Putting a child through college can be a financial burden for many families. Many college students take out loans to pay for higher education, and in some cases, it can take a lifetime to pay it all back. So, how can you help your child save for college? If you do your research, it’s much easier than you may think. Use this guide to start learning how you can save for college.
When Should You Start Saving for College?
While it’s never too early to start saving for college, it’s wise to have a few things sorted out first. While it may feel selfish, take care of your future before saving for your child’s.
To start, create an emergency fund and keep adding to it. You can tap into these savings if you need to pay hospital bills or fix home or car damage. At the same time, work on paying off your debt before saving for your child’s college fund. The sooner you pay off your debt, the more you’ll be able to afford to help your child save money.
Before saving for college, the third thing you should invest in is your retirement plan to ensure you’ll be financially stable after you retire. If you feel selfish about taking care of yourself first, think about it like this — you can always borrow money for college, but you can’t borrow money for retirement. However, if you have enough money when you retire, you can help your child repay their loans.
There’s no wrong way to save for college. You can start whenever you’re ready, but the earlier you start, the greater your chance is to save more. The secret is to remember your needs and future matter, too.
How Much Should You Save for College?
Often, the amount you will need to put aside for your child’s college education will depend on the institution they want to attend. Each college option has vast price differences. In 2022, attending college in the U.S. costs an average of $35,331 per year. This cost includes tuition, textbooks, and other fees.
However, several factors can impact college costs. You might have to pay additional fees depending on where your child goes to school.
While in-state tuition averages just over $9,300, out-of-state rises to over $27,000. You will need different savings strategies to afford out-of-state tuition for your child over in-state. Each state also has varying tuition rates, where some states raise higher than others.
As you begin to budget and plan for your child’s college fund, you should research the average cost of college in your state to get a more accurate representation of your savings goals. Vermont had one of the highest public in-state tuition rates in 2021, costing students around $16,600 annually. On the other hand, Florida only costs around $4,400 each year for a public in-state school.
Additionally, you should consider public versus private schools. Private colleges can average over $35,000 annually for tuition alone — total fees for a private college can easily cost over $50,000 each year. While many families prefer the many perks that a private university education can offer, you will have to save accordingly to ensure you can afford the fees.