How much should you really save for your kid’s college?

If you’ve ever plugged your baby’s age into a college calculator and seen a six-figure number pop up, you’re not alone if your first reaction was, “Well, I’ve already failed.”

Those projections can be terrifying: hundreds of thousands of dollars for four years of college, especially if you have more than one child. But here’s the truth: you do not have to (and usually should not) aim to prepay 100% of a hypothetical future college bill.

Let’s walk through how to set a realistic college savings target, what that looks like per month, how 529 plans actually work, and how to prioritize college without putting your own future on life support.

Start with the real question: how much of college do you want to fund?

Most parents start with, “How do I save enough for college?” I think a better question is, “How much of college am I choosing to fund?”

That shift matters. It takes you out of panic mode and into planning mode.

You don’t control:

• Exactly what college will cost in 18 years
• Where your child will want to go
• Scholarships, grants, and future laws

You do control:

• How much you’re willing and able to contribute
• When you start
• What account you use
• How well you protect your own financial foundation

So instead of asking, “How do I save $220,000?” try, “Do I want to cover 25%, 50%, 75%, or 100% of a reasonable projected cost?”

What college actually costs today (and why sticker price is misleading)

To build a plan, we need a starting point. Let’s look at current averages from the College Board for a full-time student in 2025–2026:

Public in-state 4-year university (average)

• Tuition and fees: about $11,950 per year
• Total budget (tuition + housing, food, books, transportation, etc.): about $31,000 per year
• Four-year total at today’s prices: roughly $124,000

Private nonprofit 4-year university (average)

• Tuition and fees: about $45,000 per year
• Total budget: about $65,470 per year
• Four-year total at today’s prices: roughly $262,000

Those are published prices. The sticker price is not what most families actually pay.

After grants and tax benefits, the College Board estimates that first-time full-time students at public four-year schools pay an average of only about $2,300 in net tuition and fees. Families still have to cover living costs, but it’s a reminder: don’t take the $65,000 private-school sticker, multiply by four, and assume that’s your bill.

This is why I like to plan around a reasonable average and a percentage you want to cover, not the scariest possible number.

Projecting costs into the future (without freaking out)

Now for the part that makes everyone sweat: the future. Nobody knows exactly what college will cost 18 years from now. So we use an assumption and adjust over time.

Let’s assume college costs rise by about 3% per year. Starting from today’s average public in-state total budget (~$30,990):

• Freshman year in 18 years: about $52,758
• Sophomore year: about $54,341
• Junior year: about $55,971
• Senior year: about $57,651
• Projected four-year total: about $220,721

Do the same exercise for the average private nonprofit budget, and you land somewhere around the low-to-mid $400,000s over four years.

Deep breath: these are projected published budgets. They’re before future grants, scholarships, tax credits, discounts, and any choices your family might make (like community college first, living at home, or in-state vs. out-of-state).

In fact, from 2015 to 2025, inflation-adjusted tuition and fees at public four-year in-state schools actually fell about 7%. So these projections are planning tools, not guarantees.

Choosing your target: 25%, 50%, 75%, or 100%?

Let’s use that projected public-school four-year cost of about $220,721 and decide how much of that you want to own.

• 25% of costs: about $55,180
• 50% of costs: about $110,361
• 75% of costs: about $165,541
• 100% of costs: about $220,721

There is no law that says you must have four full years prepaid in an account the day your child graduates high school.

Your share could be a mix of:

• What you save and invest before college
• What you cash flow from your income while they’re in school
• What your child contributes (work, savings)
• Scholarships and grants
• Help from other family members
• Possibly some carefully chosen student loans

I like to think of college as a shared funding project, not a bill you alone must cover in full.

What your monthly savings might look like

Now to the question everyone really cares about: what does this mean per month?

Using Vanguard’s math and assuming a 5% annual return on investments:

Saving for a $100,000 goal

• Start at birth: about $285 per month
• Start at age 5: about $454 per month
• Start at age 10: about $846 per month

Saving for a $200,000 goal

• Start at birth: about $570 per month
• Start at age 10: about $1,692 per month

Notice what’s happening: waiting 10 years doesn’t just double the monthly amount—it can nearly triple it. That’s the cost of giving compounding less time to work.

Another way to see it: if you invest $250 per month for 18 years at 5% (contributing at the end of each month):

• You put in: $54,000
• Investment growth adds roughly: $33,300
• Total: about $87,300

The numbers will never be perfect—returns aren’t guaranteed, and your investments should become more conservative as college gets closer—but the principle stands: time does a lot of the heavy lifting.

And if $285 per month isn’t possible right now, that doesn’t mean you do nothing. Start with $25, $50, or $100 and increase it as your income grows. The worst college savings plan isn’t starting small—it’s waiting until it’s too late.

Why I usually like 529 plans for college savings

If you’re pretty sure the money is for education, a 529 plan is often a great starting point.

Here’s the basic idea:

• You invest money in a 529 plan (usually in mutual funds or age-based portfolios).
• The money grows tax-deferred.
• If you use it for qualified education expenses, withdrawals are generally federal income tax-free.
• Your state may also give you a tax deduction, credit, or other benefit for contributions, depending on where you live.

