Saving enough money to cover their child’s college tuition, fees, room, and board is one of the toughest challenges for most parents. In fact, data shows that the average parental contribution of $11,862 annually makes up the largest share of student funding.

For this reason, many parents wonder how much to save for kids’ college and how to do so without going beyond their means. This comprehensive guide will help you determine the amount you should set aside for your child’s college and provide valuable tips on creating a savings plan and sticking to it.

How Much Money Will My Child Need for College?

Deciding on how much to save for your child’s college depends on the type of college they plan on attending—in-state, private for-profit, or private nonprofit. Another factor that impacts the decision is whether they’ll attend a two-year or a four-year program. To get a clearer picture of college pricing, take a look at the average college tuition cost per year for each type:

Program	In-State	Private For-Profit	Private Nonprofit
Four-year program	$9,678	$17,825	$38,768
Two-year program	$3,501	$15,637	$17,735

These figures keep getting higher with inflation, but the information in the table can give you a rough idea of how much to save for college per child. Typically, however, parents want to save around $57,981 for college expenses, and on average, they tend to save $5,143 annually, according to recent college-saving statistics.

How To Determine How Much to Save for Kids’ College

The amount of money you should set aside for your child’s college isn’t set in stone. A significant factor to take into account is that the tuition cost at public four-year colleges increased by 9,24% from 2010 to 2022. This means that whichever amount you decided on previously needs to be flexible and increase with inflation. Still, you can follow the one-third rule to get an approximate idea of how much to save for kids’ college.

According to the one-third rule, instead of covering the whole cost using only your savings, you should combine savings with your current and future income. That way, the cost would be split into thirds:

1. One-third—Savings (past income)
2. One-third—Current income
3. One-third—Loans (future income)

Applying this rule should help you get a general idea of the amount you can have saved up when you combine the funds. How you’ll split your funds depends on your budget and priorities—some parents might save more and borrow less, or vice versa. 

If you feel the money you’ve saved so far isn’t enough, you can ask your family and friends for help. Those willing to contribute can do so on numerous occasions like birthdays, holidays, and other special celebrations.

How Much Should I Save for Kids’ College Every Month?

There’s no definitive answer to how much you should save for your child’s college per month, but it would be ideal to set aside $250 every month since their birth if you want to save enough for an in-state four-year college. However, if you’re aiming for an amount that would cover a private nonprofit four-year program, saving $550 a month from your child’s birth should suffice. For an out-of-state public four-year college, saving $450 a month should be enough by the time your child starts attending.

Since the amount you’ll end up with from monthly savings will largely impact what college you’ll be able to send your child to, assessing your financial possibilities and planning your budget early on is crucial. To do so efficiently, you should:

1. Decide what you can afford
2. Set an end goal
3. Invest in a savings plan

Decide What You Can Afford

The average family saves approximately $300 for their child’s college every month since birth. If you were to do so, you’d be able to save $7,929 by the time your child turns six or $27,778 by the time they’re 18, which is enough to cover college tuition in most cases.

Still, it’s important to set aside the amount you can afford—what might be affordable to some families can be a luxury for others. Generally, the monthly sum that fits most families’ budgets is about 10% of discretionary income. However, any contribution can amount to a large sum over time.

You can also modify the amount you set aside as your income and budget change. For example, paying for daycare or preschool may make it harder to save a significant sum for your child’s college, but the financial burden typically gets lighter once they start school. Although it’s best to start saving as soon as possible, starting a few years later still gives you plenty of time to collect a decent sum before your child is ready for college.

Set an End Goal

Setting a specific sum of money as an end goal can simplify keeping track of your savings and help ensure you save enough by the time your child goes to college. When deciding on the final amount, take these factors into account:

• Your child’s age
• The type of school you want to be able to afford
• The expected rise in college tuition and fees 

Your goal amount doesn’t have to be the full amount as the remaining funds can be filled in by financial aid, scholarships, and current income. Typically, you should aim to save between one-third and 50% of the tuition cost to make your end goal more realistic.

The goal sum may also feel more achievable if you start saving when your child is born, even if you’re setting aside as little as $15 or $25 per month. Starting a college savings plan like 529 early lets the money compound and grow over time, leading to significant investment gains.

Invest in a Savings Plan

The savings plan you choose can greatly impact how much money you’ll end up saving for your child’s college. Opting for a tax-advantaged savings plan like the 529 plan offers tax-free withdrawals and a decent return rate, so your funds can grow. This means that your monthly contributions can be lower than planned because your money will grow over time.

Let’s say you have an eight-year-old child, and you’ve just started saving $445 a month in a 529 savings plan. Over time, this amount would increase, and you’d most likely be able to cover one-third of the costs for an out-of-state public school or approximately half the cost for an in-state university by the time your child starts college.

You can also pay monthly contributions to the following savings accounts:

• Roth IRA—Using a Roth Individual Retirement Account (IRA) as a college savings fund is a great alternative to 529 plans since you can withdraw your contributions tax-free whenever you want. However, you’ll get a 10% penalty on your earnings if you withdraw funds before you reach the age of 59½
• UGMA/UTMA—You can control these custodial accounts until your child reaches legal age. After that, they become the owner of the account. While withdrawals from these accounts have no penalties when used for the child’s benefit, the money you earn is taxed
• Coverdell ESA—This savings account also doesn’t impose a tax on contributions and deductions if you use the money for education-related expenses, but it has stricter investing rules than 529 plans

How Much Should I Save for My Kids’ College if I Have More Than One Child?

