How much should I save for college

Introduction: The college savings challenge

Deciding how much you should save for college can feel overwhelming, but a common benchmark can provide a clear starting point. Many financial advisors recommend the 1/3 rule: aim to save about one-third of projected college costs. For a public four-year university, this could mean a total savings goal of $30,000 to $40,000, or about $140 to $185 per month if you start when a student is born. This approach helps balance family budgeting needs with the student’s future debt, creating a manageable path forward.

While that target may seem high, it’s important to remember that most families use a mix of funding sources to cover expenses. Savings are just one piece of the puzzle, alongside financial aid, scholarships, and student loans. The goal isn’t necessarily to cover 100% of the costs from a savings account but to reduce the amount that needs to be borrowed. According to Mark Kantrowitz, financial aid expert, “Every dollar you save is a dollar less you have to borrow.” This mindset shifts the focus from an intimidating total to the powerful impact of consistent saving over time.

This guide is designed to help you create a personalized and realistic savings strategy. We’ll walk you through everything you need to know, from estimating expenses to setting achievable goals. You will learn how to:

• Understand today’s average college costs
• Project future costs based on education inflation
• Use savings benchmarks beyond the 1/3 rule
• Calculate a savings target tailored to your family’s finances
• Adjust your plan as your circumstances change

Before you can set a savings goal, you need a clear picture of the costs you’re planning for. Let’s start by breaking down the current price of a college education.

Current college costs: Understanding your target

To set a meaningful savings goal, you first need to understand the full cost of attendance, which includes more than just tuition. The total price tag—often called the “sticker price”—covers tuition and fees, room and board, books and supplies, transportation, and other personal expenses. These costs can vary dramatically depending on the type of institution and its location.

According to the College Board’s Trends in College Pricing report, the average estimated budgets for full-time undergraduate students for the 2025-2026 academic year are $19,360 for public two-year institutions, $28,040 for public four-year in-state, $45,930 for public four-year out-of-state, and $60,110 for private nonprofit four-year colleges. While these figures can seem high, they represent the starting point for your calculations.

*Other expenses include books, supplies, transportation, and personal expenses. Source: College Board, Trends in College Pricing 2024 (projected for 2025-2026).

Location also plays a significant role in the total cost. For example, public four-year in-state costs are generally highest in the Northeast and lowest in the South and Midwest. It’s important to research costs specific to the state or region where a student might attend college.

However, it’s crucial to remember that very few families pay the full sticker price. The net price—what you actually pay after grants, scholarships, and educational tax benefits are subtracted—is almost always lower. According to the College Board, families on average cover about half of the published price out-of-pocket or with loans. Understanding this difference is key to setting a realistic goal and avoiding discouragement from high initial figures.

While these current costs provide a solid foundation for your plan, they are only a snapshot. College costs have historically risen faster than general inflation. To create an accurate savings target, you need to project what these expenses will look like when it’s time for enrollment.

Future cost projections: Planning for education inflation

Because college costs have historically outpaced standard inflation, using today’s prices to set a long-term goal can leave you underfunded. According to the College Board’s Trends in College Pricing reports, the average rate of increase for tuition and fees has been between 5% and 6% annually over the last decade. To plan effectively, you must project what the price tag will be when a student is ready to enroll. You can create a rough estimate using a simple formula: Current Annual Cost × (1.05)^{Years Until College}. This calculation helps turn today’s prices into a more realistic future target.

The table below projects the estimated cost for one year of college in the future, based on a student’s current age. It uses the 2025-2026 costs from the previous section as a baseline and assumes a 5% annual cost increase to illustrate the impact of education inflation.

Source: College Finance calculations based on College Board 2025-2026 costs. Methodology: 5% annual inflation.

These projections can be daunting, but they are a planning tool, not a prediction set in stone. Many financial planners suggest using a more conservative inflation rate of 4% for long-term planning, as historical rates may not continue indefinitely. It’s also important to remember that you don’t necessarily need to save for the full four-year cost. Many families set a goal to cover two or three years of expenses with savings, planning to use other resources like current income and financial aid for the remaining years. This approach can make the total savings target feel much more attainable and prevent planning paralysis.

