How Much You Need to Save for College for 2025

Student Finance & Loan Expert

According to the National Center for Education Statistics (NCES, 2023), the total cost of tuition, fees, room, and board in A.Y. 2013-14 was $18,100 in public universities and $40,731 in private nonprofit institutions. In A.Y. 2022-23, these amounts rose to $22,389 and $52,848 respectively. As the cost of higher education rises, families face the challenge of figuring out how much to save for college.

With over a decade of experience as a career planning expert, I’ve guided families and students through this dilemma. Often, my advice is to save as much as you can, as early as you can. But what does that entail? Usually, this involves breaking down savings into manageable monthly contributions. This may seem confusing for many families, especially those just starting their child’s college fund.

To shed further light, I have suggested versatile strategies to save for college in this guide. In addition, I’ve detailed valuable information about college costs, inflation, financial aid, and more to help parents prepare for this significant investment in their child’s future.

Key Points of Knowing How Much to Save Up for College

Generally, college expenses are double the general inflation rate (Finaid, n.d.). Projecting future costs using historical inflation rates and tuition calculators can help families plan for higher education costs.
Research tuition, fees, room, board, and other expenses at colleges of interest, and discuss your plans with your child to set realistic expectations and guide them in making informed decisions.
Consider financial aid, like scholarships or grants, to reduce total educational expenses. This ensures your child receives quality education without compromising your overall financial stability.

What is the average cost of college tuition in the U.S.?
How do I know how much to save for college?
What are the best ways to save for college?
What expenses should I expect in college?
When should I start saving for college?
Why is college so expensive?
What financial goals should I prioritize alongside college savings?
How can parents and students balance saving for college with other expenses effectively?
What if my family can’t afford college?
What tax benefits can enhance my college savings plan?
Should I consider career certifications as an alternative to traditional college education?
How can I adjust my budget if my financial situation changes?
Can online education offer a more affordable pathway for higher education?
Can I Apply for Student Loans Without a Cosigner?
How can a student loan cosigner release improve my loan management strategy?
What are alternative ways to manage housing costs during college?
Is choosing an easier bachelor's degree a viable strategy to reduce college costs?
How can families plan for post-graduate education costs?
How can I access fast student loans when facing unexpected college expenses?
How can alternative income streams boost my college savings?
How can I assess the return on investment of a college degree?
Other Things You Should Know About Saving Up for College

What is the average cost of college tuition in the U.S.?

Before you compute how much to save for college, you must determine what type of institution and degree program your child will pursue. Generally, costs vary depending on the institution’s type, reputation, and location, as well as the student’s residency status or academic load.

The following are the tuition and required fees based on the latest data from the College Board (Ma & Pender, 2023) and the NCES (2023). The chart below also includes the total cost of tuition with housing and food.

Public two-year: $3,990
Public four-year, in-state: $11,260
Public four-year, out-of-state: $29,150
Private nonprofit four-year: $41,540
Private for-profit four-year: $18,241

Compared to four-year institutions, two-year colleges are often viewed as a cost-effective starting point for higher education due to the shorter time required to earn an associate degree. Graduates with this degree can apply for entry-level jobs, enabling them to earn and save for an advanced degree.

In contrast, bachelor’s degrees, typically pursued at four-year universities and colleges, are more expensive but offer a broader and more intensive study of a discipline. However, students who transfer credits from an associate degree to a bachelor’s program can reduce overall costs. By evaluating the costs and benefits of institution types and degree levels, you can prepare for a financially sustainable educational pathway that benefits your child.

How do I know how much to save for college?

Now that you are familiar with the average costs of higher education, the next step is to factor in inflation. College costs have historically increased by about 6% per year, and this affects how much you should set aside monthly to pay for your child’s education.

You can explore free online college cost and savings calculators to spare yourself from computing how much to save for college. To use these, you typically need to input your child’s age now, their age at the start of college, any current savings, your intended monthly contributions, annual household income/tax bracket, educational cost inflation, and average tuition and fees of the desired school.

