There's no getting around it. College is expensive. It may, however, cost less than you think.
While the price listed on a school’s website may be jaw-dropping, remember the published price is like the sticker price on a car. It doesn’t always reflect the true cost, which is referred to as the net price.
The net price is the sticker price minus any scholarships, need-based grants, or other types of financial aid a student receives and doesn't have to repay. When thinking about how much you may have to pay for your child's college education, try to focus on the net price.
Here are the average costs for 2024–2025, including tuition, fees, and room and board:
|
|
Public college, in-state student |
Private college |
|
Average sticker price |
$24,920 |
$58,600 |
|
Average net price |
$20,780 |
$36,150 |
Source: https://research.collegeboard.org/media/pdf/Trends-in-College-Pricing-and-Student-Aid-2024-ADA.pdf
How much to save
College costs can be daunting for a lot of people. One strategy that can make it less overwhelming is to set a savings goal. Perhaps it’s saving a percentage of the 4-year cost—maybe a third, or 33%—with the expectation that a combination of income during the college years and loans will cover the remainder.
Let's look at an example using that as the savings goal. We'll assume you have a 3-year-old daughter and haven't started saving for her college education. You expect she'll begin at age 18, so we'll estimate the cost of college 15 years from now.
Projected net college prices for a 3-year-old
|
|
Public college, in-state student |
Private college |
|
Average 4-year cost |
$215,319 |
$503,488 |
|
33% saving goal |
$71,055 |
$166,151 |
In this example, you'd be able to reach the public school goal by saving $208 a month. For the private college goal, you'd have to save $489 a month.
Source: Calculated using Vanguard's college cost projector. The average 4-year cost of college was calculated by using the average 2023-2024 net prices of $20,310 for a public college and $34,790 for a private college, and a cost increase of 5% annually. The monthly savings amounts are based on a 5% average rate of return on your savings. This is a hypothetical example and does not represent or predict the performance of any particular investment, and the rate is not guaranteed.
Save what you can
If saving over $100 a month isn’t realistic, save what you can. And remember—every dollar you can save is one less dollar your child will potentially have to borrow!
