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A college education is expensive. And it’s getting more so by the year.

In fact, you can expect college costs to double by the time your newborn is 18 years old, says Mark Kantrowitz, a nationally recognized expert on student financial aid and the vice president of research at

For a child born today, that means tuition, fees, room and board for four years at an in-state public university will cost more than $165,000. For a private college? Try a whopping $376,000, more than the median price¹ of a home in the United States. And that doesn’t include the cost of books, supplies and other expenses.

In the face of such overwhelming numbers, it’s no wonder parents feel paralyzed when it comes to saving for their child’s education. Still, it’s possible.

"Plan early and it will be less terrifying, and it can be doable," says Sonja Montiel, an independent educational consultant and founder of College Confidence in Thousand Oaks, California.

An illustration shows a college student carrying a duffel bag and pulling a suitcase as they wave goodbye to their parents.

What is a good first step in saving for college?

"Find a good financial advisor who has a strong understanding in college financial planning and college financial aid," suggests Micheal McKinnon, founder of College Planners of America in Downers Grove, Illinois, and the executive director of the National Institute of Certified College Planners, which recognizes advisors who are college financial planning specialists.

"A good financial advisor will not only help you save money, but spend money strategically while looking at all the tax advantages available to you," McKinnon says.

For more information on the different types of financial advisors and tips on finding one who is right for you, read Finding a Financial Advisor.

Headshot of Micheal McKinnonA good financial advisor will not only help you save money, but spend money strategically while looking at all the tax advantages available to you.
Micheal McKinnon, founder, College Planners of America

Practical steps to help you plan for one of life’s biggest expenses

An advisor can develop a college savings plan specific to your financial situation, but in general, following these steps is a good place to start.

Get your other finances in order

Before you start saving for college, consider paying off high-interest consumer debt, building an emergency fund, and maximizing any employer match on contributions to your retirement plan.

Financial advisors typically recommend prioritizing saving for your retirement over your kids’ college fund, since parents and kids can take out loans for college but parents cannot take out loans for retirement. And if the parent is on sound financial footing after graduation, they can always help with paying the college loans.

Aim for at least 1/3

Like with any major purchase, you’re going to spread the cost of college out over time, says Kantrowitz. A rough rule is that one-third of funds will come from past income, or savings; one-third from current income; and one-third from future income, or loans. “Obviously, if you want to borrow less, you save more,” he says. “If you don’t save, you’re going to have to borrow more or go to a cheaper college. Savings, in a way, is the antidote to student loan debt but it also expands college choice.”

Consider school type

You may not know the exact college your child will attend at this point, but you probably have a preference for the type of school: community, in-state public, out-of-state public, or private. This helps narrow your savings goal because the cost for each school type varies greatly.

Monthly Savings for College

To save one-third of the cost of college for a child born this year, Kantrowitz says ideally you should try each month to put away the amounts shown below.

$250 for in-state public college

$450 for out-of-state public college

$550 for private college

Estimate with online tools

Use calculators early and regularly through the years to get an idea of college cost.

An illustration showing only the hands of two people sitting opposite each other at a desk, as seen from above. One person’s hands hold a cup of coffee. The other is pointing to a chart on some papers between them.
  • College savings calculators identify how much you need to save each month to reach your goal given your child’s age, school type, current income and potential aid.
  • EFC (expected family contribution) calculators estimate what you’re potentially capable of paying. Schools use this figure to calculate need-based aid, which lowers the cost of college. Typically, your EFC is calculated in your child’s senior year of high school when you complete the Free Application for Federal Student Aid (FAFSA), but having an estimate in advance can help direct your college savings and college search plans.
  • Net price calculators are found on college websites. The better ones estimate merit aid based on your child’s academic record. While you may not know the kind of student your child will be in high school, sharing with your child how different levels of academic success are rewarded can reinforce the value of being a good one.

Just. Start. Saving.

