Paying for their children’s college education is one of the largest financial goals many families face. Since most financial aid is need-based, higher-income households often assume they don’t qualify for help. But that assumption may leave money on the table. With careful planning, even high-net-worth families can meaningfully reduce the cost of college.

Here are seven strategies worth considering.

Use tax-advantaged accounts

Even if you plan to cover tuition out of pocket, it often makes sense to contribute to a 529 plan. These accounts offer tax-free growth and withdrawals for qualified education expenses. In some states, contributions may qualify for a state tax deduction or credit.

529 plans also provide estate planning benefits. Annual contributions are governed by annual gift tax exclusion rules, but with 529 plans you’re permitted to “superfund” the account, meaning you can contribute up to five years’ worth of gifts at one time. Because 529 plan balances aren’t considered part of your taxable estate, superfunding a 529 account is a great way to efficiently move money out of your estate.

Coverdell Education Savings Accounts offer similar tax benefits, but they come with income limits that rule them out for many high earners.

Consider a trust

Trusts can offer flexibility when funding education. Unlike 529 plans, there’s no cap on contributions, making them useful for large gifts or multigenerational planning. But there are trade-offs.

Contributions over the annual gift tax exclusion ($18,000 per beneficiary in 2025) count against your lifetime gift and estate tax exemption. And unlike 529s, earnings in the trust are taxed annually — and distributions may be taxable to the beneficiary or grantor, depending on how the trust is structured.

Despite these limitations, trusts can be a valuable tool, particularly when used as part of a broader wealth strategy.

Don’t skip the FAFSA

Many wealthy families skip the Free Application for Federal Student Aid (FAFSA), assuming their income disqualifies them. But that’s often a mistake.

FAFSA data is required for many merit-based scholarships and institutional aid programs, regardless of financial need. Skipping the FAFSA could mean missing out on unexpected opportunities, while submitting the FAFSA each year keeps your student in the running.

Pursue merit-based aid

Not all scholarships are based on financial need. Awards for academic achievement, athletics, leadership or specific interests are often available to students from any financial background.

Families should start the scholarship search early. Online platforms like Fastweb or the College Board Scholarship Search can help identify opportunities. Even smaller awards can help reduce the total cost.

Be willing to negotiate

College pricing isn’t always fixed. If your child receives a more generous package from one school, you may be able to negotiate a similar package with another school. Even in the absence of competing offers, some schools are open to revisiting their award letters, especially for students with strong academic or extracurricular credentials. In some cases, families are able to reduce tuition by 5% to 15% through negotiation.

Pay tuition directly

Families near or above the federal estate tax threshold should consider paying tuition directly to the college or university. These payments are exempt from gift tax reporting, regardless of the amount, and can help reduce the size of a taxable estate.

To qualify, payments must be made straight to the institution and used strictly for tuition. Payments for room, board and supplies don’t count.

Coordinate with your estate plan

College funding can be a valuable wealth transfer tool. Vehicles like irrevocable trusts and custodial accounts (UTMA/UGMA) allow assets to grow outside your estate, but they must be structured carefully to avoid triggering unnecessary taxes.

Direct tuition payments, annual exclusion gifts and 529 plan contributions should all be coordinated with your broader estate plan to help ensure efficiency and consistency across generations.

Final thoughts

College is expensive, even for wealthy families. But that doesn’t mean you should overpay. With thoughtful planning, it’s possible to reduce tuition costs while also advancing your long-term estate and wealth goals.

A qualified financial advisor can help tailor the appropriate strategies to your family’s specific goals, helping ensure your education dollars work as hard as your investments.

This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed. Steven C. Merrell is a managing director at Creative Planning (formerly known as Monterey Private Wealth). He welcomes questions you may have concerning investments, taxes, retirement or estate planning. Send your questions to: Steve Merrell, 2340 Garden Road, Suite 202, Monterey, CA, 93940. Or you can email steve.merrell@creativeplanning.org.