How Much to Save for College


Most Americans have some vague sense that they ought to be saving more to send their children to college. At least in part because of the way financial aid works, however, it’s hard to know exactly, or even vaguely, how much to save.

Now there are answers. According to a piece by Jennifer Saranow Schultz in the New York Times:

Today, Fidelity Investments released what it is calling the first industry guidelines for how much parents should save in a 529 college savings plan. It’s offering up both annual and monthly suggestions based on income, assuming the family doesn’t want to take out any loans.

Taking into account the expected increase in the price of college (5.4 percent a year) and expected scholarships and grants, Fidelity estimated how much families should save for college over the next 18 years.

According to Fidelity, a family making $55,000 would need to save $48,000 to cover the qualified expenses of a public university and $107,000 to cover such costs for a private one. This translates into saving $160 a month for a public college and $410 a month for a private one.

A family that earned $75,000 a year should save $190 a month for a public university and $410 a month for a private school.

A family that earned $100,000 a year should save $250 a month, for a public university and $460 a month to send a child to a private school.

Families that earn about $150,000 a year ought to save $250 monthly if they expect to send a child to a public university and $500 a month per child (about 4 percent of total income) for a private education.

Incidentally, given the assumed 5.4 percent annual college cost increase, in 18 years one year at a private college will cost (tuition plus room and board) an average $91,744.

View the Fidelity guide here.

Support Nonprofit Journalism

If you enjoyed this article, consider making a donation to help us produce more like it. The Washington Monthly was founded in 1969 to tell the stories of how government really works—and how to make it work better. Fifty years later, the need for incisive analysis and new, progressive policy ideas is clearer than ever. As a nonprofit, we rely on support from readers like you.

Yes, I’ll make a donation

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer