How Much Should I Be Saving For College?

With college costs increasing at twice the rate of inflation, it is important to start saving early. Interest working for you now in a regular savings program is much better than having interest work against you in the future in the form of education loans. Knowing how much to save for your kid’s college is an important place to start. Use our college savings calculator for the projected cost of college and to determine how much you should be saving on a regular basis.



Using the College Education Savings Calculator

Our calculator can help you determine how much to save for your kids’ college. The savings is more important than you might realize. If you have kids now, even state schools will likely cost more than $100,000 by the time they are ready to graduate from high school. While loans and scholarships are an option, your children may not qualify for enough of both to get them through school. And trying to fund an entire higher education with loans can result in your kids starting their working lives with unreasonable debt levels. In addition to using our calculator, consider the following questions as you start to save for your child’s degree:

  • How much time do I have? The sooner you start saving, the more time you have to take advantage of compound interest, and the less money you will need to put aside each month.
  • How will I be investing? A 529 account is designed specifically to help you save for college. Consider these and other savings and investment vehicles to see which ones help you save the most with the best tax advantages and interest rates.
  • How much will I need? If you have more than one child, you may need to save money to get a few kids through college at the same time. Also, consider whether your children may wish to go to private or state schools and what they want to study. A child living at home and attending a state college for four years will need very different financial support than a child attending a private college out of state and studying for years to be a doctor.
  • What is my bigger financial picture? If you have debt, you may need a repayment plan so you’re not juggling significant consumer debt and children at college. You also will want to have a solid retirement plan in place so you have money for that expense, too, which may come at the same time as your children are in college or shortly thereafter. Consider, too, whether your tax bracket may qualify your children for bursaries or financial aid. This can help you plan for college costs.
  • What more can I do to help my child afford college? Work with your child to keep their grades and test scores as high as possible so they qualify for scholarships and AP classes, which defray the costs of a higher education. Encourage your child to apply for scholarships as early as possible. Some are even available before high school. Learn about the financial aid process and get ready to apply well in advance of deadlines. If your child is in high school, they may be able to get a part-time job to come up with some college savings of their own, too. Have regular, early conversations with guidance counselors about college so you can stay on track.

Be sure to use the calculators at Money Help Center to gain control of your household budget. Our free calculators may help you find ways to save more for school.