College Planning

What Do We Need to Save for College?

The simple answer is as much as you can afford. But remember there are lots of options to help. The important thing is to start now by building a plan and doing what you can.

How Much to Save for Your Child's College

Many parents have questions about how soon they should start contributing money towards their child's college savings plan, and how much they should set aside each month. Before we get to that math, there are a few questions you need to answer first.

How much do you intend to contribute to your child's college savings plan?

Do you intend to cover your child's full cost of tuition, room, and board? If not, what can you afford to contribute each year? Is a private college or university education off the table? According to the 2016 edition of Sallie Mae's annual study “ How America Pays for College”, parents' savings and income only accounted for 30 percent of the sources used to pay for college. If you are unable to help finance your child's full education in your college saving plan, it's important to be open with them about financial aid options.

How much will college cost?

According to Fox Business, the four year costs of tuition, room and board, and books at an in-state public university for a child born in 2014, are expected to add up to $196,496 (with an annual 5% increase), and the costs of a private institution would be close to double that figure. There are several handy online tools available that you can use to calculate your child's future cost of tuition, as well as the amount of money you will need to start saving per month to cover the amount you intend to contribute. We recommend The College Board's College Cost Calculator and'sWorld's Simplest College Cost Calculator.

Does that magic college savings number work for you?

The sticker shock you're probably suffering from is normal. If the numbers you see just aren't feasible, then it's time to investigate other financial aid opportunities. Student loans for college are always a viable option for both students and their parents, and of course, there are a wide range of scholarships opportunities available. You can learn more about the different types of financial aid and how student loans work in the Protective Learning Center.

Should you start saving money for college now?

The short answer is yes. According to a 2013 article from the U.S. News & World Report, even parents dedicating as little as $100 a month to a 529 college plan with an 8 percent interest rate from the time their baby is born, would have enough to cover a third of their child's college education in 18 years. The sooner you can contribute to your child's college savings, the longer you'll allow any returns to accrue, and the more money you could have to contribute to your child's academic career. (Here's a handy primer on the 529 College Plan.)

If you aim to cover as much of your child's college expenses with your college saving plan as you possibly can, it's important to start now. If you can't afford to set anything aside at the moment, be aware that the longer you wait to start saving, the more you'll have to save per month in the future.

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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How Much Should You Save for College?

As a parent, the question “ How much should you save for college?” can be a bit of a mystery. Like anything else, saving for a child's college education just takes a bit of planning. Despite what some might have you believe, the question “How much should you save for college?” can have an easy answer. Start by doing the math now, so that you can build a savings strategy early. For more information, visit the Protective learning center.