Planning for college in 2026 can feel overwhelming — especially as tuition costs continue to rise. Whether you’re starting a college fund for a newborn or figuring out how to save for college while paying off a mortgage, having a strategy in place can make a meaningful difference over time.
At First State Bank and Trust (FSBT), we help families across the St. Croix Valley prepare for major life milestones, including college planning. From understanding 529 plan tax benefits in 2026 to comparing Minnesota and Wisconsin college savings options, there are several ways parents can begin building a strong financial foundation for their child’s future.
Key Takeaways
- Starting early gives your savings more time to grow.
- 529 plans offer tax advantages for education savings.
- Parents should prioritize retirement savings alongside college planning.
- Monthly automatic transfers can simplify saving.
- Minnesota and Wisconsin families have different 529 plan options.
- Unused 529 funds may now be eligible for Roth IRA rollovers under updated rules.
- FSBT can help families create personalized college savings strategies.
What is the Average Cost of College in the St. Croix Valley?
One of the first questions many parents ask is: “How much should I save for college every month?”
The answer often depends on the type of school your child may attend and how early you begin saving.
Current in-state tuition and fees at regional universities like the University of Minnesota Twin Cities and UW–River Falls can range from approximately $9,000 to $16,000 per year before housing, books, and other living expenses. Private colleges may cost significantly more.
Even modest monthly contributions can add up over time. For example:
- $100 per month for 18 years could grow to tens of thousands of dollars depending on investment performance.
- Starting a college fund for a newborn allows more time for compound growth.
- Increasing contributions gradually over time may feel more manageable for household budgets.
Using a college savings calculator can help estimate how much you may want to save based on your goals and timeline.
What Are the Best College Savings Plans for Parents?
Parents today have several college savings options available. The right approach depends on your financial goals, flexibility needs, and tax considerations.
529 College Savings Plans
For many families, 529 plans remain one of the most popular college savings plans because of their tax advantages and flexibility.
Benefits of 529 plans may include:
- Tax-advantaged growth
- Tax-free withdrawals for qualified education expenses
- High contribution limits
- Potential state tax deductions or credits
- Use for colleges, trade schools, and some apprenticeship programs
529 plans can vary across states. For instance, Minnesota and Wisconsin families may see different state tax deductions, contribution benefits, and plan features depending on where they live. You can compare Minnesota 529 plans vs. Wisconsin 529 plans to determine which option best aligns with your financial situation and tax preferences.
Recent legislative updates have also increased interest in 529 plan tax benefits in 2026, particularly surrounding expanded flexibility for unused funds.
UTMA vs. UGMA Accounts
Some parents explore UTMA vs. UGMA accounts when they want greater flexibility outside of traditional education savings accounts.
These custodial accounts allow funds to be used for purposes beyond education expenses, but they generally do not offer the same tax advantages as 529 plans. Parents should also understand that assets in these accounts legally become the child’s property once they reach adulthood.
Traditional Savings Accounts
For parents who want a simple, low-barrier starting point, dedicated savings accounts can still play an important role in college planning.
An FSBT SuperKids Savings Account can help younger children begin saving birthday money, allowance earnings, or gifts from relatives while learning healthy financial habits early.
What Are the New 529 Plan Rules for 2026?
One of the most talked-about updates involves the new 529 plan to Roth IRA rollover rules in 2026.
Under current federal guidelines, unused 529 funds may potentially be rolled into a Roth IRA for the beneficiary if certain requirements are met, including:
- The 529 account must generally be open for at least 15 years
- Annual rollover limits apply
- Lifetime rollover caps apply
- Rollovers must follow IRS eligibility rules
This change helps address a common concern among parents: “What happens to a 529 plan if my child doesn’t go to college?”
Families may now have several options:
- Change the beneficiary to another qualifying family member.
- Use the funds for vocational programs or apprenticeships.
- Roll eligible unused funds into a Roth IRA.
Because tax rules can change, families should consult a qualified financial advisor for college planning guidance specific to their situation.
Should Parents Save for College or Retirement First?
Many parents struggle with balancing college savings and retirement planning.
In most cases, financial professionals recommend prioritizing retirement savings first. A common way to think about it is the “oxygen mask” approach: Your child may have access to scholarships, grants, or student loans, but there are no loans available for retirement.
That doesn’t mean parents should ignore college savings entirely. Instead, many families benefit from creating a balanced strategy that supports both goals over time.
Working with a financial advisor for college planning can help families determine:
- How much to save monthly
- Which accounts make sense
- How to balance competing priorities
- When to adjust savings contributions
For families evaluating long-term financial goals, FSBT also offers retirement planning resources that can complement education savings strategies.
How Can Parents Save for College Consistently?
Consistency often matters more than starting with a large amount.
Parents looking for practical ways to save for college may consider:
- Setting up automatic monthly transfers
- Depositing tax refunds or bonuses into savings
- Encouraging grandparents to contribute to a 529 plan
- Increasing savings contributions gradually over time
- Opening a separate savings account dedicated to education
Grandparent 529 plan contributions may also provide tax advantages depending on individual circumstances and state rules.
Automating contributions can help families build savings steadily without needing to think about it each month.
Preparing Teens for Financial Independence
As children approach high school graduation, college planning also becomes an opportunity to teach financial responsibility.
Parents may consider opening a checking account to help their students learn budgeting, debit card management, and everyday banking skills before heading to college.
Combining savings habits with financial education can help students feel more prepared for life after graduation.
FAQs
How much should I save for college each month?
- The amount varies based on your timeline and goals, but even small monthly contributions can grow significantly over time when started early.
What happens if my child doesn't go to college?
- Unused 529 funds may potentially be transferred to another beneficiary, used for vocational education, or rolled into a Roth IRA if eligibility requirements are met.
Is a 529 plan better than a regular savings account?
- 529 plans offer tax advantages for qualified education expenses, while regular savings accounts provide greater flexibility. Many families use a combination of both.
Can grandparents contribute to a 529 plan?
- Yes. Grandparents can often contribute directly to a child’s 529 plan and may receive tax benefits depending on state rules and contribution limits.
Start Building a College Savings Plan Today
Saving for college doesn’t require perfection — it requires a plan and consistency over time.
Whether you’re comparing 529 plans, exploring savings account options, or trying to balance education goals with retirement planning, starting early can provide greater flexibility down the road.
At First State Bank and Trust, we work with families throughout Stillwater, Hudson, and the surrounding St. Croix Valley communities to create savings strategies tailored to their goals. From Kids Savings Accounts to personalized financial guidance, FSBT can help you take the next step toward preparing for your child’s future.
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