College Planning

Getting an early start on college savings for your child is an important part of a smart financial planning strategy. We all know that a college education comes at no small cost – but the investment is worth every penny. College graduates may earn 60 to 75 percent more than high school graduates over the course of their careers. Those with graduate and professional degrees often earn even more. There's a lot to consider when building a college savings plan, but First Midwest offers plenty of resources that can help you pull it all together.

Call 800-241-1749 to get connected with a First Midwest Financial Consultant today.

Meet a Consultant

Back to Top 

Getting Started

There is no time like the present. Your First Midwest Financial Consultant can help you get started with a college savings plan that puts you on the path to higher education.

  • As with planning for most other financial life events, you need to do the math. There are tools to help you estimate the cost of a four-year public or private college education, adjusted for inflation, based on your child’s current age.
  • You’ll need to decide how much of this cost it is realistic for you to save on a monthly basis or annual basis, and write that into your budget, perhaps as an automatic deduction to keep your plan on track.
  • Depending on your children’s ages and when you start, college savings may be a short-term goal (less than three years), medium-term (three to ten years), or long-term if you begin before or soon after your child is born. You’ll want to match your college savings plan to the appropriate time horizon.
  • When you have at least eight to ten years for college savings to build, you may want to consider investment vehicles that have historically offered the highest returns.1 As your child grows closer to college age, assets should be gradually shifted into more conservative instruments. Your First Midwest Financial Consultant can help you craft a savings and investment plan to see you through from birth to college.

Call 800-241-1749 to get connected with a First Midwest Financial Consultant today.

Meet a Consultant

1Past performance is not indicative of future returns.

Back to Top 

College Savings and Investment Accounts

There are three types of accounts that are frequently used for funding college, each with specific advantages and drawbacks. Your First Midwest Financial Advisor can help you determine which of these plans is right for your family.

  • Coverdell Education Savings Accounts (ESAs) – This account provides advantages such as investment flexibility (you can choose how the money is invested), tax-deferred growth and tax-free withdrawals. However, contributions are limited to $2,000 per year and these accounts are only open to investors with a modified adjusted gross income under $110,000 for singles and $220,000 for couples filing jointly.
  • Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) – These custodial accounts are controlled by the custodian, typically a parent, and must be used for the minor child’s benefit. Deposits to a custodial account are considered an irrevocable gift. One disadvantage to custodial accounts is that the child gains legal control of the assets at age 18 or 21, depending on the state, and may choose not to use the money for college. Because assets are in the child’s name, another disadvantage is that these assets can affect the child’s eligibility for financial aid.
  • 529 plans2 – Named after Section 529 of the Internal Revenue Code, 529 Plans are administered by individual states, which determine the plans’ structures and investment options. Withdrawals from these accounts for qualified education expenses are tax-free. There are two types of 529 plans: prepaid tuition and savings. Prepaid tuition plans are currently available in 13 states, including Illinois, and allow for the pre-purchase of tuition based on today’s rates. While most plans allow investors from out of state, there can be significant state tax advantages and other benefits to investing in your own state’s 529 plan. However, contribution limits and other rules vary by state, so it pays to investigate your options.

Call 800-241-1749 to get connected with a First Midwest Financial Consultant today.

2Investors should consider the investment objectives, risks, and charges and expenses associated with the municipal fund securities before investing. The issuer's official statement contains this and other information about the investment. You can obtain an official statement from your financial representative. Read carefully before investing. Past performance is no guarantee of future results.

Meet a Consultant

Back to Top 

Making Difficult Choices

When parents have limited income and assets, and must choose between saving for retirement and saving for their child’s higher education, financial experts generally recommend funding retirement accounts first. While this may sound selfish, there are good arguments for making this choice:

  • Other resources exist for funding a college education, including student loans, grants and scholarships. Graduates can take many years to pay off their student loans, and these loans often carry low interest rates.
  • On the other hand, limited options exist for retirees who don’t have personal savings and investments. Most must survive on limited Social Security benefits, continue working to make ends meet, or depend on family for assistance, if that is even an option.

Call 800-241-1749 to get connected with a First Midwest Financial Consultant today.

Meet a Consultant

Back to Top 

Alternative Strategies

Sometimes, no matter how well you plan, you may still come up short when it’s time to start paying for college, so you may want to consider these options:

  • Your child can attend a more affordable community college for the first year or two, then transfer to a public or private four-year institution. It’s wise to check with both schools in advance about course prerequisites, transfer credits and other requirements.
  • If you have significant equity in your home you may want to consider refinancing your mortgage with a cash-out option, or securing a home equity line of credit to obtain money for college expenses.
  • Encourage your child to get a part-time job or work during summers off to earn money toward their own college expenses.
  • Tuition Rewards from First Midwest Bank can help you earn up to one full year of private college tuition just by taking care of your everyday banking needs.

Call 800-241-1749 to get connected with a First Midwest Financial Consultant today.

Meet a Consultant

Back to Top 

Instant Answer Center

Answers online. Anytime.
Student Checking | Open Now

You are leaving the First Midwest website.

Redirecting to

This is a link to a third-party site. Note that the third party's privacy policy and security practices may differ from First Midwest Bank's standards. Complete details regarding third-party links are available in our Terms of Use.