College Savings 101: Understand Your Option & Start Early


College for my kids? Ways away, right? They may still be newborns or toddlers but the earlier you set your kids up for success the better. That’s why implementing a plan today is essential. College, a not-for-profit organization, published research showing the trends in college tuition costs dating back to 1989, revealing that over the past 40 years, college tuition rates have been constantly increasing at two to three times the rate of inflation each year.   

It’s simple, saving for college over time makes infinitely more sense than borrowing and paying it off later. ​When you’re saving, your money earns interest; when you borrow, you’re charged interest. Every dollar saved is one less dollar you have left in student loans​.​ Together, we can set your children up for a bright future and also work to eliminate the $1.7 trillion student debt crisis.  

Understand your Options 

Having a strong understanding of the options available to you will give you the confidence to choose the correct path to achieve your goals. Below are the most common options for saving and investing for your child.

Savings Accounts

If you go this route and your child does not go to college, you can use the money to meet another financial priority, such as retirement. However, the greatest drawback to saving for college with savings accounts is that they typically earn low-interest rates and may take significantly  longer  to reach your college savings goals. 

529 College Savings Plan

529 college savings plans are one of the most popular college savings options. 529 plan earnings can grow tax-free and won’t be taxed when you choose to withdraw funds, as long as you use them for qualifying college expenses. While a 529 college savings plan is similar to a Roth IRA, there are no limits to how much you can contribute each year. You may save as much as you’d like until your account reaches a certain balance, which is usually $400,000 or more. 529 plans offer age-based investment options that can make saving for college simple yet effective. You may get a tax break or credit for contributing to a 529 college savings plan. Unfortunately, if your child doesn’t end up going to college and you don’t have another child to transfer the funds to, you’ll be on the hook for taxes and a 10% penalty fee. 

Coverdell ESA 

A Coverdell ESA is similar to a 529 plan in that it can help you ensure your savings are used for tuition, books, room and board, and other college-related costs. When you withdraw from a Coverdell ESA, you won’t have to pay any federal taxes on it, as long as you use the money on qualified expenses. Although the Coverdell ESA may be a good option, it’s essential to understand its restrictions. It will only allow you to contribute up to $2,000 per year per child. Since the cost of higher education is increasing every year, saving $2,000 per year for 18 years or a total of $36,000 may not be enough to cover a lot of your child’s college expenses.

Custodial Accounts 

If you’re unsure whether your child will attend college but still want to save for their future, a custodial account can be a great option. Two of the most common custodial accounts include UGMA (Uniform Gift to Minors Act) and UTMA (Uniform Transfer to Minors Act). 

There are no restrictions on how you can use the funds of a custodial account. The only caveat is that the money needs to benefit your child in some way. Custodial accounts also offer tax breaks. While the initial $1,000 is tax-free, the second $1,000 is taxed at your child’s income tax rate, and the remaining is taxed at your income tax rate. Once your child turns 18, you won’t be able to tell them what to do with the funds. 

At UNest we are big fans of Custodial Accounts because of the flexibility they offer our families.  No two kids are alike and we believe that having options for how funds are used makes a lot of sense for many parents who may want to help their kids buy their first home or car as well as attend school!  Having this flexibility while also receiving tax benefits is a big plus. 

Pick an option and Start Saving

Families who start as early as when their child is born will accrue a much more significant amount of their savings from earned on investments. For example, if you take a family who starts saving for their child’s college when their baby is born, roughly a third of the savings will come from earnings alone. For parents who wait until their child is already in high school to create a child college savings plan, less than 10% of the money in the account will come from earnings. Suppose you want to be proactive in saving for your child’s future. In that case, you can get started even sooner to reap the most tax-advantaged benefits of establishing a bank account for child education—when they’re just a baby or even before they’re born.

Bio: Ksenia Yudina is the Founder and CEO of UNest, the first mobile app that makes it easier than ever before for parents to save for their children’s future. Ksenia is an entrepreneur and financial expert with over ten years of experience in the financial industry. As a wealth manager I helped affluent parents access smarter saving and investment options. I founded UNest to extend the same financial acumen to parents across all income levels and backgrounds. To date, UNest has helped tens of thousands of parents save millions of dollars for their kids’ future.