Seeing these future numbers helps frame the scale of the challenge. Now that you have a realistic estimate of future costs, let’s translate these projections into a specific savings goal using established benchmarks and rules of thumb.

The 1/3 rule and other savings benchmarks

With a clearer picture of future college costs, you can use established benchmarks to translate those large numbers into a concrete savings goal. These rules of thumb are not rigid requirements but helpful starting points for creating a plan that works for your family’s financial situation. They provide a framework for balancing savings, current income, and borrowing.

One of the most widely cited strategies is the 1/3 rule, which divides the total projected cost of college into three parts. The goal is to save one-third of the cost, pay another third from current income and financial aid while the student is enrolled, and cover the final third with student loans. This approach makes the total cost less intimidating by breaking it down into manageable components. It also acknowledges that borrowing is a common and often necessary part of the college funding equation. According to Sandy Baum, education policy expert, “Borrowing is not inherently bad; the question is how much, and under what terms.”

Beyond the 1/3 rule, several other benchmarks can help you gauge your progress and set your target:

• The 2K Rule: This is a simple, straightforward guideline suggesting you save $2,000 per year for each student you’re saving for. Over 18 years, this would result in $36,000 in savings, plus investment growth.
• Age-Based Milestones: This approach sets savings targets based on a student’s age. A common target is to have saved approximately one year of a public college’s tuition by age 10. For example, you might aim for $5,000 by age 5, $15,000 by age 10, and $30,000 by age 15.
• Income-Based Savings: Some advisors recommend saving a percentage of your gross income. For instance, you might aim to save 10% of your income if you start when a student is born, or 15% if you begin when they are five years old.

While these benchmarks are useful, it’s also helpful to see what families are actually saving. According to Sallie Mae’s How America Pays for College 2024 report, the average amount families have saved for college is $25,000, with savings covering about 11% of total college costs. This reinforces that savings are just one part of a larger funding strategy.

These rules provide excellent reference points, but they don’t account for your unique financial circumstances, risk tolerance, or specific college goals. The next step is to move beyond these general guidelines and calculate a savings target tailored specifically to your family.

Calculate your personal savings target

While benchmarks provide a solid starting point, calculating a savings target based on your family’s specific circumstances will give you the most accurate and motivating goal. You can create a personalized plan by working through a few key steps that transform big-picture numbers into a clear monthly action item.

Follow this process to create a tailored savings target. This framework helps you move from broad estimates to a specific number that reflects your goals and resources.

1. Select a College Type and Project the Cost: Using the tables in the previous sections, choose a target school type (e.g., public four-year in-state). Multiply the projected one-year cost by four to get a total estimated cost of attendance. For example, a future one-year cost of $67,486 for an in-state school becomes a four-year target of $269,944.
2. Estimate Your Financial Aid and Contributions: This is the most variable part of the calculation. Start by using the Net Price Calculator on a prospective college’s website. This tool provides a personalized estimate of what you might pay after grants and scholarships. You should also consider your estimated Student Aid Index (SAI) from the FAFSA, as a lower SAI generally leads to more need-based aid. Subtract any expected scholarships, grants, and potential contributions from grandparents or other family members from your total projected cost.
3. Apply Your Savings Rule: Decide what portion of the remaining cost you want to cover with savings. If you follow the 1/3 rule, divide your net cost by three. For our example, if the net cost after aid is $150,000, your savings goal would be $50,000.
4. Calculate Your Monthly Savings Amount: Divide your total savings goal by the number of months remaining until the student enrolls in college. This final number is your monthly savings target.

To make this final step easier, the table below shows the monthly savings needed to reach common goals depending on when you start. This illustrates the powerful advantage of starting early.

Methodology: Calculations are based on principal contributions only and do not include potential investment growth.

Using a dedicated college savings vehicle like a 529 plan can help you reach these goals more easily. These accounts offer tax-deferred growth and tax-free withdrawals for qualified education expenses. Many states also offer a state income tax deduction or credit for contributions, which can stretch your savings even further.

This personalized target gives you a clear destination. However, life is dynamic, and your financial situation can change. The next step is knowing when and how to adjust your plan along the way.

