A parent and student meet with a guidance counselor

4 Steps Parents Can Take to Create College Savings Rewards

Parents looking to reward children with college savings should ensure they encourage behavior that goes above and beyond. 

A parent and student meet with a guidance counselor

Before outlining an incentive plan, parents should set up a family meeting with their child's high school counselor to find out the best use of the student’s time. 


A student's participation in saving for college is as much about a being a good scholarship candidate as it is about contributing actual money.

Virginia parent Roy Thompson matched any money his two daughters, Irene and Ashley, contributed to their tax-advantaged college investment accounts. But he also contributed money into those accounts, commonly known as 529 plans, when they received straight A's on their report cards.

His eldest daughter received a scholarship. She was able to use funds from her 529 plan to pay for qualified education expenses not covered by her scholarship, such as textbooks. Both of his daughters were able to get their degrees without incurring debt and the money in their 529 plan accounts lasted through their undergraduate years.

[Learn how high school students can use 529 plans for college credit.]

Irene, who graduated from Virginia Commonwealth University, received a certificate from the National Forensic Academy at University of Tennessee, paid for by her employer. Ashley, a graduate of the University of Virginia, is pursuing a master's degree in health administration at Johns Hopkins University – and is paying tuition out of her college savings.

“Incentives like matching contributions or rewards for reaching academic milestones are smart ways for parents and grandparents to encourage kids to save,” says Lynne Ward, executive director of the Utah Educational Savings Plan.

Parents should follow these steps for setting up a reward system for activities and academic achievements that can improve students’ scholarship chances while encouraging saving for college.

1. Meet with high school counselors: High school counselors know what community scholarships and programs are looking for in terms of grades and extracurricular activities, says Mary Morris, chairwoman of the College Savings Foundation.

Before parents incentivize anything, they should set up a family meeting with their child's high school counselor to find out the best use of the student’s time, she says.

2. Remember to reward going above and beyond: Parents shouldn’t give their teens money to do what is already expected of them in school, Morris says.

For instance, parents giving students money to do 50 hours of community service that is already required for graduation in their school district shouldn’t be rewarded, she says. However, if a student does 100 hours of community service, a parent may want to add additional money to their teen’s college savings account.

Use a similar rule for participation in extracurricular activities, Morris says. While extracurricular participation isn’t a requirement, minimal participation may not improve scholarship chances and shouldn’t be rewarded. Holding leadership positions is an accomplishment parents might reward.

[See how small amounts added to college savings can grow.]

3. Chat with students about their goals: Morris told both of her daughters that if they want to go to an out-of-state school, they’d have to help make up the difference by earning scholarships. If they did, she’d help fill in the gap.

While her children both chose in-state schools, she recommends parents encourage kids to find ways to reduce college costs if they choose to go to a more expensive school than the family planned on savings covering.

4. Show them how contributions grow: Every dollar Thomson gave his daughters as a matching contribution or for grades, he also showed them in their 529 plan statements. He wanted to show them both how the dollars contributed added up and how they grew.

For instance, if a $50 contribution for straight-A report cards was contributed twice per year during a student’s entire high school career, contributions that grow at 5 percent annually would total almost $450.  

[Get tips on ways to illustrate 529 plan savings for children.]

Students are more likely to participate in college savings if families continually communicate about costs and colleges, Morris says.

The good news for students is that the work they put in isn’t all about money. Working hard in school and extracurricular activities can not only help them pay for their dream school with scholarships, but also improve their admissions chances.

Trying to save for college? Get tips and more in the U.S. News College Savings 101 center.