How to Plan for College Costs Within Your Financial Plan

Planning for college costs works best as part of the whole financial plan, not on its own. Start with what your household can afford alongside retirement and other goals, file the free FAFSA (the Free Application for Federal Student Aid), compare award letters line by line, and be cautious of any service that guarantees aid or admission. No planner can promise either one.

Key takeaways

• College costs compete with other goals, including retirement. Decide the budget first.
• FAFSA stands for Free Application for Federal Student Aid. It is free, colleges and states use it to consider aid, and the form is for you to complete. John McLeod of Pragmatic Solutions suggests every family fill it out.
• Aid amounts, scholarships, and admission decisions are made by schools and other organizations. No one can guarantee them.
• Before paying for college planning help, ask how the provider is paid and what you receive for the fee.

How do college costs fit into a financial plan?

For many families, college is one of the largest costs they will face, and it often arrives while parents are also saving for retirement. Money spent or borrowed for college cannot also fund other goals, so the decision is partly about trade-offs.

A useful starting point is the whole picture: income, savings, debts, insurance, and the retirement timeline. From there, a family can ask how much it can reasonably contribute from savings and cash flow, how much borrowing, if any, is comfortable, and what that means for retirement. Scenario Testing is one planning step that can help here. It compares choices before decisions are made, such as how much to save for college or how a loan might affect retirement timing. Scenarios rely on assumptions, so they illustrate possibilities and do not predict results.

• Savings and cash flow

  Savings, 529 plans, and income earned during the college years.

  Watch for: Dollars used here are not available for retirement or other goals.

• Grants and scholarships

  Aid from schools, states, and outside groups that generally is not repaid.

  Watch for: Amounts and eligibility vary. None are guaranteed.

• Student loans

  Federal and private loans taken in the student's name.

  Watch for: Borrowed money is repaid, usually with interest.

• Parent borrowing

  Loans taken by a parent to cover remaining costs.

  Watch for: Repayment can compete with retirement saving.

Illustration only. For education. It is not advice, and amounts, eligibility, and deadlines vary by family and school.

What should you know about federal aid and the FAFSA?

The Free Application for Federal Student Aid (FAFSA) is the form colleges use to determine how much financial aid a student may be eligible for, and some states and schools use it for their own grants, scholarships, and loans (Federal Student Aid). Four points are worth knowing:

• Every family should consider filing. Filing is how a household applies for federal aid, and some states and schools use it for their own aid too. John McLeod of Pragmatic Solutions, an independent consultant described below, suggests that every family fill it out, whether or not they expect to qualify. Filing does not mean any aid will be awarded, and amounts are decided by each school and program.

• It is free. The Federal Trade Commission notes that only you and your family can complete the FAFSA, that it is always free, and that you should never share your FSA ID with anyone, including companies or consultants (FTC).

• It is yearly. Families apply for aid each year. The 2027-28 form, for aid covering July 1, 2027 to June 30, 2028, became available on September 23, 2026 (U.S. Department of Education). State and school deadlines can be earlier than federal ones, so check each.

• Loan rules have changed. For parent PLUS loans received on or after July 1, 2026, the federal limit is $20,000 per year, with an overall limit of $65,000 for each student, and parent PLUS loans can be repaid only under the Tiered Standard Plan (Federal Student Aid). Rules can change, so confirm current terms before borrowing.

How should a family time the process?

Most families do not need a complicated calendar. A simple order of steps helps keep college decisions tied to the larger plan.

1. 1. Explore

   Talk about goals and review savings and cash flow.

   Watch for: Set a family budget before looking at schools.

2. 2. Estimate

   Use each school's net price calculator to estimate cost.

   Watch for: Estimates are not offers and can change.

3. 3. Apply for aid

   File the free FAFSA and check state and school deadlines.

   Watch for: Some schools ask for additional forms.

4. 4. Compare offers

   Compare award letters, separating grants from loans.

   Watch for: Ask each school how to request a review.

Illustration only. For education. It is not advice, and amounts, eligibility, and deadlines vary by family and school.

What can help, and what can no one promise?

Test preparation, tutoring, and application coaching are education services, not financial planning. Quality and cost vary, and results differ from student to student. Ask what is included, how progress is measured, and what happens if your child's results do not change.

What should you ask before paying for college planning help?

Federal Student Aid notes that commercial financial aid advice services can cost well over $1,000, and that charging for help is not itself fraudulent, but a company that does not deliver what it promises is scamming you (Federal Student Aid). A school counselor or a college financial aid office can often provide free help. If you do consider a paid service, these questions can help:

1. What exactly will I receive, and which parts are available for free elsewhere, such as the FAFSA?
2. How are you paid, and what is the total cost, including any installments?
3. Do you earn commissions or other compensation from insurance or other products you may recommend?
4. Are you affiliated with any scholarship program, seminar, or contest that leads to a sales conversation?
5. Do you guarantee any result? (Be cautious if the answer is yes. The FTC lists "the scholarship is guaranteed or your money back" and "we'll do all the work" among phrases that signal a scam.)
6. Will you ask for my student's FSA ID or login information? (It should never be shared.)
7. What are the cancellation and refund terms, in writing?
8. How will my family's information, including my child's, be stored and shared?

Do some families use life insurance to help pay for college?

A small number of families look at an advanced approach that involves permanent life insurance. We mention it for education only. It is not a recommendation, it is not suitable for most households, and it does not replace saving for college or having a plan.

