The amount you should save depends on which college your child will attend, when they start, and how much you can afford to set aside

There is no single "right" number because college costs vary widely by school type, location, and your child's age. A public in-state university costs less than a private school or out-of-state public option. A child born today will face different prices than one starting college in five years. And your household income, current savings, and risk tolerance all shape what you can realistically put away.

The most useful approach is to work backward from a specific school or type of school, calculate what four years will cost when your child enrolls, then divide by the number of years you have left to save. This gives you a monthly or annual target. If that target is too high, you have three levers: save less and plan to cover the gap with loans or scholarships, choose a lower-cost school option, or plan for your child to attend community college first.

Key Takeaways

  • Public in-state tuition, fees, room, and board currently range from roughly $25,000 to $35,000 per year depending on the state, while private universities run $50,000 to $80,000 or more annually.
  • Costs rise 4 to 6 percent per year on average, so a school that costs $30,000 today will cost significantly more when your child enrolls in a decade.
  • Saving 50 to 75 percent of projected costs is a realistic target for most families; the remainder typically comes from student loans, scholarships, or your child's earnings.
  • A 529 plan offers tax advantages and lets you save without affecting your child's financial aid may be able to access as much as keeping money in the child's name would.
  • Starting to save when your child is young gives compound growth time to work, but starting late is better than not saving at all.

Estimating what college will cost when your child enrolls

Begin by picking a school or school type you think your child might attend. Use the College Board's net price calculator on the school's website, or search "college cost calculator" to find tools that let you enter your income and assets. These tools show you the sticker price (tuition, fees, room, board) and estimate what you might actually pay after grants.

Next, account for inflation. College costs have risen 4 to 6 percent annually over the past decade. If your child is 10 years old and you are looking at a school that costs $30,000 per year today, multiply $30,000 by 1.05 raised to the 10th power (the number of years until enrollment). That gives you roughly $48,900 per year in today's dollars. Multiply by four years for a rough total of $195,600.

If your child is younger or older, adjust the exponent. If they are 5 years old, use 13 years (13 years until age 18). If they are 15, use 3 years. This calculation is approximate—actual inflation may differ—but it prevents you from planning based on today's prices.

Setting a savings target based on your household situation

Most families cannot save 100 percent of college costs. A realistic target is 50 to 75 percent, with the remainder covered by loans, scholarships, your child's work-study earnings, or your out-of-pocket spending when the time comes. If your projected four-year cost is $195,600 and you aim to save 60 percent, your target is roughly $117,360.

Divide that by the number of years until your child enrolls. If you have 10 years, you need to save about $11,736 per year, or $978 per month. If that feels unaffordable, lower your target percentage (plan to cover more with loans) or reconsider the school type (community college for the first two years costs far less).

If you have less than five years until your child starts college, your monthly target will be higher because you have less time for compound growth. In that case, focus on what you can realistically save rather than trying to hit a percentage. Even $200 per month over three years is $7,200 that reduces what your child needs to borrow.

Using a 529 plan to save with tax advantages

A 529 plan is a state-sponsored savings account designed for education. Money you contribute grows tax-free, and withdrawals for college tuition, fees, room, board, and books are not taxed. You can open one through your state's plan or through most brokerages.

The account is in your name (the parent or grandparent), not your child's. This matters for financial aid: money in a parent-owned 529 counts less heavily against your child's aid may be able to access than money in the child's own savings account would. Contributions are not tax-deductible federally, but some states offer a state income tax deduction for contributions to their own plan—check your state's rules.

You can invest the money in age-based portfolios (which shift from stocks to bonds as your child gets closer to college) or pick your own mix of funds. If your child does not attend college, you can transfer the money to another family member's 529 or withdraw it (you pay taxes on the growth, plus a 10 percent penalty, but not on what you contributed).

Deciding between stocks and bonds based on your timeline

If your child is 10 or more years from college, you have time to recover from market downturns, so a portfolio weighted toward stock funds (60 to 80 percent stocks) is reasonable. If they are 5 to 10 years away, a balanced mix (50 percent stocks, 50 percent bonds) spreads the risk. If they are 3 years or closer, shift toward bonds and stable value funds to protect what you have saved.

These are general guidelines, not rules. Your comfort with risk and your overall financial situation matter. If you have other savings and a stable income, you can afford to take more risk. If this is your only college fund and you cannot afford to lose it, be more conservative.

Covering the gap with loans, scholarships, and your child's contribution

Even if you save 60 or 70 percent of costs, your child will likely need to borrow or earn part of the remainder. Federal student loans (Stafford loans) have fixed interest rates and income-driven repayment options. Parent PLUS loans let you borrow in your own name. Private loans exist but typically carry higher rates and fewer protections.

Scholarships—merit-based (for grades or test scores) and need-based (for financial need)—can reduce what your child needs to borrow. Your child can also work part-time during school or full-time during summers. Many colleges expect students to contribute $2,000 to $3,000 per year from work; this is factored into financial aid calculations.

Community college for the first two years is a legitimate path that cuts costs roughly in half. Your child earns an associate degree or completes general education requirements at lower cost, then transfers to a four-year university for the final two years. This works well if your child is undecided about their major or if the university they want to attend is very expensive.

Adjusting your plan if you are starting late or have limited income

If your child is already in high school or you have limited income to save, focus on what you can realistically set aside rather than chasing a percentage target. Even $100 per month for three years is $3,600 that reduces borrowing. Open a 529 if you can, but a regular savings account works too.

Research schools within your state system first—in-state tuition is significantly lower than out-of-state or private options. Look into your state's public universities and community colleges. Many states also offer tuition prepayment plans that let you lock in today's prices; these can be useful if you expect costs to rise sharply, though they reduce flexibility if your child's plans change.

Talk to your child about the financial reality early. If you cannot save the full amount, they should understand that loans or scholarships will be part of the picture. This conversation helps them make informed choices about school type and major, and it sets realistic expectations.

Frequently Asked Questions

What if I have not saved anything and my child starts college next year?

You still have options. Your child can attend community college for two years (much lower cost), work part-time, take out federal student loans, and transfer to a four-year university later. You can also contribute what you can afford out of current income when the time comes. Many families do a combination of all three.

Does saving in a 529 hurt my child's chances of getting financial aid?

Parent-owned 529 plans count as parental assets and affect aid less than money in your child's name would. However, they do reduce aid may be able to access somewhat. The trade-off is worth it for most families because the tax savings on growth outweigh the aid reduction. Run the numbers using a college's net price calculator to see the effect for a specific school.

Should I save for college or retirement first?

Retirement comes first. You cannot borrow for retirement the way you can for college. Max out employer 401(k) matches and build an emergency fund before aggressively saving for college. Once those are solid, direct extra money toward a 529.

Can I use a 529 for private K-12 school or trade school?

Yes. 529 funds can be used for private elementary and high school tuition (up to $35,000 per year as of 2024, though this may change), and for trade or vocational school programs. Check your plan's rules and your state's current limits.

What happens to a 529 if my child gets a full scholarship?

You can withdraw the amount of the scholarship without the 10 percent penalty (though you pay taxes on the earnings portion). Any remaining balance stays in the account and can be transferred to another family member, used for graduate school, or withdrawn with the penalty.