According to the College Board, the average annual cost of tuition, fees, and room and board at a four-year in-state public university for the 2018–2019 school year was $21,370—representing a 30% increase from a decade earlier.1 (For private nonprofit schools, the total was $48,510, or a 25% increase.) Multiply those costs by four years, factor in inflation, and you could be looking at hundreds of thousands of dollars per child.
But do you really need to save every last penny of the total cost of college? Maybe not. “Thanks to financial aid, grants and scholarships, many families don’t pay the full published price for college,” says Robert Aruldoss, a senior research analyst at the Schwab Center for Financial Research.2 “So don’t automatically rule out schools based on the price of admission.”
You can use the National Center for Education Statistics’ Net Price Calculator to browse published prices and the net cost that families typically pay after subtracting the average amount of federal, state/local government, grant or scholarship aid from the total cost of attendance.
Then it’s time to estimate a likely combination of financial aid, savings and out-of-pocket payments that works for your family. For example, if your child’s education will cost $100,000 in total, you could aim to save roughly a third before college, cover another third using a combination of your regular income and your child’s contributions from part-time work, and fund the remaining third with a mix of loans and the like.
You can use a calculator to determine just how much you’ll need to sock away each month in order to reach that goal.
“Of course, every additional dollar you can put toward your child’s college fund today—without sacrificing your retirement savings, which should always take priority—is a dollar you or your child won’t have to borrow tomorrow,” Robert says. “But however you choose to apportion the high cost of college, tapping multiple sources can help you successfully pursue your other savings goals while still keeping your college-savings efforts on track.”
1“Tuition and Fees and Room and Board over Time.” | 2How America Pays for College, Sallie Mae, 2018.