5 Best College Savings Plans to Start for Your Infant in 2025


College is expensive. By the time your newborn is ready for university in 18 years, the cost of tuition could be double what it is today. The best time to start saving was yesterday; the second-best time is today.

Here are the top 5 ways to build a nest egg for your child's education.

1. The 529 Savings Plan

This is the "gold standard" for college savings in the US (and similar education plans exist globally).

  • Pros: Your money grows tax-free, and you don't pay taxes when you withdraw it for qualified education expenses (tuition, books, room, and board).

  • Cons: If the child doesn't go to college, you may pay a penalty to withdraw the cash (though rules are changing to allow rollovers to retirement accounts).

2. Custodial Accounts (UGMA/UTMA)

These are investment accounts in your child's name that you manage until they turn 18 or 21.

  • Pros: You can use the money for anything that benefits the child, not just college (like a first car or a laptop).

  • Cons: Once the child reaches legal age, the money is fully theirs. If they want to spend it on a sports car instead of school, you can't stop them.

3. Roth IRA (The Secret Weapon)

While usually for retirement, a Roth IRA can be a great college vehicle.

  • Pros: You can withdraw your contributions anytime without penalty.

  • Cons: There are limits on how much you can contribute per year based on your income.

4. Prepaid Tuition Plans

Some states or institutions allow you to "lock in" today's tuition rates for the future.

  • Pros: You are immune to tuition inflation.

  • Cons: It can limit which schools your child can choose.

5. High-Yield Savings Accounts

If you are risk-averse, a simple bank savings account is better than nothing.

  • Pros: Safe, FDIC-insured, and easy to access.

  • Cons: The interest rate is usually lower than inflation, meaning your money might lose purchasing power over 18 years.

Conclusion

Compound interest is the eighth wonder of the world. Even saving $50 a month starting when your baby is an infant can grow into a substantial fund by the time they are 18. Pick a plan and start today!

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