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How much to save for college: 4 common questions

College financial planning comes with some big questions—not least of all its looming, uncertain price tag. Get answers to four of the biggest ones so you can start preparing for your child’s education.


How much do I need to save for my child’s college fund?

The cost of college depends on several factors, such as:

  • Public or private: While public colleges receive funding from their states, private colleges rely heavily on donations and tuition, so tuition at private schools tends to be higher. In 2022-2023, the average cost of tuition and fees for in-state students at a public four-year college was $10,950, according to the College Board; a private four-year college was $39,400.
  • Special programs: Spending a semester abroad or pursuing special coursework during the summers are enriching opportunities. They come at a cost, however, such as airfare, program fees and extra housing and food expenses. Talk to your student now about whether they’re interested in taking part, because planning ahead for them can help put them more easily within reach.
  • Advanced study requirements: Pursuing a profession that requires a post-graduate degree means funding more schooling than just a four-year degree—either by you or your student, or a combination of both. It isn’t always practical for your graduate to work for a few years after college to fund that study, as in the case of a would-be physician. Understanding how much additional schooling is needed and what it could cost can help you both understand the size of your education savings goal.
  • Living expenses: It will be tough to get an idea of how much the costs of daily life could affect your college savings until your child has a short list of potential schools to attend, but it’s worth knowing about. Consider how different the costs can be for a student whose college is in a rural setting where on-campus housing is available for all four years but a car is a necessity. It’s quite different than for a campus in a major city where housing costs are likely to be much higher but a car isn’t needed.

Once you have considered these variables, estimate your tuition bill. Then consider how long you have until your child will be ready to attend college. Keep in mind that if you're starting early, costs are likely to be higher in 10 to 12 years.  However, more time means more opportunities to contribute to savings and more time for any investments to have the potential for growth. Less time means fewer opportunities to build up savings or any potential earnings from investments.


What can I do if I start saving for college late?

Look for ways to trim your budget so you can free up money to save. You can also ask friends and family to make contributions to your child’s college savings as birthday or holiday gifts. You might also encourage your teen to consider starting at a two-year community college, where they can earn credits at a fraction of the cost of a four-year college— and may be able to transfer those credits to a four-year school later on. While you’re spending less on tuition for those introductory, transferrable credits, the bulk of your child’s college fund can have the potential to continue growing.


How else can I pay for college if I can’t save enough?

Families pay for college by using several sources. In 2023, 50 percent of tuition payments came from parent and student income and savings, Sallie Mae notes. Other sources, including scholarships, grants and loans, help pay the rest. A variety of government and private sources, including the schools themselves, offer these.

Ask your child to meet with their high school guidance counselor about how to qualify for aid and any local scholarships. Cultural, professional and religious organizations in your area—and perhaps even your employer—may offer aid that you weren’t aware of. And if you and your child have started looking at schools, contact each school’s financial aid offices to learn about resources and opportunities they might have.

Tip: The federal government awards about $120 billion in grants, work-study funds and low-interest loans each year. To tap into that aid, you must fill out a FAFSA—the Free Application for Federal Student Aid.


What is a 529 plan and how can it help me save for my child’s education?

A 529 education savings plan is a tax-advantaged account designed to help families put away money for future education expenses. 529 education savings plans generally offer a mix of investment options. In addition to offering the potential for tax-free growth, withdrawals from 529 plans, including any earnings, are free from federal tax, and potentially free from state and local tax when used for qualified higher education expenses such as tuition, room and board, computers, and books or supplies.1 Keep in mind that, as with any investment, a 529 can lose money.

Tip: Some states offer state tax deductions for contributions made to in-state plans; check with your state before choosing a plan.

Prepared with these answers, you and your child can start planning for college with the confidence that comes from knowing how to make good choices for the future—no matter how close that future may be.

  1. To be eligible for favorable tax treatment afforded to the earnings portion of a withdrawal from a Section 529 account, such withdrawal must be used for “qualified higher education expenses,” as defined in the Internal Revenue Code. The earnings portion of a withdrawal that is not used for such expenses is subject to federal income tax and may be subject to a 10% additional federal tax, as well as applicable state and local income taxes. The additional tax is waived under certain circumstances. Qualified higher education expenses include: tuition, fees, books, supplies and equipment required for enrollment or attendance of the beneficiary at an eligible educational institution, certain room and board expenses, special needs services incurred in connection with enrollment or attendance at an eligible educational institution, and computers or peripheral equipment, computer software, or internet access and related services that are to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible educational institution. The beneficiary must be attending an eligible educational institution at least half time for room and board expenses to be considered a qualified higher education expense, subject to limitations. Institutions must be eligible to participate in federal student financial aid programs to be eligible educational institutions. Some foreign institutions are eligible. You can also take a federal income tax-free distribution from a 529 account of up to $10,000 per calendar year per beneficiary from all 529 accounts to help pay for tuition at an elementary or secondary public, private or religious school. Qualified higher education expenses now include expenses for fees, books, supplies, and equipment required for the participation of a beneficiary in an apprenticeship program registered and certified with the Secretary of Labor under the National Apprenticeship Act and amounts paid as principal or interest on any qualified education loans of the beneficiary or sibling of the beneficiary, up to a lifetime maximum of $10,000 per individual. Distributions with respect to the loans of a sibling of the beneficiary will count towards the lifetime limit of the sibling, not the beneficiary. Such repayments may impact student loan interest deductibility. State tax treatment may vary for distributions to pay for tuition in connection with enrollment or attendance at an elementary or secondary public, private or religious school, apprenticeship expenses, and payment of qualified education loans.
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