Using CNN’s calculator, you can also consider the scenario below if you wish to send your child to a public four-year institution as an in-state student. Assume that your child is one year old now, your tax bracket falls at 22%, your before-tax return is 8%, and the cost of inflation is 6%.

Scenario 1

Current tuition, fees, housing, & food: $24,030
Current savings: $0
College goal amount: $283,070
Monthly contribution to reach goal: $627

If you wish to send your child to a private nonprofit university instead, you need to save as much as $1,466 monthly to reach a goal of $661,910.

Meanwhile, if you have some money saved up, consider the following scenarios (public four-year institution):

Scenario 2

Current savings: $10,000
College goal amount: $283,070
Monthly contribution to reach goal: $559

Scenario 3

Current savings: $50,000
College goal amount: $283,070
Monthly contribution to reach goal: $287

Let’s say your child is a little older. You wish to send them to the same type of school, but you have no savings. You must contribute $663/month to complete contributions to a $251,931 goal if your child is currently three years old. In contrast, if your child is 10, you must allot $892/month to reach $167,549.

Keep in mind that these figures can vary based on the year your child will attend college, the actual rate of inflation, the performance of your savings or investment accounts, and your income. However, these estimates are slowly becoming apparent, especially since some schools may start charging $100,000 for the cost of attendance soon (Lieber, 2024).

What are the best ways to save for college?

Saving for college can be overwhelming, but there are various ways to help you prepare for this expense. Understanding your options and their benefits can make a considerable difference in how much to save for college.

529 Plans: These investments are designed for education expenses, including tuition, apprenticeships, or student loans. Understanding how much to contribute to 529 is beneficial since they grow tax-free, and withdrawals for qualified expenses are also tax-free. Each state has its own 529 plan, and many states allow you to use your contributions in other U.S. states.
Coverdell Education Savings Account (ESA): Similar to a 529, Coverdell funds can be used for a wide range of educational expenses tax-free. However, it is only available to families of a specific income level and students in eligible schools. Moreover, the maximum annual contribution limit is only $2,000 per beneficiary.
Custodial Account: This fund is set up under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). Typically, these accounts have no income or contribution limits nor withdrawal penalties. Assets are set up by parents or grandparents and transferred to the child when they reach maturity.
Prepaid Tuition Plan: This is a type of 529 that allows parents to purchase future tuition at current rates. This is ideal for students who will attend in-state colleges and universities. Parents can pay in installments or a lump sum. However, you can only use them for tuition, and only a handful of states offer this program.
Traditional Savings Account: This allows parents to accumulate savings over time to finance their child’s college education. The funds grow based on the account’s interest rate or investment returns. This is ideal for emergency funds or minimal expenses because there aren’t many tax benefits.

What expenses should I expect in college?

While tuition and fees are the major expenses associated with college, students and their families should also be prepared for various miscellaneous costs that can add up over time. These additional expenses can impact exactly how much to save for college. Here are common costs you should expect:

Room, boarding, and meals
Textbooks and supplies
Transportation or parking
Laptops, software, or subscription services
Personal expenses
Extracurricular, recreational, or entertainment expenses
Health insurance and other medical/dental expenses
Miscellaneous fees (organizations, laboratory, specialized classes, uniform, etc.)

Remember that you have the option to decline certain expenses, and each institution has its own list of included fees. Make sure to review the financial information page of your preferred school for details.

Based on the College Board’s data, the student budget for housing and food ranges from $9,970 to $14,650, while books and supplies cost around $1,250 to $1,470. The chart below breaks down these enrollment-weighted budgets by type of institution (excluding tuition and fees).

When should I start saving for college?

Aside from planning how much to save for college, you should consider when to begin saving. Ideally, you should start saving as soon as possible. For parents, this means when their child is born or even earlier if feasible. For students, it means setting aside money from their first job or as soon as they begin receiving an allowance.

The rule of thumb is this: The earlier you start, the more time your money has to grow and the more potential you have to reduce expenses when college enrollment approaches.

