Your Very Own Endowment

Thinking about 529 plans the way a university might

Universities figured out the smartest way to manage money about a hundred years before the rest of us. They stuff pile after pile of capital into a wrapper that is generally tax-exempt at all but the richest private schools, let it compound undisturbed for generations, and spend only what the big pile throws off. In non-profit parlance, this is an endowment; Harvard’s is larger than Paraguay’s GDP.

If you have kids, you will one day contribute disproportionately to keeping our richest universities so flush (if you don’t already). Wealthy lawyers’ children don’t get financial aid. That’s probably as it should be, but it means you’ll pay sticker price. And if you’re not savvy, you’ll pay with money that has been taxed on the way in, taxed as it grew, and mourned as you forked it over.

It’s anxiety-inducing enough as it is to think about paying for college. But it gets even worse when you consider universities’ massive leverage. For generations, college has, on balance, been the most straightforward path to increasing one’s earning potential, making a degree basically non-negotiable for white-collar work. Thus, universities can compel almost any vaguely reasonable tuition increase; most people socialized to believe in higher education’s importance—that is, people like us—will pay.

So, in my 30s, when I realized my kids’ tuition bills would run something like $75,000 per semester in the 2030s, I decided I needed a strategy. (Ivy-level cost of attendance is already near $90,000 a year and has been climbing 4 to 5 percent annually. The arithmetic is not kind.) I didn’t want to do what so many frazzled parents, no matter how high their incomes, do because of deficient savings: work more years in high-stress jobs to pay for college out of current cash flow. Or, worse, saddle their kids with loans they barely understand.

Instead, I decided I’d try to win the college game by playing it the way universities play it.

I’d build my own endowment.

Not as crazy or complex as it sounds

Building your own endowment sounds grandiose and complicated. It’s neither.

Here’s what I’m doing: I started with my target number, which was the all-in cost (in-state tuition, room, and board) for a very strong public university in my state. I used Miami University (Ohio) as the benchmark. In 2026-27, Miami’s in-state tuition, room, and board are $36,558 annually, or $146,232 in total.

Then I tried to get that amount into each of my three kids’ 529 plans as fast as possible. This has been difficult, but I’m pleased with my progress. I chose a 529 over other, more obscure college savings vehicles because it’s often the best educational savings option for most people. It was for me, too. 529s offer tax-free growth and withdrawals for qualified expenses while combining strong tax breaks with flexibility for families. Notable perks include easily changing the beneficiary to another family member, using up to $10,000 to pay off student loans, and minimal impact on federal financial aid calculations.

Of course, 529 plans have important rules you must follow. In 2026, you can contribute $19,000 per giver, per participant. Past that, you start using up your lifetime gift tax exemption of $15 million per individual ($30 million for married couples) for 2026. So, two aggressive parents with means can give each child $38,000. But a particular advantage of 529 plans, which blows way past $38,000, is five-year front-loading. This move allows you to make five years of contributions up to the gift tax limit at once, adding $190,000 to your child’s 529 plan instantly. Downsides of front-loading worth noting are that once you’ve done it, you cannot make other gifts to your child during that five-year span, since you’ve already used up your annual exclusion; and front-loading forfeits several years of an available state income tax deduction that individuals in participating states can take advantage of for contributing to 529s. But on balance, compounding interest on such a large sum invested early should consistently outweigh these negatives.

Moreover, 529s work well because so many otherwise solid places to stash money are lackluster for high-earning lawyers. I recommend maxing out your 401(k), but for you the ceiling is incredibly low; you could max yours out in a few months or less. And your 401(k) plan is even more meh if your employer is stingy with contributions. Direct Roth contributions don’t work in your case, and the regular backdoor version is tiny (though the mega backdoor Roth is a strong choice). A cash balance plan is likely out of reach until you’re an equity partner. And taxable accounts, while necessary, come with their own annoyances for the high-earning lawyer, including being taxed at some of the steepest marginal rates and getting hit with the 3.8% net investment income tax. Nobody but Marie Antoinette will sympathize much, but these are real drawbacks to your savings options.

So, 529s are worthwhile. But where do your large contributions come from? For most lawyers, the answer is probably not your salary. As an associate or an income partner with small children, your paycheck arrives on the same day every month, and I’m sure a high-cost-of-living city and other expenses stretch it thin. Saving this aggressively for college probably won’t fit into your household budget. Your bonus, on the other hand, might be a great fit. Redirect three or four of them during the diaper years, and you’ve hit the benchmark before your little one starts kindergarten. If you’re already taking partner distributions, it’s the same disciplined move with bigger checks and less waiting.

In our case, when that money—four years of Miami University for three children—is invested, my wife and I will stop saving specifically for college. The eventual result will be that, while I benchmarked to Miami, a great outcome in itself, when it’s time to pay for school, the kids’ college nest eggs should have grown to cover almost anywhere they get in.

But covering tuition was never really the goal.

My deeper goal is that, when my kids reach college age, I want to do what my father-in-law, a surgeon, did for his kids: pay tuition out of current earnings, like any other line item in the family budget. If I can cash-flow those four years—a reasonable expectation for me if my firm keeps growing, and for you if you keep practicing—I never touch the 529s. And a 529 I don’t spend doesn’t sit still. It keeps compounding for another thirty years if things go well. This is how I build the endowment ultimately intended for my grandkids.

