What if you didn’t save for college?

Mark KantrowitzBy: Mark Kantrowitz | 

What are your options if you didn’t save for college, or didn’t save enough? Clearly, families who save for college have more flexibility in paying for college, but there are still a few options available for families who didn’t save for college.

It is never too late to start saving

It is never too late to start saving for college, even if college is just a year or two away. The more you save, the less you’ll need to borrow.

Families who don’t save will either need to borrow more to pay for college, or the student will need to enroll in a lower-cost college.

Obviously, it is better to start saving when the child is young, ideally soon after birth, since you'll have more time for the earnings to compound. Even better, some families start saving for college before their children are born.

If you start saving at birth, about a third of the college savings goal will come from earnings. If you wait until the child enters high school, less than 10% of the goal will come from earnings, and you'll have to save six times as much per month to reach the same college savings goal. But, even if you don’t get any earnings on top of contributions, every dollar you save is a dollar less you’ll have to borrow.

Benchmarking progress in saving for college

Most parents plan on saving about a third of future college costs, but most parents have actually saved only about 10% of actual college costs.

A simple rule of thumb can help you benchmark your progress in saving for college by multiplying the child’s age by a dollar amount based on the type of college. If the current balance of your college savings account is close to this figure, your college savings plan is on track to reach a goal of saving one third of future college costs.

  • If your child will enroll in an in-state public 4-year college, multiply the child’s age by $3,000.
  • If your child will enroll in an out-of-state public 4-year college, multiply the child’s age by $5,000.
  • If your child will enroll in a private 4-year college, multiply the child’s age by $7,000.

State income tax benefits provide a discount on college costs

It is still worthwhile to contribute money to a college savings plan, even if the student is about to enroll in college or has already enrolled in college. Many states offer a state income tax deduction or tax credit based on contributions to the state’s 529 plan. If you live in one of these states, contributing to the state’s 529 plan is like getting a discount on tuition at your state’s marginal income tax rate.

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.


Four of the 35 states prevent you from immediately taking a distribution and still getting the tax benefit. For example, the state income tax benefit in two of the states is based on contributions net of distributions. But, in those states you can make the contributions in even years and take distributions in odds years, or vice versa.

Apply for financial aid and scholarships

Students should always file the Free Application for Federal Student Aid (FAFSA) to apply for financial aid from the federal government, state government and most colleges and universities.

Students should also search for scholarships using one or more of the dozen free scholarship matching services, and apply for every scholarship for which they are eligible. Every dollar they win is a dollar less they'll have to borrow.

Enroll at lower-cost colleges

Students who haven’t saved for college will need to borrow more. But, total student loan debt at graduation should be less than the student’s annual starting salary. If total student loan debt is less than annual income, the borrower should be able to repay the student loans in ten years or less.

To keep student loan debt at a reasonable level, students whose families have not saved for college may need to apply to lower-cost college, such as in-state public colleges and the six dozen colleges with generous “no loans” financial aid policies.

Students should also apply to a financial aid safety school, which is a college that not only will admit them, but where they could afford to enroll even if they get no financial aid.

Families should compare colleges based on the net price, which is the difference between the college’s cost of attendance and the gift aid (grants, scholarships and other money that does not need to be repaid). Since net price correlates strongly with debt at graduation, it is best if the student chooses one of the colleges that admits them that also has one of the lowest net prices.

Ask friends and family for help

Parents can ask friends and family for help, such as grandparents who want to leave a legacy for their grandchildren. But, they need to be careful to avoid hurting eligibility for need-based financial aid.

Gifts to the student count as untaxed income to the student, reducing aid eligibility by as much as half of the gift. Gifts to the parent, however, are ignored as income on the FAFSA. (The CSS PROFILE form, however, counts all such gifts as income.)

A better option might be for the grandparent to contribute the money to a parent-owned 529 plan, which yields a better financial aid treatment than gifts to the student. Alternately, they could wait until the student graduates to give them a graduation gift, such as helping them to pay down or pay off their student loans.

Financial aid from work and volunteer opportunities

There are also several types of financial aid that are related to work and volunteer activities. These include ROTC, AmeriCorps, working a full-time job in the summer and working a part-time job during the school year.

Finding a part-time job on or near college campuses is easy. Besides employers who are eager to employ reliable college students, there are also many more available side hustles, such as driving for Uber or Lyft, TaskRabbit, Upwork and Amazon Mechanical Turk, among other opportunities.

But, be careful to not work more than 12 hours a week, because every additional hour takes away too much time from academics.

Don’t forget to claim education tax benefits, such as the American Opportunity Tax Credit or Lifetime Learning Tax Credit, on your federal income tax return.


Mark Kantrowitz

Mark Kantrowitz

Publisher and VP of Research

Mark Kantrowitz is a nationally-recognized expert on student financial aid, scholarships and student loans. His mission is to deliver practical information, advice and tools to students and their families so they can make informed decisions about planning and paying for college.