Smart — and surprising — ways to pay for your children’s education

For many Hispanic-Latinos, education is the key to a better life. In fact, half of Hispanic-Latinos in one recent survey say securing a well-paying job is one of their top reasons for getting a college degree.¹ That might help explain why the percentage of Hispanic-Latino Americans who have spent time in college is rising. In 2024, 46% had at least some college experience compared to 36% in 2010. On top of that, 21% had a bachelor’s or higher degree in 2024, up from 13% in 2010.²

While education is a priority for many families, paying for a child’s college education can be challenging when you consider that the average cost of tuition and fees increased by 17.4% (adjusted for inflation ) between the 2005-2006 school year and the 2025-2026 school year.³ Fortunately, there are things we can do to prepare, even when we’re balancing our desire to support our children’s educational journey with other family priorities — all at the same time.

Juggling college and other big family goals

1. Start early. “You don’t have to figure everything out right away,” says Sandy Liotta, a managing director and wealth management advisor at Merrill. “I tell my clients that getting started is so much more important than waiting to craft the perfect plan.”

“For my clients, what’s stressful isn’t so much providing for their children’s education; it's not being sure how best to do it,” notes Merrill senior vice president and wealth management advisor Chris Piña. Piña took one of his clients, an engineer originally from South America, through various options to consider — from 529 education savings plans and trusts to Roth IRAs and more — as the client planned for his three sons’ education, beginning when they were small children.

Starting early proved to be a plus when the client’s wife passed away and their financial picture changed. Complicating matters were financial commitments to extended family members abroad. Still, Piña was able to help his client adjust his plan for the boys’ education by factoring in how much he anticipated in future college costs, creating an approach to save for college through 529 plans and setting up a strategic asset allocation portfolio that rebalanced periodically to stay aligned with his investment objectives, risk tolerance and time horizon. Ultimately, with Piña’s help, the client was able to stay on track with all his priorities, including retiring at 65.

2. Look for tax advantages. One benefit of starting early is you can leverage the power of compound interest as your savings and investments have the potential to grow. And when you use a 529 education savings plan, you get the added benefit of tax-free growth, tax-free withdrawals (where the withdraws are used for qualified education expenses) and, in some cases, state-tax-deductible contributions, says Liotta, who believes 529s are one of “the best long-term educational savings vehicles.” Grandparents can also open a 529 plan for grandchildren without affecting the student’s eligibility for need-based aid, and when funds are withdrawn, they will not count as student income on the Free Application for Federal Student Aid (FAFSA). For those looking for tax advantages, a Roth IRA also offers the potential for penalty- and tax-free withdrawals for qualified higher education purposes, as long as certain requirements are met, she notes.

3. Empower your children so they can help, too. “There are parents who say, ‘I want to give my kids everything,’ but in the Hispanic-Latino community, I think it’s more common for us to say, ‘I want my child to be a productive member of society,’” says Piña. This is where a custodial Roth IRA can help. You may be more familiar with Roth IRAs as a savings vehicle for retirement, he says, “but they can be used to cover qualified higher education costs, and you can help your child open one in their name as soon as they start earning income, perhaps from a summer gig or after-school job.” Just be mindful that contributions can’t exceed the lesser of the child’s total annual taxable compensation or the same annual limit applicable to traditional IRAs. To help you determine how much to contribute, review the current annual contribution limits. Generally, taxable amounts withdrawn from a Roth IRA are subject to an additional federal 10% tax if taken before age 59½, unless an exception, such as a withdrawal for qualified higher education expenses, applies. One other bonus of Roth IRAs is that they don’t have to be reported as assets when your child fills out the FAFSA — so these funds won’t affect their aid eligibility until they’re withdrawn.

4. Review your progress annually. Even if you start planning for college early, there are many variables that you can’t control. Not only do the costs associated with education change over time, but the economic conditions and your life circumstances can change as well. As a result, it’s a good practice to reassess your needs and your plan regularly.

“This is an annual discussion,” says Piña. “You may want to make small adjustments, as your children’s college plans firm up. And as they get closer to college, you won't want as much risk in the portfolio because you're going to need that money soon.”

5. Think creatively to fill the savings gap. Planning won’t necessarily mean having every single penny when tuition comes due. It should mean knowing roughly how much you might need, what percentage you’ll have saved and where the rest could potentially come from. Of course, loans play a role even for many affluent parents, and you can consult with your advisor on which options might be best for your situation, whether a personal loan, a home equity line of credit or a loan against your investments, such as a Loan Management Account® (LMA® account), offered by Bank of America. But think beyond that.

While private colleges and universities come with hefty tuitions, many state schools offer in-state students an excellent education at a fraction of the price. Another way to potentially save is if your child can accumulate enough credits to graduate a semester early. Scholarships, while they often come in smaller dollar amounts, can add up as well. Community colleges are another option.

“Our community has a great sense of family — and that means you help your parents, and if you’re a parent, you help your child,” sums up Liotta. “We recognize the importance of education to our children’s success, and helping them succeed is worth any individual sacrifice.”

¹ UnidosUS, “Survey of Latinos in Higher Education,” October 2024.

² Pew Research Center, “Key facts about U.S. Latinos,” October 22, 2025.

³ Education Data Initiative, “Average Cost of College by Year,” September 23, 2025.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

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