Whether any of this works out depends on things I can’t control. Man plans and God laughs, of course, but the best-case scenario I’m angling for is that no one in my family has to think about paying for college again for a long time. My parents struggled to pay for one college education. I’m looking at three, with a possible graduate school stint tacked on in each case. I’ve seen the anxiety that coming up short on college costs produces in a family. To me, avoiding that is worth three large piles of money that, however paradoxical, I’m aiming never to spend.

If that sounds like more multi-generational machinery than you want, and you’d prefer to simply pay for your kids’ college and be done with it, I’d understand. My approach isn’t for everyone. But the case for funding early is clear-cut and doesn’t depend on the multi-generational part, as I’ll explain.

Lawyer families should bank on significant education expenses

Everything above leans on an assumption: that my grandchildren will need to pay for a lot of higher education. The most common objection I hear to aggressively funding 529 plans, even from lawyers, is the mirror image of that assumption. Won’t I overfund it? After all, I’m not even sure my kid will need this money.

For lawyer families specifically, I think that worry is misplaced. The odds that your children or grandchildren end up on an expensive, multi-stage education path are higher than you might assume.

First, educational attainment is “sticky” at the top. A Brookings Institution study analyzed intergenerational mobility and found that three in four children of parents in the top quintile of educational attainment stayed in one of the top two quintiles themselves.¹ Amazingly, the study indicated that educational advantages are inherited even more reliably than money is. And lawyers’ kids aren’t just conditioned toward more education; they’re funneled toward selective private institutions, the ones whose sticker prices climb fastest.

What’s more, undergraduate tuition may be just the beginning of your post-secondary expenses. Sociologist Florencia Torche has documented what she calls a U-shaped pattern of parental influence. The correlation between parents’ and children’s outcomes is strong at lower levels of schooling and nearly disappears among bachelor’s-degree holders. But then it reemerges even more strongly among advanced degree earners.² So, for families with professional or doctoral parents, graduate school may feel more like a baseline expectation than an optional splurge. And grab the Maalox, regretful lawyers: in The Class Ceiling, sociologists Sam Friedman and Daniel Laurison found that children of lawyers are seventeen times more likely to enter law than children whose parents work in other fields. (They used British data, but there’s little reason to think the American dynamic differs.) After medicine, law was the second most “heritable” profession they examined.³

Put it together, and the real risk appears to run the other way: for a lawyer’s family, overfunding isn’t the danger; underfunding is. And if my kids or grandkids embark on this sort of educational odyssey, I may be the one coming up short financially, even after carefully funding undergrad eighteen years early three times. But because I’ve done the prep work, if this happens, I’ll be the one hoping to tap my cash flow to pay for additional schooling from a well-considered position of strength as I aim to compound funds for the next generation. If you don’t do that savings work, tapping cash flow for college could mean spending four (or more) years postponing retirement in a role you dread to make the math work.

Finally, a few practical features of 529s make it even harder to overfund one. You can change the beneficiary to another child, a future grandchild, or even yourself if your intended beneficiary doesn’t use the funds. Also, recent rules permit a limited rollover of leftover 529 funds into the beneficiary’s Roth IRA.⁴

Given all this, I suspect you’ll have less money “trapped” in a 529 than you assume. If you’re happy to pay for education in your family—whether for your kids, their kids, or another relative—nature and nurture present overwhelmingly good reasons not to skimp on this funding. So, start putting something away, even if it’s not intended to help decades into the future.

Winning the long game

Universities got rich by being patient, treating money as something that outlives even its most spectacular stewards. They’ve used no real trick or secret asset class, mostly relying instead on a hundred-year time horizon and the discipline not to touch the principal. In many ways, a university endowment is the ultimate snowball.

You don’t have to be Harvard-level rich to borrow that time horizon. A 529 funded early and benchmarked to a sensible number is a small endowment in everything but name. Left alone, it grows to cover schools you didn’t dare benchmark to. Left alone longer, it becomes even more powerful.

Universities will keep raising tuition. They have every incentive to, and absent lunacy on their part, or technology that renders them obsolete, people like us will continue paying. That won’t change. But what can change is which side of the compounding you’re on. If you build the machine well early, you stop being the family that dreads the tuition bill and start being the one that funded it two generations ago.

¹ Brookings Institution, “The Inheritance of Education,” Social Mobility Memos, October 27, 2014.

² Florencia Torche, “Is a College Degree Still the Great Equalizer? Intergenerational Mobility across Levels of Schooling in the United States,” American Journal of Sociology 117, no. 3 (2011): 763–807.

³ Sam Friedman and Daniel Laurison, The Class Ceiling: Why It Pays to Be Privileged (Policy Press, 2019), drawing on UK Labour Force Survey data.

⁴ SECURE 2.0 Act of 2022. The rollover is capped at $35,000 over the beneficiary’s lifetime; the 529 must have been open for at least 15 years; contributions made within the prior five years are ineligible; and annual transfers are limited to that year’s IRA contribution limit ($7,500 in 2026).