Starting early provides flexibility in financial planning and allows you to weather market fluctuations and economic changes more wisely. It also gives you more time to explore and take advantage of various savings options and financial aid opportunities that may become available as your child approaches college age.

If you haven’t started saving early, it’s never too late. Even small contributions regularly can accumulate significantly over time. Starting later might require more aggressive saving strategies or adjustments to your financial plan, but every bit saved can still make a difference.

Why is college so expensive?

According to the College Board (2023), tuition and fees adjusted for inflation remained stable in public two-year, public four-year, and private nonprofit four-year institutions throughout 2020, followed by slight declines from 2021 to 2023.

Specifically, from A.Y. 2022-23 to A.Y. 2023-24, there was a one-year percentage change of -0.5% for private nonprofit institutions, -1.9% for public universities, and -2.0% for public two-year colleges. So, why are colleges still expensive?

Many public institutions face increasing costs due to the need for more state funding. As colleges and universities allocate more resources towards non-student learning expenditures like institutional debt (National Education Association, 2022), they increasingly depend on tuition revenue to meet operational expenses.

Furthermore, schools divide funds related to faculty salaries, student services, recruitment, administrative expenses, maintenance of facilities, and technological advancements. Many colleges and universities also invest in modern facilities and additional amenities to attract students, which adds to overall expenses (Korn et al., 2023).

These factors collectively contribute to the perception and reality of higher education remaining expensive despite fluctuations in tuition rates observed in recent years. Therefore, families and students alike must try to stay updated on college funding and expenditures to determine how much to save for college.

What financial goals should I prioritize alongside college savings?

Families and students alike must remember that aside from knowing how much to save for college, they must gather funds for other finances. This ensures that you are not only ready to cover higher education costs but also prepared for other significant expenses. Here are some financial goals to consider saving up for alongside college funds:

Emergency funds
Health and insurance
Homeownership fund
Major life events
High-interest debt

A survey found that half of high school students are uncertain about their expected financial contributions to college expenses (Fidelity Investments, 2023). Additionally, 57% of low-income Gen Z high schoolers express a need for increased financial guidance from their schools (Educational Credit Management Corporation, 2023).

This underscores the importance of parents and schools in imparting financial literacy and responsibility to future university students, which proves invaluable as they begin saving for college and managing their own finances. Doing so can help them balance financial demands and achieve financial stability.

How can parents and students balance saving for college with other expenses effectively?

Now that you have identified the additional costs associated with college, you might be wondering how you can begin accumulating funds. Balancing how much to save for college with other expenses can help avoid financial strain and set a solid foundation for achieving your objectives. Here are some effective strategies that might prove useful:

1/3 Rule: To start your college fund, try setting aside one-third from past savings, one-third from your current income, and one-third from future funds, such as loans or scholarships. This technique is ideal for parents who have multiple expenses to pay off each month.
50-30-20 Rule: This method allocates 50% of your income to necessities, 30% to discretionary spending or wants, and 20% to savings. This strategy may be more approachable to students or fresh graduates.
Utilize a Budget Tracker: Develop a detailed budget that keeps tabs on all income sources and expenses. Try to stick to it and flag down any unnecessary spending that could otherwise be used for your savings account.
Automate Payments: Set up automatic transfers to your savings account to ensure you never miss a beat in downpayment or avoid penalties for missing contributions.
Explore Other Sources of Income: Look into part-time jobs, freelance work, or side gigs to boost your pool of funds.

In addition, remember to evaluate various factors that can influence the overall cost and value of your child’s education. For example, assess the cost of living in the college’s location to determine whether commuting or living on campus is more economical.

Similarly, consider if an online program might be a better fit. Online degrees are equally valuable as traditional degrees and can be more cost-effective since they eliminate fees associated with physical attendance.

Furthermore, gauge the potential return on investment by researching the average starting salaries of graduates from each institution. Additionally, examine the long-term earnings potential and job placement rates in your child’s chosen field. This comprehensive analysis can help you make informed decisions about the most financially viable and beneficial educational path for your child.