Realistic savings goals by income level

Your personal savings target is a powerful tool, but it must also be realistic for your family’s budget. Your household income will largely determine your capacity to save and will also influence the amount of financial aid you can expect to receive. The key is to find a balance that works for you, remembering that any amount you save is a step in the right direction. Below are some general guidelines for setting achievable goals based on different income levels.

For families in this income range, the focus should be on maximizing financial aid. Students will likely qualify for significant need-based aid, such as federal Pell Grants. The primary goal of saving is to cover remaining gaps and reduce the need for loans. A realistic savings target is often between $50 to $100 per month. This amount can help cover books, supplies, or a portion of a student’s living expenses. Strategies often include starting at a community college to lower overall costs or utilizing state-specific grant programs.

Families in this middle-income bracket may qualify for some financial aid, but savings play a more critical role in bridging the gap between aid and total cost. Aiming to save $150 to $300 per month is a common and achievable goal. This level of savings, especially if started early in a 529 plan, can cover a significant portion of tuition at an in-state public university. The funding strategy for this group is typically a balanced mix of savings, some financial aid, contributions from current income, and federal student loans.

As income increases, eligibility for need-based financial aid decreases significantly. Therefore, savings become a primary component of the college funding plan. A target of $300 to $500 per month is a practical goal. Families in this range often focus on maximizing contributions to tax-advantaged accounts like 529 plans to cover a large portion of costs at public universities (in-state or out-of-state) or to make private colleges more affordable. Loans may still be necessary, but substantial savings can keep them manageable.

At this income level, families are less likely to receive any need-based financial aid and are expected to cover most college costs. Savings goals often start at $500 per month and go up from there, depending on the target school. The objective may be to save the full four-year cost of a public university or a substantial part of a private university’s tuition. With a robust savings plan, families can provide students with a wider range of college choices while minimizing or even eliminating the need for student loans.

These income-based goals provide a realistic starting point. However, financial situations are not static. It’s important to have a plan for adjusting your savings target as your circumstances evolve over time.

When and how to adjust your savings target

A college savings plan is a living document, not a one-time calculation. It’s normal and expected to adjust your target over the years as life circumstances change. Regularly reviewing your plan—at least once a year or after a major life event—ensures it remains realistic and aligned with your family’s financial health. Flexibility is key to long-term success.

Several life events can impact your ability to save and may require you to reassess your goal:

• Changes in income: A new job, promotion, or job loss can significantly alter your savings capacity.
• Family changes: The birth of another child, marriage, or divorce can shift financial priorities and require a new savings strategy.
• Unexpected expenses or windfalls: Major medical bills might require you to pause contributions, while an inheritance or bonus could provide an opportunity to catch up.

If you’re starting late or have fallen behind, focus on high-impact strategies to make up ground. Consider setting up automatic annual increases to your contributions, even a small 2-3% bump can make a difference over time. Another effective technique is to allocate a portion of any financial windfalls, like tax refunds or work bonuses, directly to your college savings account. As college enrollment gets closer, you might also consider a period of more aggressive saving for the last few years if your budget allows.

Sometimes, the best adjustment isn’t to your savings but to the college plan itself. If your original target becomes unattainable, discussing alternative paths can significantly lower costs. This could mean starting at a community college for two years before transferring to a four-year university, choosing an in-state public school over a private or out-of-state institution, or focusing on schools known for generous merit aid.

While saving is important, it should never jeopardize your overall financial security. Be mindful of over-saving at the expense of funding your retirement accounts, maintaining an adequate emergency fund, or paying down high-interest debt.

Revisiting your savings goal is a key part of managing the entire college funding puzzle. Savings are a critical piece, but they work alongside other resources. Understanding how all these funding sources fit together is the next step in creating a comprehensive plan.

Balancing savings with other funding sources

Your savings goal is part of a larger funding strategy. It’s rare for one source to cover the entire cost of college. Most families use a combination of resources, often aiming for a balanced mix: one part from savings, one part from current income, and the final part from scholarships, grants, and student loans. This approach creates a manageable plan that doesn’t place an unsustainable burden on any single area.

