How Much to Save for College by Your Child's Age

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You've been saving for college—but is it really enough? Here's how much you should have saved for each year of your child's life, based on their goals.

Across the nation, students and their parents struggle with the questions about paying for college. How much will they need, and where will they get those funds?

Very few families have the option of cash flowing freely to fund a student’s college education. That means advanced planning can make a world of difference when that student enters the school selection process. While grants and scholarships would be a cherry on top, families can’t predict how much aid will be available when their child is born.

Knowing how much to save for college and creating a dedicated savings plan can set your family on a path towards an affordable education — without the impending anxiety of settling for large amounts of student loan debt.

But how much is enough?

While there are no concrete answers, let’s break down a simple way to set your own college savings goals and how you might get there.

Figure the Cost of College

The cost of a college education varies with several factors. Will you be paying for a public or private four-year school or community college? Will you pay in-state tuition? It is tough to know how much to save for college until your child gets closer to college age. That’s especially true if you begin this savings journey when your child is born, so let’s rely on averages.

In this case, we will assume your student is attending a North Carolina public four-year state school and paying in-state tuition.

The average tuition for that scenario is around $7,000 per school year. Of course, tuition is only part of the equation. Adding in fees, room and board, textbooks, and other costs, the average annual costs for a student living on campus at a four-year public college come to about $20,000 per year.

Of course, there could always be additional expenses. For the general concept, though, let’s use $20,000 per year as the target.

Start Saving Accordingly

Four years of $20,000 is no small expense. That figure — especially the total $80,000 price tag — can be truly frightening when first introduced. But split into smaller chunks of a savings-per-year concept, it could start to appear doable. That’s how we’ll break down smaller targets as your child gets older.

Essentially, that means saving $80,000 in 18 years, coming out to a goal of saving about $4,400 per year towards that college fund.

Using those metrics, you could create a set of benchmarks as your child gets older.

  • Plan to have about $22,000 saved by the time your child turns 5.
  • Plan to have about $44,000 saved by the time your child turns 10.
  • Plan to have about $66,000 saved by the time your child turns 15.

Meeting these marks would require aggressive saving and may not be feasible for some families. Maybe the goal could be covering tuition only, which would cut these targets by more than half. No matter how you approach the process, setting targets like these will give you a shot at meeting your college education savings goals. They can also motivate you to jumpstart your saving efforts.

529 or UGMA/UTMA Planning

Though saving for college seems straightforward, it can be beneficial to research the various saving opportunities at your disposal. You don’t have to simply pile up money in a bank account — though that’s an option.

The most common college savings program is a 529 plan, which is generally a way to receive tax advantages by investing your savings for education expenses. Another is the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts, which allow you to invest and save on behalf of your child until they are old enough to gain control of those funds.

Be Brave and Start Now

Of course, the above calculations are all simplified and very general. It’s difficult to predict exactly how much money will be necessary to cover college expenses, especially so far in advance. Use the NC 529 College Savings Calculator to adjust the above figures based on what makes the most sense for your situation. As long as you find the best ways to save for college, you can get on the right track.

While saving to pay the full amount of college expenses is an ambitious goal, it is essential to at least minimize the amount of aid needed to fill the gaps leftover. By aggressively pursuing grants and scholarships, and starting a savings strategy, families will come closer to college savings goals, avoiding the long-term stress faced by many with large student loan balances.

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