It’s National College Savings Month — and there’s no better time to make sure your savings strategy is on track


Parents — your kids may have headed back to school, but before you know it, they’ll be heading off to college. Fittingly, September is National College Savings Month, so let’s talk strategy.

I was recently reading the Student Loan Hero 2018 survey about saving for college and found three worrisome statistics:1

  • 44% of parents feel guilty that they haven’t saved more for their kids’ education.
  • 37% of parents said they have considered using their retirement savings to pay for college costs.
  • Nearly 75% of parents use a regular savings account to save for college.

As the father of three college graduates, I know firsthand how daunting it can be to develop a college savings strategy for your children. But let me offer one suggestion that could ease that anxiety, potentially protect your retirement savings and put you on the right track to pay for that higher education: a 529 savings plan. 529 plans are tax-advantaged education savings plans which allow you to save money in an investment account that won’t be taxed if funds are used to pay for college expenses. Let’s explore three ways a 529 plan can help you break these common bad habits:

  1. Bad habit #1: Avoiding college savings plans because your child may not attend a university. Some parents may be thinking, “I don’t even know if my kids will go to college!” But 529 plans aren’t limited to traditional university programs. Qualified educational institutions include colleges, universities, vocational schools and other post-secondary educational institutions eligible to participate in a student aid program administered by the Department of Education. This includes virtually all accredited public, nonprofit and proprietary (privately owned, profit-making) post-secondary institutions.No matter what your child’s future holds, there is a good chance that a post-secondary educational experience will be part of their plans — and that there will be a cost associated with it. A 529 savings plan can help you save for these expenses.
  2. Bad habit #2: Double-dipping from your retirement fund to pay for college. There are a few reasons why I recommend against using retirement plan funds to pay for college. First, and most obviously, applying these funds toward college expenses lowers the amount you will have available for retirement. Second, retirement plan distributions may come with their own taxes and/or penalties, which could limit the final amount available to cover your child’s college expenses. Finally, relying on retirement savings for college may reduce your student’s eligibility for need-based financial aid.Rather than dipping into the same pool to save for college and retirement, consider a 529 savings plan. You can reduce the risk of unwanted distribution taxes and penalties while keeping your retirement savings intact.
  3. Bad habit #3: Using a general savings account for higher education savings. Some of the same rules of thumb apply when it comes to using a savings account for college savings. Unlike withdrawals from generic savings accounts, 529 funds aren’t taxed when used to pay for college expenses. What’s more, many 529 plans, including CollegeBound 529, feature a variety of portfolios that are designed to fit your risk preferences and savings timelines: 
    • Age-based portfolios that align with your child’s expected year of college enrollment
    • Target risk portfolios designed to seek your desired risk-adjusted returns
    • Individual portfolios that let you and your financial advisor customize your college savings strategy across major asset classes

The final word

Saving for college is a major undertaking — but the right strategy can make it easier without compromising your other savings goals. During National College Savings Month, talk to your financial advisor about the ways a 529 plan can work for you.

For additional information on 529 plans, visit

1 Source: Student Loan Hero, “Survey: 44% of Parents Feel Guilty About Not Saving Enough for College,” Andrew Pentis, May 15, 2018 




Important information

Before you invest, consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program.

For more information about CollegeBound 529, contact your financial advisor, call 877-615-4116, or visit to obtain a Program Description, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing. Invesco Distributors, Inc. is the distributor of CollegeBound 529.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial advisor/financial consultant before making any investment decisions. Invesco does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state tax laws are complex and constantly changing. Investors should always consult their own legal or tax professional for information concerning their individual situation. The opinions expressed are those of the authors, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.

Thomas Rowley
Director, Retirement and Education Strategies

Thomas Rowley is director of retirement and education strategies and one of Invesco’s most frequently requested speakers. He provides analysis of the evolving retirement landscape and develops actionable strategies to help investors and financial advisors maximize their retirement-planning opportunities. Mr. Rowley regularly shares his insights online at in addition to his speaking engagements.

Mr. Rowley’s insights reflect more than 20 years of experience in the investment industry. He translates his comprehensive knowledge of retirement planning into lively, clear explanations of the complexities of legislative, investing, tax and social issues.

Mr. Rowley shares his analyses of retirement-related issues through regular personal appearances, continuing education webinars and Web-based commentaries.