This balanced approach is why you don’t need to save 100% of the projected cost. Contributions from current income can cover ongoing expenses, while a student’s earnings from a summer job or federal work-study can help with personal costs. Actively seeking scholarships and grants further reduces the amount you need to cover, lessening the reliance on savings and loans.

When a gap remains, financial aid provides a crucial safety net. Lower-income families may qualify for federal Pell Grants, which don’t need to be repaid. For most families, federal student loans are the first borrowing option. Every dollar you save directly reduces this need. For example, saving $10,000 can eliminate a loan of that amount, saving you $2,000 to $3,000 in interest over the life of the loan.

When federal aid isn’t enough, private student loans can fill the gap. It’s important to understand the differences: federal loans offer unique protections like income-driven repayment plans, while private loans require a credit check and often a cosigner. As reported by industry analyses as of October 2024, private loan rates typically range from 4.5% to 16% APR and can be fixed or variable. Many lenders let you prequalify with a soft credit pull that won’t affect your score. If you have a funding gap after exhausting other options, you can compare rates from 8+ lenders.

FAQ: Common college savings questions

The amount you should save monthly depends on your goal and when you start. To reach a $50,000 target for a public university, you might save around $230 per month if you start at birth. If you begin when a student is 10, that monthly amount increases to over $500 to reach the same goal, illustrating the benefit of starting early.

The 1/3 rule is a guideline that divides the total projected cost of college into three parts. The goal is to save one-third of the cost, pay another third from current income and financial aid while the student is in college, and cover the final third with student loans. This creates a balanced and less intimidating funding plan.

A common age-based milestone is to have saved the equivalent of one year’s tuition at a public, in-state university by the time a student is 10. Based on current costs, this would be a target of approximately $11,000 to $15,000. This benchmark helps ensure you are on track to meet a larger goal.

Yes, $20,000 is a significant amount that can make a major impact. It could cover nearly two full years of tuition and fees at an average in-state public university or the entire cost of an associate’s degree at a community college. This level of savings can substantially reduce the need for student loans.

It is possible to overfund a 529 plan. If the funds are not used for qualified education expenses, the earnings portion of withdrawals may be subject to income tax and a 10% penalty. It’s important to balance college savings with other financial priorities like retirement.

Saving $100 per month is a great start and makes a meaningful difference. Over 18 years, that amounts to $21,600 in principal alone. This can cover a significant portion of tuition at a public university and reduce future student loan debt by thousands of dollars.

Creating a college savings plan is a marathon, not a sprint. The goal isn’t to save every penny but to build a strategy that reduces future borrowing and provides financial flexibility. By starting today, you are taking a powerful step toward making college more affordable. Remember that every dollar saved is a dollar you won’t have to borrow later.

• Use the 1/3 rule as a guide: Aim to save about one-third of projected costs, which is often $30,000 to $40,000 for a public four-year college.
• Start early if you can: Reaching that goal could mean saving $140 to $185 per month if you begin when a student is born.
• Be realistic with your income: Even $50 to $100 per month makes a significant impact and is a great starting point.
• Remember it’s a team effort: Savings are just one part of the plan, which will likely include current income, financial aid, and student loans.
• Review and adjust: Revisit your savings target every few years to ensure it still fits your family’s financial situation.

Your next steps are simple: use the framework in this guide to calculate your personal target, open a tax-advantaged account like a 529 plan, and set up automatic contributions. If you find you still have a funding gap after maximizing savings and federal aid, private loans can help cover the difference. Trusted by 50,000+ students and families—see your prequalified private student loan rates now.

References and resources

Use these tools and resources to continue your research and build your savings plan. They provide detailed information and calculators to help you refine your strategy.

• College Savings Calculator: Use online tools to project future costs and calculate the monthly savings needed to reach your goal.
• Savingforcollege.com: A leading resource for comparing state 529 plans, understanding their benefits, and choosing the right one for your family.
• College Navigator: Research detailed cost of attendance information for specific colleges with this tool from the U.S. Department of Education.
• StudentAid.gov: The official source for all federal student aid information, including details on grants, loans, and the FAFSA process.
• College Finance Guides: Learn more about 529 savings plans and strategies for maximizing scholarships.