What if my family can’t afford college?

Several budget-friendly and financially versatile plans can make higher education more accessible, especially if you find yourself unable to afford college costs. Exploring these options and strategically planning how much to save for college can help families bridge the gap despite financial challenges.

Scholarships and Grants: Students can apply for a needs- or merit-based scholarship or grant through their chosen school, government initiatives, or private organizations. Depending on the benefactor, the amount can cover either the full or a portion of your cost of attendance.
Work-Study Programs: These programs allow students to earn money through part-time jobs on or off-campus, providing another source of funds that can offset educational expenses.
Employer Benefits: Some employers offer tuition assistance or reimbursement programs for their employees and sometimes extend these benefits to their dependents. Others also provide scholarships specifically for their employees’ children.
Educational Loans: You can also apply for federal loans, which are available to both student and parent borrowers, by submitting a Free Application for Federal Student Aid (FAFSA) Form to your chosen college. Likewise, private lenders, like banks or credit unions, offer private student loans, but these usually have higher interest rates and less flexible repayment terms.

Hope is not lost for families struggling to fund their child’s college education. One of the best options to explore is scholarships and grants since these do not require repayment. Meanwhile, student loans can be considered as a last resort. Federal loans, which can be either subsidized or unsubsidized, provide various options and often include deferment periods for repayment. However, it is important to keep track of your repayment schedule especially since the average age to pay off student loans is around 30 to 45.

Lastly, you can consider alternative sources for your child’s college expenses. For example, you could seek financial assistance from relatives or friends who may offer a more flexible repayment schedule. According to a survey, families who borrowed money from relatives or friends received around $400 to $700 (Sallie Mae, 2023). The chart below further looks into these sources. By looking into these avenues, you can broaden your financial resources and potentially ease the burden of college costs.

What tax benefits can enhance my college savings plan?

Tax-advantaged savings vehicles can significantly improve the growth and efficiency of college funds. For instance, 529 plans offer tax-deferred growth and tax-free withdrawals when funds are used for qualified education expenses. Several states further provide tax deductions or credits for contributions to these accounts, which may reduce overall taxable income. Moreover, Coverdell Education Savings Accounts, though subject to contribution limits, allow for tax-free investment growth while broadening eligible expenses. Families should review state-specific benefits and consult financial professionals to optimize these advantages. In some cases, planning for advanced degrees—such as exploring the shortest master's programs online—can also complement college savings strategies and long-term educational goals.

Should I consider career certifications as an alternative to traditional college education?

Exploring career certifications can provide a practical, cost-effective alternative to a traditional college degree. These programs often require a shorter time commitment and lower financial investment, while still offering a competitive edge in today’s job market. For individuals looking to secure timely employment or minimize student loan burdens, this alternative can lead to a quicker return on investment and enhanced career mobility. Consider evaluating technical training or professional accreditation programs to determine if they align with your long-term career objectives and financial planning. Research into the best certifications for jobs can offer further insights into industry-recognized credentials that support sustainable financial growth and professional advancement.

How can I adjust my budget if my financial situation changes?

Financial situations can change unexpectedly, but with the right strategies, you can prepare for and mitigate crippling financial blows. Adjusting your budget ensures you can still meet your financial goals, including saving for college. Here are practical steps to help you adjust your budget when your financial circumstances change:

Reevaluate Your Income and Expenses: Assess your current income, including any new sources or reductions. Recalculate your savings targets based on your new financial reality, and, if possible, continue contributing to savings, even if at reduced rates.
Prioritize Essential Expenses: Focus on necessities and temporarily reduce or eliminate non-essential spending. Look for cost-cutting measures in your daily expenses.
Supplement Your Income: Consider selling unused or unwanted items online or at garage sales. In addition, check for available government or community assistance programs to help with essential expenses.
Seek Professional Advice: Consult financial advisors or counselors for personalized guidance on managing your finances or reshaping your plans.
Discuss Plans with Your Child: When your child reaches an appropriate age, discuss how you’ll handle remaining costs, whether you’ll cover everything, or they’ll assume some responsibility over time, to ensure that everyone is on the same page and financial expectations are clear.

