdell education savings account (Coverdell ESA) is a common option. It is a trust or custodial account set up in the United States solely for paying qualified education expenses for the designated beneficiary of the account. When established, the designated beneficiary must be 18 or younger, and the documentation must be in writing and meet certain requirements.

These accounts are more restrictive than 529s when it comes to contributions, allowing you to add just $2,000 to the account each year and only allowing contributions on behalf of children under 18.

How can family help save for education?

It truly does take a village to raise a child, so investment in a child’s education falls right into that community effort. Family members like grandparents, aunts, and uncles can simply open a savings account devoted to contributing to a child’s education. However, those accounts will not typically offer much of an interest rate.

Contributing to an existing account, such as an NC 529 Account, is a great way for extended family members to make a big impact on a child’s future. Family members can contribute to the account directly by submitting a gift form. NC 529 even offers printable gift cards to designate your financial gift for various occasions.

How do I get started with NC 529?

Nearly every state has a 529 plan option for families to save for K–12 tuition and college expenses. The person who opens the account is the owner or participant, and the child is generally named as the beneficiary.

After opening an NC 529 Account, you can begin making contributions as small as $25. You can make contributions in various ways, including regular payroll deductions or automatic contributions through your bank account. If you decide you need to reduce or increase your routine contributions, the program provides that flexibility.

Whether a grandparent or parent, opening an NC 529 Account is a simple yet smart investment to better the life and education of a child.

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