The magic number for college savings

Joseph HurleyBy Joseph HurleyBy Savingforcollege.com
View as:  Full Article | Pages

Private 4-year school

The current published price of tuition, fees, room and board for the average four-year private college is $46,950. If costs continue to rise at 3.5% annually, the four-year sticker price of college for today's newborn will be about $355,151. Let's say your goal is to save 25% of this cost by the time your daughter is ready for college. If your 529 plan returns 6% annually, you can reach your goal with monthly contributions of $250.

Public 4-year in-state school

If your child attends the public university in your state, the cost drops further. Four years at the average public university starting in 18 years is projected to cost $157,114. Using the same 529 plan as in the example above, you would need to make monthly contributions of $111 to meet your goal of covering 25% of the total costs.

Don't mind the gap

Admittedly, the savings 'gap' in both cases is still large: around $266,000 for private school and $118,000 for public school. But before you start hyperventilating, consider that for most families these are 'worst case' cost projection (except perhaps for those headed to the Ivy League or equivalent). And you may feel that saving for the room and board portion is not appropriate since your child may decide to commute to school, or because much of that cost is incurred whether or not the child is attending college.

Find your 529 plan - Select your state below

Did you know that residents are not limited to investing in their own state's plan? Another state may offer a plan that performs better and has lower fees. Select your state below to see your state's plan and other options.

Find a 529 plan in

Select your state below

AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY DC

Find a 529 Plan. Select your state below.

Did you know that residents are not limited to investing in their own state’s plan? Another state may offer a plan that performs better and has lower fees. Select your state below to see your state’s plan and other options.


Sticker price versus net price

The College Board finds that the 'net price' at the average private college in 2017-18 was about $20,210 less than the published price. The difference comes from institutional grants and federal grants and tax benefits. If we adjust the numbers in our calculator we find that you can cover 25% of the net price with monthly 529 plan contributions of $142 a month. Public four-year schools offered an average of $5,830 in grant aid and tax benefits, which means you could reach your goal of covering 25% by contributing just $80 a month.

2017-18 college costsTotal sticker priceNet price
Private four-year college$46,950$26,740
Public in-state four-year college$20,770$14,940

NEXT ARTICLE