College Savings Calculator is a hypothetical tool that demonstrates how monthly contributions, age-based asset rebalancing, and tax savings may impact the long-term value of your account, and do not take into account a portfolio’s underlying investment management fees. Calculations assume the private institution cost inflation is 2.8%, public out of state cost inflation is 3.9%, public in state cost inflation is 2.7%. Portfolio is assumed to have only stocks and bonds. Monthly equity returns are based on the historical data from the 10-year track record of the stock market (SPY). Monthly fixed income returns are based on the historical data from the 10-year track record of the bond market index (AGG). The current college expenses are provided by the Actual account performance may differ due to market fluctuations, changes in recurring investments, and asset allocation. The information provided here is for illustrative purposes only and does not represent actual or future performance of any investment option and is not intended to predict or project the investment performance of any security or index.

Ksenia Yudina, CFA, MBA

Founder and CEO

Ksenia is the Founder and CEO of U-Nest, the first mobile app that makes it easy for families to save for college. As an entrepreneur and finance professional, Ksenia has focused on alleviating the impact of student debt on families across the economic spectrum. Previously, Ksenia was a Vice President atCapital Group/American Funds, the largest 529 provider in the U.S. In this role, she played a leadership role in helping parents plan and manage their finances, with a focus on the future well-being of their children. Prior to Capital Group/American Funds, she was founder of a residential real estate company. Ksenia earned her bachelor’s degree in finance from CaliforniaState University Northridge, and an MBA from UCLA’s Anderson School of Management.

Mike Van Kempen

Chief Operating Officer

Mike joined U-Nest in September 2019 as COO. He was previously at Acorns, a financial wellness platform, where he spearheaded the analytics and growth initiatives. Mike successfully expandedAcorns’ paid acquisition strategy, adding over 4.5 million investment accounts. Mike began his career in strategy & analytics at Belly, a Chicago-based loyalty startup in 2012. At Belly, Mike led projects that fueled growth across all aspects of the business, growing the customer base from1,000 to over 11,000 merchants, and accumulating a membership of over 2 million customers.Mike holds a B.B.A. in Finance from Loyola University of Chicago.

Steve Buchanan

Chief Technology Officer

Steve has over 20 years of experience in delivering digital innovations in the financial sector. Steve previously orchestrated product architecture and innovation as a Solutions Architect/ Fintech consultant at Union Bank. Prior to Union Bank, he was Chief Architect and Director of Engineering at Calypso, a Silicon Valley startup, where he architected and built multiple financial solutions. He was also Head of Global Integrations at Globe One in Vietnam where he integrated its Peer-to-Peer lending products into core banking solutions. Steve also built the first ever electronic Equities &Equity Options trading systems for Scottish stock brokers Wood Mackenzie (acquired by CountyNatWest). He is a graduate of Edinburgh University.

Peter Mansfield

Chief Marketing Officer

Peter has built an impressive track record in multiple financial industry segments including payments, credit/prepaid cards and lending. He has played an instrumental role at a succession of financial industry leaders, co-founding companies such as Brand3 (acquired by American Express) and PropertyBridge (acquired by Moneygram), and, as the early stage marketing lead at Marqeta (where he was team member number two), BillFloat and WallabyFinancial (acquired by Bankrate).He has helped fast-growth companies reach an aggregate market value of close to $8 billion. Peter holds a bachelor’s degree in economics from the University of Angila, UK.

Sonya Kidman

Client Relationship Manager

Sonya Kidman is a Customer Success professional with a decade of experience in advocating for consumer through user research and genuine empathy. Sonya specializes in user behavior and regularly attends national and global training sessions in wellness and people analytics tools. Sonya is a true global citizen was born in Russia, grew up in Israel, lived and worked in Canada and NewZealand. That global expertise along with an undergraduate degree in Sociology from Tel AvivUniversity have helped to shape a bullet-prof Sonya's framework to develop a winning customer strategy.

Frank Mastrangelo

Board Member

One part banker and one part technologist, Frank spent his early days with the Annenberg Foundation and PNC Bank. His career path led him to Jefferson Bank, where he led the build-out of its electronic banking platforms, and where he would forge a powerful alliance with The Bancorp co-founder Betsy Z. Cohen. As President and COO of The Bancorp from its inception in 1999 Frank played a critical role in helping the organization become an industry bellwether for branchless financial services and a global leader in payments. For this, he has become a widely respected fintech expert, and thought-leader. Frank was recognized in 2013 by Banking Innovation, a leading industry journal, as an “Innovator to Watch.” and as one of the innovators shaping the future of banking. Frank is a graduate of West Chester University of Pennsylvania.