In general, the idea works like this. A family with very young children, and enough resources that the tax benefits of a 529 plan are of limited use to them, may consider a whole life policy that builds cash value over many years. When the child reaches college, the family pays for school with borrowed money. After graduation, when repayment is due, the family may use the policy's cash value to repay those loans instead of drawing on other savings. Money taken out of the policy as a loan or withdrawal reduces the death benefit.

This approach carries trade-offs that are worth understanding first:

• Cost and time. Premiums are paid for many years before college begins. In the early years, cash value is often lower than the premiums paid, and ending a policy early may involve surrender charges.
• Interest is still a cost. Education loans may accrue interest while the student is in school, depending on the loan type. Policy loans generally accrue interest too, and unpaid loans and interest are deducted from the death benefit (NAIC).
• Lapse and tax risk. If policy loans and interest grow too large compared with the cash value, the policy may lapse. That can end the coverage and may create a tax bill. Tax treatment depends on the type of policy and the history of premiums, loans, and withdrawals.
• Nothing is guaranteed. Cash value growth, dividends, and loan rates depend on the insurer, and policy illustrations rely on assumptions.
• Competing purposes. A policy exists to provide a death benefit. Using its cash value for college can reduce protection for beneficiaries and leave less for other goals, including retirement.
• Simpler options exist. For many families, a 529 plan or other savings may be easier to understand and cost less.

Acanto does not suggest this approach as a general strategy. Whether any version of it makes sense depends on the whole picture: income, taxes, the retirement timeline, existing insurance, and the estate plan. If you are curious, you can raise it with us as part of a full planning review, where we would compare it with simpler alternatives, including not using insurance at all. Any insurance purchase would go through a licensed insurance professional, who may earn commissions. Review the policy contract and illustration, and talk with your tax professional, before making any decision.

Does Acanto offer college planning help?

Acanto's financial planning helps households look at college costs alongside retirement, cash flow, insurance, and estate planning. Learn more about Acanto's financial planning services.

Separately, John McLeod, an independent consultant and insurance agent listed on our About page, provides college planning services through Pragmatic Solutions. His services are separate from Acanto's. He is paid directly by the clients he serves and by Pragmatic Solutions, and as an insurance agent he may earn commissions. Using his services is optional and is not required to be an Acanto client. The questions above apply to any provider, including him.

Frequently asked questions

Is the FAFSA really free?

Yes. The FAFSA is free to complete and submit. Websites that charge for help filling it out are not affiliated with or endorsed by the U.S. Department of Education.

Can anyone guarantee financial aid or college admission?

No. Aid is decided by schools, states, and other organizations, and admission is decided by each school. Be cautious of anyone who guarantees either.

Do college planners cost money?

Some do, and fees vary widely. Free help may be available from a high school counselor or a college financial aid office. Ask any provider for fees, compensation, and refund terms in writing.

Can life insurance be used to pay for college?

Some families explore using the cash value of a permanent policy to repay college loans. It is an advanced approach with costs, interest, lapse and tax risks, and no guaranteed results, and it is not right for most households. Acanto does not suggest it as a general strategy, and whether it fits depends on your whole financial plan.

How can paying for college affect retirement?

Money used or borrowed for college is not available for retirement. Parent borrowing in particular can compete with retirement saving, so it helps to look at both goals together before deciding how much to contribute.

Start with the full picture

Before deciding how much to put toward college, it helps to see everything your household needs to support. An Asset-Map Discovery Session places your accounts, income, insurance, liabilities, and key estate documents on one page, so college decisions can be considered alongside the rest of your plan. Schedule your Asset-Map Discovery Session, explore Acanto's investment strategies, or get in touch with questions.

Important disclosures

This article is provided by Acanto LLC, a Registered Investment Advisor, for general informational and educational purposes only. Registration does not imply a certain level of skill or training. It is not individualized investment, tax, or legal advice, an offer or solicitation, or a recommendation to buy or sell any security or adopt any strategy. Investing involves risk, including the potential loss of principal, and no investment strategy can guarantee a profit or protect against loss. Financial aid rules, loan limits, and deadlines change, and your results will depend on your circumstances and each school's decisions. Any examples are illustrative only.

College planning services described above are provided by John McLeod through Pragmatic Solutions, separately from Acanto, and are not investment advisory services of Acanto. Mr. McLeod is paid directly by clients and by Pragmatic Solutions and, as an insurance agent, may earn commissions. Acanto has not verified the results of any third-party service, and no outcome is guaranteed.

The discussion of life insurance is general education about one possible approach, not a recommendation to buy any insurance product. Insurance guarantees depend on the claims-paying ability of the issuing company. Insurance products are not investment advisory services of Acanto, and any insurance professional involved may earn commissions.

Acanto does not provide legal or tax advice. Please consult your tax and legal professionals about your own situation. For more information about Acanto's services, fees, and business practices, review Form ADV Part 2A, available upon request or at adviserinfo.sec.gov.

Sources: Federal Student Aid, FAFSA; Federal Student Aid, One Big Beautiful Bill Act updates (page last updated August 24, 2026); Federal Student Aid, avoiding scams; FTC, how to avoid scholarship and financial aid scams; U.S. Department of Education, 2027-28 FAFSA launch; NAIC, life insurance consumer guide. All accessed October 12, 2026.