Parenthood is a rewarding, beautiful part of life, but also an enormous financial responsibility.

While a majority of parents (understandably) focus on how to pay for day-to-month-to-year child-rearing costs, not enough plan how to pay for future costs related to higher education. More than half (56%) of millennials saving for college are still paying back their own student loans — an indication that those who have experienced the burden of student loans want to prevent their children from having to deal with similar circumstances in the future.

The months of July and August have the highest birthrates in the U.S. So for employers, it’s a great time to give employees tips on how they can save for their children’s college expenses.

The important part is just to start

Like all financial planning, the earlier employees start to financially prepare for major life milestones, the better. But sometimes they are so busy living their lives that they forget to fill up a rainy day fund or set up a 529 plan. Employers should remind employees that if they have a child who is 5, 10 or even 15 years old, it is by no means too late to begin making financial preparations. In fact, the Center for Social Development states that: “Children with $1 to $499 in a dedicated college savings account are 2.5 times more likely to enroll in and graduate from college than children with no account.” Naturally, the more money saved for higher education, the better. But remember: Something is better than nothing.

Know your options

Some parents prefer to save for their children’s college by investing in a mutual brokerage account, a Roth IRA or selecting a 529 plan through their state or employer. If investing through a 529 plan, employees can often invest with age-based options — a helpful feature for those parents starting to save when their children are enrolled in K-12 schools. If parents start saving $100 a month into a college savings plan when their child is born, that could be worth about $39,000 when their child is ready for college (assuming a 6% return rate). Student loan debts have made millennials want to save more for college than any other generation and, as a result, they are more likely to use a 529 plan than prior generations.

Please note: The choice of investment(s) you make should be decided based on your risk tolerance and acumen as an investor.

Key takeaways

Employers should encourage their employees who are expecting children to start saving now — even if they fear that they aren’t beginning at the right time. If life (and kids) teaches us anything, it’s that there is never a “right time” when it comes to matters of importance, and saving for college is one. Today, the average amount of student loan debt is just over $37,000 — but it’s not too late to preemptively work to alleviate this burden. Nearly all of parents (91%) currently paying back their own student loans plan to re-allocate those dollars toward their children’s college savings plans as soon as their own loans are paid off.


This article was written by Marcos Cordero from Employee Benefit News and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to

The views of the author of this article do not necessarily represent the views of Gradifi. This article is not intended to constitute tax, financial or legal advice. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained here. Readers should consult their own attorneys or other tax or financial advisors to understand the tax, financial and legal consequences of any strategies mentioned in this article.