How Much Should I Save Before College?

Bill Nelson is a planning excellence lead consultant at Northwestern Mutual.

According to data from the U.S. Bureau of Labor Statistics, full-time wage and salary workers age 25 and older with a bachelor’s degree had median weekly earnings of $1,628 in the second quarter of 2026, or about $84,656 per year, compared with $994 per week, or about $51,688 per year, for high school graduates with no college. That adds up to about $32,968 more per year for workers with a bachelor’s degree. College graduates also tend to experience lower unemployment, per the BLS. In March 2026, the unemployment rate for workers age 25 and older with a bachelor’s degree or higher was 2.8 percent, compared with 4.7 percent for high school graduates with no college, according to BLS data.

The downside—other than time spent studying—is that earning a degree can be expensive. If you haven’t looked at college costs in a while, you might be shocked at the sticker price. This is especially true for out-of-state or private universities. Luckily, starting to save for college as early as possible can lighten the burden.

If you’re wondering how much to save for college, this article can help you learn about the average cost of college and a rule of thumb for how much to save before school. You’ll also explore some ways to save, and ideas to reduce the costs.

Costs can be challenging

So, how much should you save for college? For the 2025-2026 school year, this was the average cost of earning a four-year degree per year, including tuition, housing, meals, and fees, according to the College Board:

• $25,850 per year at an in-state public university
• $45,780 per year at an out-of-state public university
• $60,920 per year at a private, nonprofit college

Keep in mind that you’ll have to spend about this much every year, making the in-state public university more than $103,000. And the total goes up if you add travel costs like plane tickets for Thanksgiving vis pits.

If you’re estimating how much two kids could cost through college, multiply the projected annual cost by four years for each child, then adjust for inflation and any financial aid.

How much should you save for college?

If you’re saving for your kid’s college, starting early can give your money more time to grow. Every family’s financial situation is unique, but some students and their families aim to cover about one-third of their college expenses with savings. The other two-thirds could be covered by a mix of income, financial aid, and scholarships.

With this rule in mind, if you are planning for school in the next year or two, you can get a quick estimate of the expenses by taking the average cost of tuition for a target school and multiplying that number by four. You can then divide that number by three to get a savings target. Your Northwestern Mutual financial advisor has planning software that can help you calculate the future cost of education (including inflation).

If you’re targeting a particular school, you can get an even more accurate estimate using their numbers. Searching online for a term like “typical tuition at XYZ university” should give you the general idea.

For example, the average cost of tuition, fees, housing and meals at a private nonprofit four-year college during the 2025-26 school year was about $60,420 per year, according to College Board data. Over four years, that adds up to $241,680. If your goal is to save enough to cover one-third of the total cost, you would divide that amount by three, giving you a savings target of about $80,560.

Don’t forget that college costs often increase each year. If college is a few years away, make sure you adjust your tuition estimates to account for this expected increase.

How to start saving for college

How exactly you begin saving for school will depend on whether or not you’ve already been funding a college savings plan. As with other financial goals, starting early can help you harness the full power of compounding interest.

With a college savings plan

If you’ve already funded a 529 account, or Coverdell education savings account with your child as the beneficiary, that’s a great place to be.

To see if your plan is on track, start with your current balance and estimate how it might realistically grow by the time you need it. Your Northwestern Mutual financial advisor can help you determine the cost, the resources you’ll have available and any gaps in coverage—so you can save more accurately.

If you don’t have a college savings plan, and you have a few years before you need the money, consider opening one and making regular contributions. You can automate the contributions to help you stay on track.

Without a college savings plan

A 529 or Coverdell account isn’t your only option. A new type of tax-advantaged account created by Congress, known as “Trump Accounts” allows you to make investments for your child’s future. Similarly, custodial accounts such as Uniform Gifts to Minors Act (UGMA) accounts or Uniform Transfers to Minors Act (UTMA) accounts can be opened to save or invest for your child with potential tax benefits.

A traditional savings account also gives you a place to set aside college funds outside your checking account, where they might be easier to spend. A high-yield savings account can help your money earn more interest while keeping the funds accessible. However, savings accounts generally offer lower long-term growth potential than investment-based options and may not keep pace with inflation over time.

The amount of time before the money is needed can help determine the right savings strategy. Longer time horizons may allow for more investment-oriented approaches, such as a 529 plan, Coverdell ESA, custodial account, or other investment account, which provide the opportunity for higher returns but also carry investment risk. Shorter time horizons, especially if your child plans to start college within the next few years, may favor savings accounts or other more conservative investments because they can help protect money you'll need soon from market volatility.

To learn more about investment options, see our guide on how investing can help your money grow.

Opportunities for college credit while in high school

Regardless of your current savings or household income, students may be able to pursue college credits during high school. With the high cost of college, any credits earned ahead of time can help.

Advanced Placement

One of the most well-known options is Advanced Placement (AP)®. These high school courses are designed to be rigorous and challenging. Students who complete AP courses and pass the corresponding exams can potentially save on college tuition.