“The key thing is to just get started, even if it’s just $25 a month,” says Kantrowitz, who suggests having money automatically transferred each month from your bank account into college savings so you get comfortable doing it. “It’s never too late to start. Even if your child is in his senior year in high school, a dollar saved is a dollar less borrowed.” You always can increase your monthly contribution, he says, as well as:

An illustration of a person wearing a backpack, jeans, and sneakers while sitting on top of a large, old-fashioned style safe.
  • Encourage family to “give the gift of college” for birthdays and holidays.
  • Contribute your bonus, a percentage of a raise or other windfall.
  • Redirect money you’re no longer spending on diapers, day care or other expenses your child has outgrown.

Choose the right savings vehicle

The sooner you start saving, the more time your money has to grow. But each college savings instrument has its own tax benefits or financial aid implications. Work with a qualified financial advisor to discuss the details of each account type and decide which option, or combination of options, could work for your family, bearing in mind that all investing involves risk, and no strategy can assure a profit. Options include:

  • 529 plans — State-sponsored investment accounts that let money grow tax free, as long as it is used for qualified education expenses, which include tuition and fees, books and supplies, and, if the student is enrolled at least half-time, room and board.
  • Roth IRAs — Investment accounts originally designed to fund retirement, but contributions can be withdrawn for qualified higher education expenses as well without a tax or penalty. Be aware that if you withdraw earnings, as opposed to contributions, there will be taxes due on the earnings portion. The 10-percent early withdrawal penalty is waived on the earnings if used for qualified higher education expenses
  • Coverdell Education Savings Accounts (ESAs) — Trust or custodial accounts set up to pay for qualified higher education and K-12 expenses.
  • UGMA/UTMA custodial accounts — Under the Uniform Gifts to Minors and Uniform Transfers to Minors Acts, these accounts allow you to maintain control of money given to a minor until the child reaches the age of majority. Funds can be used to pay for anything that benefits the child, including college expenses.
  • Mutual funds — A portfolio of investments where withdrawals can be used to pay for any college-related expenses (including non-qualified ones), but earnings are not tax free.
  • CD, money market and savings accounts — Balances are FDIC-insured and earn taxable interest; low interest rates may limit their growth.
  • Cash Value Life Insurance — You may have access to the cash value that accumulates in your policy to pay any college-related expenses. Be aware that using this cash value will reduce the value of the death benefit.

Prioritize the college money talk

Share with your child how much money you can contribute to pay for college. Unrealistic expectations on the part of the child can lead to heartbreak or excessive loan debt for students and parents alike. Start the conversation early, ideally in the first or second year of high school, and approach it as if you’re creating a partnership with your child to figure out how to balance their goals and hopes for college with the actual costs. And know that you won’t get everything figured out in one conversation — prepare for it to be an ongoing discussion.

Montiel suggests starting this dialogue with your children in middle school so they have time to understand the impact paying for college has on the family, and their responsibilities in return. “Be the tortoise in the tortoise-and-hare race. Go slow, start early, and you’ll be a winner in the end,” she says.

College Costs

Average college costs in 20202

2019-2020 Community college (2 years) In-state public college (4 years) Out-of-state public college (4 years) Private college (4 years)
Tuition & Fees $7,000 $42,000 $107,000 $148,000
Tuition, Fees, Room & Board $25,000 $88,000 $153,000 $199,000

Projected average college costs (estimated) in 20382
(based on 3.3% college cost inflation rate)

Projected Community college (2 years) In-state public college (4 years) Out-of-state public college (4 years) Private college (4 years)
Tuition & Fees $14,000 $79,000 $202,000 $278,000
Tuition, Fees, Room & Board $46,000 $165,000 $289,000 $376,000


1 National Association of Realtors,
2 Mark Kantrowitz,, Sept. 30, 2020


Mutual of Omaha and its representatives do not provide tax and legal advice, and the information provided herein is general in nature and should not be considered tax and legal advice. Consult a qualified professional regarding your specific situation.

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