Can online education offer a more affordable pathway for higher education?

Online education can significantly reduce overall expenses by eliminating costs associated with on-campus living and commuting. Digital learning environments often feature lower tuition fees, flexible payment options, and minimized ancillary charges, allowing students to focus resources on essential educational components. Furthermore, families can explore cost-effective alternatives such as online colleges that accept FAFSA in Texas to maintain quality instruction while easing financial strain. This model supports tailored study schedules and broader access to technical support, ensuring a balanced approach to academic success and budget management.

Can I Apply for Student Loans Without a Cosigner?

Lenders increasingly offer options for borrowers who lack a traditional cosigner by evaluating credit history, income stability, and other financial indicators. Independent applicants may qualify for student loans that prioritize a strong credit profile and consistent earnings over parental involvement. Researching lenders who specialize in these alternatives can reveal programs that assess individual financial standing rather than relying solely on a cosigner. For additional insights and step-by-step guidance, review how to apply for private student loans without a cosigner. This approach not only expands available options but also supports building a robust financial foundation while pursuing higher education.

How can a student loan cosigner release improve my loan management strategy?

For borrowers relying on a cosigner to secure favorable loan terms, obtaining a cosigner release provides a structured path toward financial independence. This process typically requires meeting specific criteria—such as maintaining a history of on-time payments or demonstrating improved creditworthiness—to transfer full loan responsibility solely to the borrower. By achieving a cosigner release, you can potentially access refinancing options and secure more competitive interest rates, thereby optimizing your overall debt management plan. For detailed insights on programs that prioritize prompt cosigner release and the steps involved, consult the student loan cosigner release guidelines.

What are alternative ways to manage housing costs during college?

Managing housing costs is a significant aspect of creating a sustainable college budget, as room and board expenses often comprise a substantial portion of the overall cost of attendance. For many students and their families, identifying ways to reduce these expenses can provide financial relief and allow for more flexibility in other areas of the budget.

One potential strategy is to explore whether living off-campus and sharing housing with roommates could reduce costs compared to on-campus dormitories. Research the rental market in the area near your institution and compare it to on-campus living expenses. On the other hand, commuting from a family home can eliminate housing costs altogether for students attending a local college or university.

Additionally, some students may qualify for financial aid awards or grants specifically designated for housing. Make sure to work closely with the school's financial aid office to review any potential opportunities you could leverage. Another option includes obtaining a part-time job and allocating this supplemental income towards housing expenses.

For students and families considering student loans, it’s crucial to understand which costs these loans can cover. For example, you may have wondered, “Can you get student loans to pay for rent?” The answer largely depends on the terms of the student loan and its allowance for living expenses. Federal student loans, for instance, typically include funds for room and board in the calculation of the total amount borrowed. Understanding these options enables families to better plan for housing-related costs while pursuing higher education.

By exploring various avenues and taking proactive measures to manage housing, families can better navigate the financial demands of college and focus on achieving academic and financial success.

Is choosing an easier bachelor's degree a viable strategy to reduce college costs?

Analyzing program rigor may present an opportunity to contain tuition expenses by reducing the likelihood of extended study due to course repetition or academic delays. Selecting a degree with a structured, accessible curriculum can support timely graduation while minimizing extra costs associated with retakes or prolonged enrollment. Prospective students should evaluate program duration, course load, and institutional support systems to ensure the chosen path aligns with both academic aptitude and financial goals. In this context, reviewing options such as the easiest bachelor's degree to get can provide insights into more cost-effective routes without compromising career readiness.

How can families plan for post-graduate education costs?

Planning for post-graduate education, such as vet school or law school, requires additional financial foresight. The costs associated with professional programs can far exceed undergraduate expenses, making a strategic approach essential for families and students.

