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How Much Money to Save for College: Preparing for the Future

Rich Fettke


Summary: In this article, we will share how much money to save for college. Topics also include when to start saving for your kid’s college, how much to save if you get a late start, tracking your savings progress, helpful college savings calculators and tools, and college savings tips for students.


In the last 10 years, the average college tuition and fees increased by $930 at public two-year colleges, based on data from Trends in Higher Education. At public four-year colleges it increased by $2,670. And at private nonprofit four-year colleges and universities, it rose by $7,390. 

Now, let’s add room and board to tuition and fees and compare the rise in cost over the last 10 years. At a public four-year institution in 2008-09, the average cost, including room and board, was $16,460. In the same year, at a private nonprofit four-year university the average cost was $38,720. 

In 2020-21, the average cost for all college expenses (tuition, fees, room and board) was $25,615 (four-year public) and $53,949 (four-year private nonprofit) respectively. 

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With the price of college steadily on the rise, parents should be more aware and motivated than ever to start saving money for their kids college now.

When to Start Saving for Kids College

The earlier you start saving for your kids college, the better. As with any type of investment, the longer money is invested the more time it has to grow. If you are a parent wondering when the best time to start saving for your kids college is, the answer is as soon as possible. Some parents choose to open a college savings account when their child is born. While others opt to start saving on the child’s first birthday or enroll in school around the age of four or five. 

So what if your child is approaching high school and you haven’t started saving for their college? Don’t worry, it’s not too late. There is still a lot of value in opening up a college savings account, even if you got a late start. Accounts set up for college savings offer many tax advantages, including tax-free gains on contributions. It’s better to start saving now than having nothing saved at all. 

In the next section, we’ll show you how to save enough money for your kids college, even if you start late.

How Much Money to Save for Your Child’s College

As parents, it’s up to you to determine how much of your child’s college expenses you would like to pay for. It may seem like a daunting task to accurately estimate how much to save for your child’s college, at any age. 

To give you an idea of how much you’ll need, do some research on potential public or private universities and their projected costs. Take current projections from several universities and divide that by the number of months until your child goes off to college. That amount is how much you should be working into your monthly budget and saving for your child’s future education.

How Much Money to Save for College If You Get a Late Start

Here’s an example:

  • Your child is 12-years-old, six years away from college, or 72 months. 
  • Based off the data presented in the introduction of this article, the average cost of a public four-year university in 2021 is $25,615 (including tuition, room and board).
  • The average year-over-year cost of college has increased 1.47%, with a  projected increase in college costs over 6 years). 

Now let’s do some math based on the numbers from our example, still assuming you start saving when your child is 12-years-old. Calculate the following to determine how much you’ll need to save each month for college expenses:

  • $25,615 divided by 72 months equals $296.81. 
  • Times $355.76 by 1.47% (the projected increase in college costs over 6 years), 
  • Equals $376.54 per month. 

This gives you a really good estimate for how much money you should be saving for your kid’s college each month, even if you’re getting a late start.

Image Highlighting How Much to Save For College if You Get a Late Start

Saving for College with the 1/3 Rule

Assuming you start saving for your child’s college early, some experts suggest saving one-third of expected costs. The idea is that the remaining funds needed for college can be paid over time using grants, loans and future income.

Saving For College with the 3X Rule

Based on past data, the cost of college education roughly triples over a 17-year period. The 3Xs Rule uses the equivalent of an average college cost inflation rate of 6.6 percent. Keep in mind, that tuition and fees usually grow faster than tuition costs plus room and board.

What’s Your End Goal?

Deciding how to set your savings goal can be roughly determined by using the ⅓ Rule and the 3X Rule. Consider the following:

  • 3 x 1/3 = 1

This means that your college savings goal should be equal to the cost of a college education the year in which your child is born. Plan to save for about one third of future college expenses and you should yield enough money to cover costs.

Figure Out Your Monthly College Savings Goal

Now, let’s say you have a child this year and want to start contributing now. Parents should plan to save for the following:

  • $250 per month for an in-state, public 4-year college
  • $450 per month for an out of state, public 4-year college
  • $550 per month for a private, non-profit 4-year college from birth to enrollment

Image Highlighting Monthly College Savings Goals From Birth to Employment

Save What You Can Afford

Parents may find it hard to set aside enough money each month for college. Contribute as much as you can afford and work your way up. Most 529 college savings plans allow you to contribute as little as $25 per month.

Track Your College Savings Progress

It will be extremely beneficial for parents to monitor their savings progress for a child’s future college expenses. Check your progress regularly to make sure you are on track to reach your savings goals by the time your child reaches college-age.

Fine-Tune Your Savings Plan

If you want to check how much you should have saved based on your child’s age, multiply the child’s current age by: 

  • $3,000 for an in-state public 4-year college
  • $5,000 for an out-of-state public 4-year college 
  • $7,000 for a private non-profit 4-year college

Helpful College Savings Calculators and Tools

For a personalized estimate of how much money to save for college, use the following college savings calculators and tools: 

5 College Savings Tips for Your Student

As parents, you are doing your part to help secure your child’s future education. As such, your child should be doing the same. Here are some great tips for your child to start growing their own savings, establish good money habits and get them to college. Parents should commit to encouraging their child with the following savings tips:

  1. Apply for scholarships
  2. Get a job
  3. Take AP classes
  4. Open a savings account
  5. Save extra money instead of spending

The Best Ways to Start a College Fund

There are a number of great ways to choose a great college fund for your child. Parents have several college savings plan options, including the following:

  • 529 College Savings Plans
  • Education Savings Account (ESA) or Education IRA
  • Coverdell Education Savings Account
  • Prepaid Tuition Plans
  • Educational Trust
  • Uniform Transfer / Gift to Minors (UTMA or UGMA)
  • Treasury Bonds
  • Real Estate Investing 

The Bottom Line

After reading this article, you should be able to determine how much money to save for college and ensure you are prepared for the cost of your child’s future education. The earlier parents start contributing to a college savings account, the better. However, even if you get a late start, it’s not too late to save enough money to cover at least a good portion of college expenses. Take advantage of helpful college savings calculators and tools online and learn about which college savings plan is right for you and your child.

Check out another article in our ‘College Series’: 50 Money Saving Tips for Kids, Teens, and College Students.

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