Afraid You Won’t Have Enough for College Expenses? Calculate It!

How Much to Save for CollegeWith college costs rising at double the rate of inflation, it can be easy for parents to think that Junior’s high school graduation is eons away.

Many parents will con themselves into thinking that their income will be better once college is really on the horizon.

While it certainly is easier to put off difficult financial decisions for later, the need for college savings is not going to go away just because parents play ostrich. Your child may still be exploring the possibilities of eating her own feet, but college is much closer than you can imagine.

But a little planning and discipline can help make sure that college is well within your reach.

Put Retirement Savings Before College Savings

It has been said before, but it is vitally important for parents to remember that saving for retirement trumps saving for college every time. Your children can take on loans for education, but there is no way to borrow for your retirement.

So if you’re savings options are limited, invest in your own golden years. Your children will thank you when they do not have to convert their living room into your retirement home.

Calculating How Much to Save for College

If you are able to save for both, how much should you be putting away for college? It would be easier if there were a simple dollar amount answer, but of course the needs will depend on many factors. The first factor is how much college will cost when your child is ready to leave the nest.

The College Board website has several excellent calculators that will help parents answer this question. College costs depend on the type of school-private or public, four-year or two-year-how long you have until you need to write the first check, and what kinds of indirect costs-like books, housing, food, etc-your child is likely to accrue.

What Percentage Should You Save For?

Once you have a rough idea of what schooling will cost for your child (and you have recovered from the heart attack brought about by sticker shock), you will next have to determine how much of the total bill you plan to be responsible for.

Whether you plan to finance the whole shebang or let your child find her own way to pay, you do need to know that schools calculate the Expected Family Contribution (EFC). (College Board’s website also provides a calculator for this figure.) The EFC calculation determines your student’s eligibility for financial aid packages. Knowing ahead of time how much colleges will expect you to pay will help you decide how much to put away.

If you still don’t know how much to plan on, remember the rule of three.

Many families will plan to have one-third of the total cost saved ahead of time, will pay one-third of the cost during the four years of schooling through parental and student cash flow and financial aid, and plan on taking out loans for the final third.

Unfortunately, if you’re like me and would like to plan for your child to go anywhere he wants (including my uber-expensive alma mater), saving a third of the cost of college may seem like a daunting task. The good news is that anything you save will help your child. Even if all you can put aside is $25 a month, that will still make for a tidy sum after years of saving and compound interest.

See this further reading on 529 College Savings Plans to help you decide where to put the money you are saving. The long and short of it is that if you take the initiative to start saving now, you can ensure that your child will get a good education without mortgaging her future.

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About Emily Guy Birken

Emily Guy Birken is an award-winning writer, author, money coach, and retirement expert. Her four books include The Five Years Before You Retire, Choose Your Retirement, Making Social Security Work For You, and End Financial Stress Now. Learn more about Emily at


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  1. Going to most colleges these days is a rip off. As a parent, I’m going to train my son to develop entrepreneurial skills at a young age so he can make his way without going the college track.