One important step is to assess long-term earning potential in your chosen field to ensure that the investment aligns with future financial goals. For example, research how long it typically takes graduates in your field to pay off loans and what their starting salaries generally are in comparison to their education debt. Aspiring veterinary students, for instance, should analyze the financial implications of attending vet school. According to industry data, the average length to pay off vet school loans often exceeds a decade, depending on loan terms and repayment strategies.

Incorporating this assessment into your college savings plan can help families decide how to allocate resources effectively between undergraduate and post-graduate expenses. Students who anticipate attending professional programs may also benefit from prioritizing lower-cost undergraduate options, leveraging financial aid, or choosing accelerated programs that shorten the time required to earn advanced degrees.

Additionally, it’s wise to evaluate loan repayment options and other financial tools tailored to post-graduate education well in advance. Families can explore specialized loan programs or forgiveness options and calculate how future income may impact affordability. With proper planning, students can reduce the long-term financial burden of higher education while pursuing their career goals.

How can I access fast student loans when facing unexpected college expenses?

When unforeseen expenses arise and your savings fall short, securing emergency funding can help maintain your college savings strategy without disruption. Many financial institutions offer expedited loan processes designed to address immediate needs. It is essential to review eligibility requirements, evaluate repayment terms, and compare rates before proceeding. Additionally, consider consulting with a financial advisor to ensure that any short-term borrowing aligns with your long-term financial goals. For expedited options, explore fast student loans as a viable resource for bridging funding gaps.

How can alternative income streams boost my college savings?

Leveraging supplemental income can strengthen your college savings strategy without overhauling your existing financial plan. Consider part-time work, freelance projects, or consulting assignments that match your expertise and schedule. Additionally, investing in specialized training or exploring certifications that pay well can open avenues for higher earning opportunities over time. Assess each option’s viability to ensure it complements your academic or professional commitments while contributing consistently to your college fund.

How can I assess the return on investment of a college degree?

Evaluating the return on investment involves analyzing post-graduate earnings, job placement rates, and the extent of loan obligations relative to the total cost of education. Consider metrics such as average starting salaries in your field, long-term income growth, and the proportion of graduates working in relevant industries. Tools that compare public and private institutions or even online alternatives can simplify this process while enabling you to identify cost-effective options, including options like cheapest regionally accredited online colleges. This measured approach supports making informed decisions by balancing upfront expenses with future financial benefits.

Key Findings

In A.Y. 2023-34, the costs of tuition and fees in public four-year institutions were $11,260 in-state and $29,150 out-of-state.
In private nonprofit four-year institutions, the tuition and fees amounted to $41,540.
The student budget for housing and food ranges from $9,970 to $14,650, while books and supplies cost around $1,250 to $1,470.
Half of high school students are uncertain about their expected financial contributions to college expenses, while 57% of low-income Gen Z high schoolers express a need for increased financial guidance from their schools.
Families who borrowed money from relatives or friends received around $400 to $700 as an additional source for college funding.

Other Things You Should Know About Saving Up for College

How much should I save monthly for college?

Determining how much to save for college monthly depends on the cost of tuition, your financial situation, inflation, and the targeted time of enrollment. If you plan to save from your child’s birth, a budget of around $250 to $700 per month over 18 years could yield a substantial college fund.

How much does the average person save for college?

Many families aim to cover a third of their child’s college education through savings. By the time your child turns 10, this often equates to approximately $15,000; by age 18, it can reach around $27,000. It’s advisable to research savings benchmarks and consult financial planners for personalized savings strategies that fit your circumstances and educational goals.

What if I have more than one child to send to college?

If you have more than one child, maintaining a savings account for each child is the best strategy. This allows you to customize savings contributions based on each child’s educational aspirations and financial aid prospects. Similarly, having different 529 plans for each child can help you gain more tax benefits. Lastly, try to earn more income by negotiating for a raise, aiming for a promotion, getting a side hustle, or looking for a new job with better pay altogether.

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