College costs are increasing with each passing year, but they are less intimidating if you start a savings account or 529 college savings plan well in advance of when you’ll need it, especially since student loans can end up costing you thousands extra in interest. But how much will you need to save in order to avoid taking out a personal loan? We break down the cost of college and figure out how much you will have to save each year to afford college tuition for your kids. Each scenario assumes that a hypothetical young couple has just given birth to a child, and they plan to save up for the next 18 years to pay for that child’s education.

Ivy League College: $10,189 per year

The most elite private colleges (a category which includes the big-name Ivy League schools) charge about $31,000 annually in tuition and fees. Tuition and fees alone are not the whole story, however. Additional costs for attending college generally include food, housing and transportation for a student who no longer lives under the family roof. On-campus room and board will set you back by another $11,000 per year more. Count on transportation and personal expenses costing about $2600 and books about $1250 per year. Total annual cost: $45,850, for a grand four-year total of $183,400. If you start saving at birth for your child’s Ivy-League college degree, you will need to set aside $10,189 per year, or $849 per month. The good news is that the high-end private schools tend to offer considerable amounts of financial aid. Ivy League schools can actually turn out to be quite a bargain, since they promise to make it financially possible for any student admitted to be able to attend.


Mid-Level College: $7,600 per year

A large number of college options exist with price tags in between the cost of your local state university and that of Ivy League schools. These mid-level choices include public colleges attended by out-of-state students, and a wide variety of private colleges and universities. The middle tier of tuition and fees will average about $20,000 per year. Room and board will run an average of $10,400, while we’ll assume transportation and personal costs will remain steady at $2600. With books and school supplies costing $1200, that puts the midlevel annual college cost at $34,200 per year, or $136,800 for all four years. Parents will need to save $7600 per year, or $633 per month.

State College: $5,033 per year

Attending a public university in one’s home state is the most affordable option if the student wants to spend all four years at the same institution. Annual in-state tuition and fees at a typical public college comes to about $9,100. Tuition and fees alone are not the whole story, however. Dorms and a meal plan are about $9,800 per school year for a state school. It’s possible that a student can save a couple hundred dollars a month by living independently in a shared off-campus house or apartment, but that’s not usually appropriate for the first year or two of being away from home.


Transportation costs and other personal expenses run about $2600 per year, while books and school supplies may come with a tab of about $1150 per year. If we add up these figures, we get a cost of $22,650 per year. Multiplying this annual figure by 4, to cover the entire four-year undergraduate period gives us a total college cost of $90,600. Divide that by 18 years of savings, however, and it comes to just $5033 per year, or $419 per month.

Many changes can take place in the course of 18 years. Depending on your method of savings, you’ll earn some interest over this period, and this will help offset the further rise in tuition costs. Your earning power will most likely increase, so you’ll be able to save more with each passing year, and of course there’s always the possibility of financial aid and scholarship help. If you are looking to take out student loans, make sure you avoid these mistakes when shopping for a loan. However, it’s a good idea to use solid figures as a touchstone for wise financial planning. And if you are looking to start an investment account for your future graduate, here are some of the best investing sites to start with, including a review of the top two, Betterment vs. Wealthfront, as well as a FutureAdvisor review. You can also look into IRAs vs 401ks to find which is the best to get the most of your retirement so you have extra money to save for your child’s future.

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