Compare that to a regular taxable brokerage account, where dividends and realized gains can trigger taxes along the way.

Control and financial aid treatment

Another reason I like parent-owned 529 plans over custodial accounts (like UTMA/UGMA) for college money is control.

• A custodial account is a gift to your child. When they reach the age of majority in your state, that money is legally theirs. You may think of it as “college money”; they may think of it as “used sports car money.” Legally, they win.
• A parent-owned 529 stays under the parent’s control. The child is the beneficiary, but not the owner.

On the financial aid side, under the current federal FAFSA rules:

• Assets owned directly by the dependent student are assessed at up to 20%.
• Parent assets (including a parent-owned 529) are assessed under a much more favorable formula, often summarized as “up to about 5.64%,” though the real calculation is more complex.

The short version: if I’m saving specifically for college, I’d generally rather have those assets in a parent-owned 529 than in my kid’s name.

“But what if my kid doesn’t go to college?”

This is the biggest worry I hear about 529 plans. The good news: 529s are a lot more flexible than they used to be.

What counts as a qualified education expense?

529 money can be used for:

• Tuition and required fees
• Books, supplies, and certain equipment
• Certain room and board costs for students enrolled at least half-time
• Registered apprenticeship programs and some other postsecondary credentialing programs

On top of that, federal law now allows:

• Up to $20,000 per beneficiary per year (starting in 2026, under current rules) for qualifying K–12 expenses, up from the previous $10,000 limit
• Up to $10,000 lifetime per person for qualified student loan repayment

You can also usually change the beneficiary to another qualifying family member (a sibling, cousin, even yourself) without triggering taxes.

The Roth IRA rollover option

One of the most interesting newer rules: subject to several conditions, you can potentially roll unused 529 money into a Roth IRA for the beneficiary.

Key limits and rules (under current law):

• Lifetime rollover limit: $35,000 per beneficiary
• The 529 must have been open for at least 15 years
• Recent contributions (within the last 5 years) generally can’t be rolled over
• The annual IRA contribution limit still applies

This is not a hack to turn every 529 into a stealth Roth IRA strategy, but it does reduce the risk of being slightly overfunded. You have more exit ramps than before.

Don’t sacrifice your retirement to pay for college

Now for the part I feel the strongest about: I would not sacrifice my own retirement to fully fund my kids’ college.

If you’re:

• Carrying high-interest credit card debt
• Missing out on an employer 401(k) match
• Without an emergency fund
• Way behind on your own retirement savings

Then sending hundreds of dollars a month to a 529 plan is probably the wrong move.

Your child has options for college:

• Scholarships and grants
• Community college for the first two years
• In-state public universities
• Living at home
• Work-study or part-time work
• Reasonable federal student loans (ideally minimized, but they do exist)

What doesn’t exist: a federal loan program for a 68-year-old who spent their retirement savings putting three kids through private school.

Ironically, draining yourself financially for your kids’ education can end up becoming a future burden on them—if you can’t support yourself later in life. I’d rather promise a realistic amount and actually deliver it than promise “any school, anywhere” and spend 18 years chasing a moving target.

How I’d build a college savings plan from scratch

If I were starting this plan today, here’s how I’d approach it step by step:

1. Secure my own foundation first.
   • Pay off high-interest debt (like credit cards)
   • Build an emergency fund
   • Capture any employer retirement match
   • Make sure I’m at least on a reasonable path for retirement
2. Decide my role in college funding.
   • Am I aiming for 25%, 50%, 75%, or 100% of an in-state public school?
   • What’s a number that won’t crush the rest of my goals?
3. Pick an account.
   • If education is the clear goal, open a 529 plan in my name with my child as beneficiary.
   • Choose an age-based or broadly diversified investment option.
4. Automate a monthly amount.
   • Start with what I can genuinely afford now—even if it’s small.
   • Increase contributions when income rises or other expenses drop (like daycare ending).
5. Revisit over time.
   • Check in every year or two: has my income changed? Has my goal changed?
   • Adjust the plan rather than obsessing over a perfect forecast.

I also keep in the back of my mind that college may look very different 10–20 years from now. The ROI of certain degrees is already questionable, and new paths to careers are emerging all the time. My job is to give my kids options and stability, not to perfectly predict the future.

Where college savings fits in your bigger money picture

College is just one piece of your financial life. It has to sit alongside:

• Your emergency fund
• Debt payoff (especially high-interest debt)
• Retirement savings and long-term investing
• Everyday expenses and shorter-term goals

If you’re still working on the basics—like building savings or getting rid of expensive debt—it can help to focus on those first. I have a separate guide on finding a solid high-yield savings account if you’re building up cash reserves, and another on tackling debt in a realistic way that isn’t just social media hype.

Once that foundation is in place, adding college savings becomes much less stressful—and a lot more sustainable.

The bottom line

You don’t need to save $400,000 per child to be a good parent. You don’t need to have everything figured out the year your baby is born. And you definitely don’t need to wreck your own retirement in the name of paying for a degree that may or may not be worth it.

Pick a reasonable share of college you’re willing to cover, use a 529 plan if it fits your situation, start with an amount you can truly afford, and let time do as much of the heavy lifting as possible. Then keep coming back to the plan as your life—and your kid—grows.