Students who complete AP courses and earn qualifying scores on the corresponding exams may be able to receive college credit, allowing them to skip introductory courses and potentially reduce the number of credits needed to graduate. Because policies vary by institution, it's important to review the AP credit guidelines at the colleges you're considering, including which exams are accepted and the scores required to earn credit or advanced placement. Keep in mind that AP exams typically require a fee, but the cost is often significantly less than college tuition.

International Baccalaureate

Another option offered by some high schools is an International Baccalaureate (IB), a rigorous program that offers a comprehensive and internationally recognized curriculum for students through high school. IB culminates in a series of exams that can lead to college credit and advanced placement. As with the AP exam, a fee is typically required for IB exams.

Dual enrollment

Some high schools also partner with local colleges to offer college courses that provide both high school and college credit. These might be called “dual enrollment,” “concurrent enrollment” or “college in high school” because they offer simultaneous credit. The school district typically covers most of the cost. Credits earned through dual enrollment are usually transferable to other colleges and universities, but it's important to read about the specific transfer policies.

College-Level Examination Program (CLEP)

Some students can earn college credit by demonstrating knowledge in specific subjects through CLEP exams. Depending on the college's policy, passing scores may allow students to bypass introductory courses and reduce the total number of credits needed for graduation.

Other ways to pay for college

While earning college credits in high school can significantly reduce the financial burden of higher education, there are additional ways to make college more affordable. 

Scholarships

There are millions of scholarship opportunities available every year. The major difference from a loan is that you don’t have to pay the money back!

Scholarships aren’t just for the top students. Some are need-based, which means your household income is a major factor. Other scholarships are awarded for academics, athletics, artistic talent, community service, extracurricular activities, and more.

Grants

Grants are essentially free money to help pay for college. They’re like scholarships in that they don’t have to be paid back. So, grants are an incredibly valuable form of financial aid.

As a family, you’ll complete a federal form called the free application for federal student aid, or FAFSA. Completing the FAFSA allows you or a loved one to be considered for many federal, state, and institutional grants as part of the financial aid process. Many grants, such as Pell Grants, are meant for students whose families have lower incomes

Work study

Work study is a form of financial aid that provides your college with funds so that it can hire a student to perform a part-time job. Work study helps your child get work experience while earning their degree—plus a paycheck. The money can be used to make tuition payments or interest-only payments on the student loans, so you or your child’s balances don’t increase while they’re still in school.

Student loans

Like any other loan, student loans require repayment with interest. Sometimes interest accumulates while the student is still in school. Loans taken out as a freshman can be a few thousand dollars more by graduation. So, it’s usually a good idea to try other options before turning to loans.

Federal student loans are part of a financial aid package after you complete the FAFSA. These typically come with a lower interest rate than private student loans and carry additional benefits including:

• Possible subsidies, like not accruing interest while in school at least half-time or right after graduation, which can significantly reduce the total amount of interest over the life of the loan
• Income-driven repayment plans for which the amount paid each month is directly tied to how much the graduate earns
• Deferment and forbearance options, which are last resorts if you absolutely cannot afford to make student loan payments
• Forgiveness potential, which usually applies to people with a good history of paying on time who work in public service, government, and nonprofit jobs

Private student loans can be used to fill a gap left by the financial aid package, but these typically have a higher interest rate than federal student loans. They also have less flexible repayment options. If you think you need private student loans, your child will need to apply with lenders separate from your FAFSA.

Employer Education Benefits

Some employers offer tuition assistance or tuition reimbursement programs for employees and, in certain cases, their dependents. Students who work while attending school may be able to reduce costs through these benefits.

Community college and transfer pathways

Completing general education requirements at a community college before transferring to a four-year institution can significantly reduce the overall cost of a degree while still leading to the same bachelor's credential.

Gifts from Family Members

Grandparents, relatives, and family friends may also be able to contribute directly to a college savings account. Rather than giving toys or cash for birthdays and holidays, loved ones can provide a gift that supports a child's future education. Even modest contributions can add up over time and help reduce the amount a student may need to borrow for college.

Get the most from college savings

While college is expensive, that doesn’t mean there aren’t ways you can make it more affordable so that your savings go further. These include:

• Attending an in-state university instead of an out-of-state university, which tends to be more expensive
• Comparing public and private colleges carefully, as a higher sticker price doesn't always mean a higher cost. Some private colleges offer generous grants and scholarships that can make them comparable to, or even less expensive than, a public university
• Getting some transferable credits through a community college, which is often close to home and less expensive
• Considering a trade school, which often costs significantly less and generally gets graduates into the workforce quickly
• Considering a trade school or vocational program if it aligns with your career goals, as these programs are often less expensive and may lead to employment more quickly
• Living at home and commuting to avoid housing, meal plan and other campus living expenses.
• Completing the FAFSA and scholarship applications as early as possible because many of these are given out on a first-come, first-served basis
• Exploring Historically Black Colleges and Universities (HBCUs), which may offer a high-quality education at a lower cost than some comparable institutions.

As you begin to assess your child’s future, it may be a good time to get advice about how you can fit college savings into your budget. Consider talking with your Northwestern Mutual financial advisor. They can help you evaluate your options and set up a plan. That plan can grow with you as you reach goals like helping family members achieve a degree.

Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP^®, CERTIFIED FINANCIAL PLANNER^®, and CFP^® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.