College doesn’t come cheap. That’s probably not a surprise to you.

• According to data from CollegeBoard, the average in-state tuition for a 4-year public university for the last school year was $11,950.
• Add costs of living, and a student’s total expenses for the year nearly triple, climbing to $30,990.
• For our in-state clients looking to stay in the University of Nebraska system, Nebraska’s costs are a little below average.
• But if your son or daughter wants to go to school out of state, or wants to attend a private school, the total cost could quickly multiply. The average total student budget for a student at a 4-year private university is $65,470.

Multiply these numbers across four years, and add inflation, and it really adds up!

Helping your children pay for college (and not get saddled with student debt) could give them a tremendous head start.

And the more prepared you are for those expenses you are as a parent, the easier it may be in the end when it comes time to write those checks.

But it raises an important question:

• What savings plans or college savings accounts should you actually use to hold the money?

A 529 plan may be the first thing that comes to mind when you think about a college savings account. And for many families — especially here in Nebraska — it may be a great place to start.

But it’s not your only option.

Depending on your financial situation, you may also want to consider Roth or traditional IRA accounts, taxable brokerage accounts, or other ways of saving. More importantly, college savings shouldn’t be viewed in isolation. It has to fit alongside your retirement, taxes, emergency savings, and other financial priorities.

We’ll cover some important high-level details here. And when you’re ready to have a personalized conversation about how college savings fits into your total financial strategy, let us know — we’ll be happy to help!

When Should You Start a College Savings Account?

Before deciding where to save for college, it helps to decide where college fits among your other financial priorities.

For families following Dave Ramsey’s Baby Steps, for example, saving for your children’s college is Baby Step 5. It comes after paying off non-mortgage debt. After building a fully funded emergency fund. And after reaching Baby Step 4, where you’re already investing 15% of your household income for retirement.

That order matters.

As much as you may want to help your children graduate without student loans, you don’t want to jeopardize your own retirement to make it happen. Your children have several potential ways to pay for an education. You have far fewer ways to fund your retirement.

Once you’re investing at least 15% toward retirement, however, it may be time to start putting additional dollars toward their future education.

Then the question becomes: Where?

Why a 529 Is Often the First College Savings Account to Consider

A 529 plan is an investment account specifically designed to help save for education.

And it can help every dollar saved go further, by reducing the taxes you’ll pay.

Although you don’t get a tax break on contributions to a 529, money inside the account can grow tax-deferred. When withdrawals are used for qualified education expenses, the earnings generally aren’t subject to federal income tax.

As a hypothetical example, let’s say you put $10,000 into a 529 plan. Then the value of that money doubles to $20,000 before you need to use it for educational expenses. As long as it comes out to cover qualified expenses, the $10,000 growth is tax-free.

529 funds can be used at many eligible colleges, universities, vocational schools and other postsecondary institutions. They can also cover qualified expenses beyond tuition, including certain fees, books, supplies, equipment, room and board, apprenticeships, and some other education and training expenses.

There is also more flexibility than many parents realize.

You can generally change the beneficiary to another qualifying family member if one child doesn’t need all the money.

And under current federal law, some unused 529 money may eventually be rolled into a Roth IRA for the beneficiary. That option has several restrictions — including a $35,000 lifetime rollover limit and a requirement that the 529 have been open for at least 15 years — but it can reduce some of the concern about overfunding a 529.

Why Nebraska Families Should Look Closely at Nebraska 529 Plans

If you live in Nebraska, there is another potential advantage.

Nebraska account owners can currently deduct up to $10,000 from Nebraska taxable income each year for contributions to accounts they own within the Nebraska Educational Savings Plan Trust (NEST). The limit is $5,000 for married taxpayers filing separately.

That makes Nebraska’s NEST 529 options particularly worth considering before simply choosing an out-of-state or generic 529 plan.

And using a NEST 529 doesn’t mean your child has to attend a Nebraska school. Funds can generally be used at eligible educational institutions around the country.

Nebraska has also recently expanded qualifying uses for its plans. As of July 2026, qualifying postsecondary credential and career-training programs can be eligible under Nebraska rules, including programs in fields such as welding, HVAC, automotive repair, health care, IT, and construction.

If you live outside Nebraska, you likely have access to different plans with different tax rules. Your own state may offer incentives for using its plan.

Iowa is a good example. For 2026, Iowa taxpayers who own an ISave 529 or IAdvisor 529 account can deduct up to $6,100 contributed per beneficiary account from Iowa taxable income.

The details vary considerably from one state to another, which is one reason your home state should be part of the conversation when choosing a college savings account. While we’re based in Nebraska and especially familiar with NEST plans and plans from surrounding states, we regularly work with clients to find options and strategies that work for them.

What About Other College Savings Account Options?

A 529 isn’t necessarily the only place you should save.

One alternative is a taxable investment account. You give up the education-specific tax advantages of a 529, but gain flexibility: the money doesn’t have to be used for education.

A Roth or traditional IRA may also provide flexibility in certain situations. IRAs are designed for retirement, not college, so we generally wouldn’t want education savings to come at the expense of your retirement plan. However, the tax rules do provide an exception to the normal 10% penalty on certain early IRA distributions when money is used for qualified higher-education expenses. Depending on the type of IRA and the money being withdrawn, income taxes may still apply. You also lose the potential future tax benefit of leaving that money in a tax-advantaged account.

Custodial accounts such as UGMAs and UTMAs provide another option. They offer greater flexibility in how money can eventually be used for the child’s benefit, but the assets ultimately belong to the child. They can also be treated differently when calculating financial aid.

The point isn’t that one of these accounts is better than a 529.

It’s that different accounts solve different problems.

Should You Use More Than One College Savings Account?

You don’t necessarily have to pick just one.

For example, parents might use a 529 for money clearly intended for education while keeping additional investments in a more flexible taxable account.

A Roth IRA might remain primarily earmarked for retirement while providing another potential source of flexibility if circumstances change.

The right mix depends on factors including your retirement readiness, tax situation, children’s ages, how much you want to contribute toward their education, and how confident you are that the money will ultimately be needed for qualified education expenses.

Even the amount you should save isn’t universal.

Do you want to pay for four years at a public university? Cover a certain dollar amount? Help with tuition while expecting your child to pay some expenses? What happens if they receive scholarships, attend community college, learn a trade, or choose a completely different path?

Those are more holistic financial planning questions, not simply college savings questions.

Make College Savings Part of Your Bigger Financial Plan

Saving for your children’s education can be an important financial goal.

But it shouldn’t come at the expense of building a strong financial foundation for yourself.

First, make sure you’re taking care of the priorities that come before college savings — including investing at least 15% of your household income toward retirement.

Then determine what you realistically want to provide for your children’s education.

Finally, decide which college savings account — or combination of accounts — fits that goal.

For Nebraska families, the state’s 529 plans and available state tax deduction make them an important option to consider. Families in Iowa and other states should compare the benefits available where they live as well.

And because the decision can affect your investments, retirement plan, taxes, and eventually financial aid, consider making your college savings strategy in coordination with both your financial advisor and tax professional.

This article was written for financial advisory clients of Asset Strategies. If you’re not yet a client and you’d like to speak with a financial advisor about saving for education or other financial goals, request a Welcome Call with an Asset Strategies financial advisor here.