Diapers to diplomas: How much to save for college?

How to start saving now for tuition tomorrow.

Eighteen years can fly by like that. While it might feel as though your newborn will stay snuggled in your arms forever, they will one day head off to college. If you know how much to save for college (and by when), you can spend less time stressing about finances and more time enjoying parenthood.

Why start now?

The total cost of college per year has been steadily rising for more than 2 decades. And in 18 years—if current trends hold—college will cost 207% more than it did 20 years ago.1 For the 2015–2016 academic year, the most recent year for which data is available, the average tuition at 4-year public colleges was $23,300 and the average tuition at private 4-year colleges was $47,400.2 Here's how that stacks up against past (and future) tuition rates:

  • The average college tuition in 1970* was $2,0133

  • The average college tuition in 2015* was $33,7672

  • The potential college tuition in 2035* could be $103,665

    *Tuition and room and board in today's dollars

This means the answer to “when to start saving for college” is now. Starting early means you have time to break the cost of tuition into smaller savings goals. If you can save $5,760 by each birthday (or $480 per month), you can have $103,665 by the time your child turns 18. To break those costs down further:

  • $28,800 by the time your child is 5 years old

  • $57,600 by the time your child is 10 years old

  • $86,400 by the time your child is 15 years old

How parents can save for college

If you’re now asking yourself how you’ll save enough for college, there are steps to make it easier. Although those numbers might seem like a tough goal to hit in just 18 years, there are other ways to lower your out-of-pocket costs for your child’s education without skimping on quality.

More than 80% of U.S. students receive some form of financial aid (scholarships, grants and other aid), which means the amount you save for college may go further than you think.4 Your children can also take advantage of dual-credit programs in high school, meaning they can earn college credit for some high school courses. CLEP tests, which allow a student to test out of some college courses, and community colleges are additional ways to lower the overall cost of their education.

Common savings options

Funds in 529 savings plans can help you earn more interest on what you are able to put aside, and there are tax breaks available to help offset the cost too. Even just putting what you can into a high interest savings account each month gives you more money to pay for tuition later. When it comes to savings accounts, typical options include:

  • Money market accounts: These accounts generally earn a higher interest rate than standard savings accounts. Your money stays insured by the FDIC, so you can sit back and watch it grow.

  • Kids savings account: Get your kids involved in saving for their education by teaching them to save early and often. Opening a savings account for them helps set them up with great lifelong saving habits.

  • Certificate of deposit (CD): Putting money into a CD locks in a set interest rate for a period of time. However, early withdrawal fees do apply, so make sure you’re able to leave that money alone.

By understanding common savings options, the answer to “how much do I need to save for college” becomes a more manageable number.

You want your kids to reach their dreams, and if you start to save while they’re young, you can help make that a reality when it comes to their education. Setting aside money in the bank today can help them achieve financial freedom tomorrow.


This site is for educational purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

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