If you have multiple children, the best strategy is to make sure that the amount you put away for each child is equal. Even if the allocated amount is smaller, ensure it’s fairly distributed between your children so each of them can have the same college funds available. 

Setting a precise amount is challenging as it depends on your budget and the college you expect your children to attend. The safest bet is to strive toward saving for each child to cover at least a lower-cost option, such as an in-state school. If they end up attending higher-cost institutions, you can cover the rest by applying for scholarships, grants, and financial aid.

If you have multiple children, the simplest way to save for college may be to opt for a 529 plan. These allow you to maintain one plan and change the beneficiary when the first child goes to college so the funds can go to the second one. You can also set up separate 529 plans for your children and contribute more tax-deductible funds to each child.

Opting for separate 529 plans comes with advantages like:

• The ability to customize the mix of investments for each child
• Multiple children being able to receive money in the same school year
• More money saved in the long run
• Lower risk of non-qualified expenses
• A more significant tax deduction
• Easier 529 gift tracking and receiving

Apply for Financial Aid as Additional Help

Besides relying on the money you’ve saved for college, your child can also apply for FAFSA or a student loan. In fact, according to Sallie Mae, 71% of families applied for financial aid in the 2022–2023 academic year as a means of paying for college. The possibility of supplementing the college costs with financial aid can give you some flexibility in college savings as it takes off the pressure of saving enough to cover the total cost. 

While it’s true that the FAFSA only requires students to demonstrate their financial need and enroll in a qualified program at an eligible college, other types of student loans require credit checks. These include Direct PLUS loans and private student loans.

Type of Loan	Explanation
Direct PLUS loans	Direct PLUS loans include Parent PLUS loans that you can apply for to pay for your child’s college education. These loans require a credit check, meaning that your child may not get approved for the funds if their or your credit score doesn’t meet the lender’s standards
Private student loans	These loans are usually considered as additional financial aid if FAFSA isn’t enough. If you decide your child should apply for a private student loan, the lender will likely require a credit check and take the parent’s credit score into consideration as well

Help Your Child Build Good Credit

Building a strong credit score for your child is a great way to increase their chances of getting approved for a loan if federal financial aid doesn’t suffice or they get rejected. It can also help your child save a significant amount of money in the long run and get a loan with more favorable interest and terms.

A credit building service like FreeKick can be highly useful for building credit early as it offers parent-sponsored credit building from the age of 13. This way, you can help your child save over $200,000 throughout their life and become more eligible not only for financial aid but also for vehicle and housing loans once they become a young adult.

FreeKick—Premium Credit Building and ID Protection

Provided by Austin Capital Bank, FreeKick is an FDIC-insured deposit account that helps young adults and minors build credit between the ages of 13 and 25. The platform also provides identity protection for your entire family, covering up to two adult parents and six children aged 0 to 25.

Parent-Sponsored Credit Building With FreeKick

If you wait until your child is a young adult to start building their credit, getting them a credit card will be tricky before they turn 21 because of the Card Act of 2009. Not being able to start building credit early can pose an obstacle for your child when trying to secure financial aid, obtain rental housing, and get a job that requires a strong credit profile.

FreeKick lets you start building your child’s credit as early as the age of 13 through parent-sponsored credit building. Here’s how to get started: 

1. Create an Account—Visit FreeKick.bank and choose a plan that matches your family’s budget and needs. Consider the amount of deposit and annual fee tradeoff
2. Set It and Forget It—When the account is activated, FreeKick automatically starts building your child’s credit over the next 12 months through a no-interest credit builder loan
3. Keep Growing—Once the first year passes, you have the option to renew the account and keep building your credit or close it and get a refund of your initial deposit

Identity Protection With FreeKick

Identity theft is a large threat, and children are among the most vulnerable—recent statistics show that a child’s identity is stolen every 30 seconds.

If your child will be applying for financial aid, they’ll be especially compromised. Without proper identity protection online, someone may steal your child’s ID information and use it to apply for FAFSA in their name, automatically making their application invalid.

What’s more, identity theft statistics show that in 2022 alone, $22 billion was lost due to identity theft, which is especially alarming when you’re trying to save money for your child’s college. For this reason, FreeKick offers comprehensive identity protection and cybersecurity features for adults and minors:

Services for Adult Children and Parents	Services for Minor Children
Credit profile monitoring SSN monitoring Dark web monitoring for personal information Up to $1 million identity theft insurance Full-service white-glove concierge credit restoration Lost wallet protection Court records monitoring Change of address monitoring Non-credit (Payday) loan monitoring Free FICO® Score monthly FICO® Score factors Experian credit report monthly	Credit profile monitoring SSN monitoring Dark web monitoring for children’s personal information Up to $1 million identity theft insurance Full-service white-glove concierge credit restoration Sex offender monitoring—based on sponsor parent’s address

FreeKick Pricing

FreeKick offers a plan that fits any family’s needs and budget. Both available deposits are FDIC-insured up to $250,000. Here’s a breakdown of the pricing options:

FDIC-Insured Deposit Amount	Plan Fee
$3,000	$0 (Free)
No deposit	$149/year

Secure your child’s financial future and protect your whole family from the risk of identity theft—sign up for FreeKick today.