Illustration by Lixia Guo; Getty Images
By Martha C. White
October 29, 2019

Parents are bombarded with headlines on how much more expensive college is getting, but sometimes it can feel like you need an advanced degree just to figure out how much you’ll need to save.

Choosing a college is a complex decision, and finances are only one part of the picture (albeit a big part). How do you figure out what it means to save “enough?” And what can you do if you do the math and then determine — or if you already know before even crunching the numbers — that you’re going to fall short of that goal?

College financing experts and financial planning experts say there are a number of steps you can take help you get schooled on how much to save. Here’s what they suggest for parents who want to learn more.

Use Calculator Resources to Create a Savings Model

Laura Keane, chief policy officer of uAspire, a Boston-based nonprofit that works to eliminate financial barriers to higher education, recommends starting at the U.S. Department of Education’sCollege Navigator, as well as the College Board Net Price Calculator and Expected Family Contributions Calculator.

Net price calculators aim to reduce the amount of guesswork with a more inclusive equation that combines the full cost of attendance — not just tuition, but housing, supplies and ancillary expenses — and subtracts anticipated grants and scholarships for which your family might be eligible.

Although this exercise is meant to be comprehensive, MONEY has noted before that differences in methodology or errors in tabulating aid can mean that estimates can fall wide of the mark. Another thing to keep in mind is that although these tools can show how much a given institution gives in aid on average, remember, as the saying goes, your mileage may vary. Household income and academic performance are two major variables that can impact how much assistance a family actually receives.

“Average net cost can be helpful to get a sense of how much aid the institution provides, but it does not mean that the average listed will apply to you and your family’s situation,” Keane says. Accordingly, look at the Expected Family Contribution as a baseline, not a midpoint, she advises. “This is the minimum you should expect to pay, yet often students may face a financial gap and, in fact, be expected to pay much more.”

Nick Ducoff, cofounder and CEO of Boston-based college consulting firm Edmit, advises using your child’s post-college earnings as a guide. “We suggest the rule of thumb of not taking more debt than the student’s expected first year salary post graduation,” he says. Assume, for instance, that your kid’s intended major means that he or she will earn $50,000 as a new graduate. “If public four-year colleges cost, on average, a bit under $100,000 and privates are around $200,000, then a family would want to save $50,000 for public colleges and $150,000 for private,” he says.

Compare Costs With Investment-Linked Research Tools

Multi-featured calculate-and-compare tools like Fidelity Investments’ College Cost Prep gives families a snapshot of estimated costs, grants and scholarships, and lets you compare college costs and potential savings. You can plug in how much you’re contributing to your 529 plan, whether or not you have other savings you can tap for college costs, and any other sources of funding — and play around with your savings ratios if your estimates are coming up short. Seeing an apples-to-apples comparison of dollars and cents, and the debt burden earning that degree will entail, might be enough to make your future student reconsider a school on their list, or maybe prompt them to look at other, more cost-effective options in a new light.

Parents can set up a tax-preferred 529 savings plan as soon as their child is issued a Social Security number, but even if you’re joining the party late, it’s better late than never. “Let’s say your child is eight and you have not started to save,” says Joel Johnson, managing partner at Wethersfield, Conn.-based retirement planning firm Johnson Brunetti. “You can have a goal of saving a certain amount for college in 10 years and then you plug in the numbers and you find out how much you will need to set aside every month.”

Many 529 investment options are target-dated the same way as retirement-oriented mutual funds and ETFs, with the asset mix shifting to become more conservative over time. So if your kid is in the early grades, don’t assume that gangbusters earnings in the early years are reflective of the rate of return you’ll be getting in a decade, Johnson says. “If you want to do an estimation, I would measure at about a 5% rate of return,” Johnson says. “If that sounds boring, remember that in the early years, again, you’re probably at 100% stocks and returns may be higher, but as that child gets close to college, they’re going to get real conservative,” he says.

“Calculators can be helpful — to a point. Families need to understand that nobody can predict the future,” says Ducoff. For this reason, college funding experts say you should encourage your future college student to consider a wide range of institutions that includes lower-cost options like in-state schools and community colleges.

What to Do If You Can’t Save Enough

If you got a late start on saving for college, running the numbers might leave you feeling defeated, Johnson acknowledges. “Sometimes this is very overwhelming,” he says. Rather than focus on what you can’t save, focus on what you can do. “The important thing is to take steps in the right direction. A lot of financial planning is moving in the right direction,” he says.

  • Don’t try to catch up by piling on risk. If you got a late start or just didn’t have enough income to save much in a 529 account, trying to make up for lost time with a super-aggressive investment mix is risky, Johnson warns. “The worst thing that happens is a year away from college the market drops, and the 529 plan is too exposed to the stock market,” he says.
  • Keep up (401)k contributions.Experts agree: It’s not worth risking your retirement so your kid can get a degree from a more expensive school. “Maybe it’s time to look at a junior college or some two-year college before you go up to a higher-level school,” Johnson says, urging parents not to put their retirement savings in jeopardy. “We live in a culture where many people believe parents should pay for all their child’s education, but that’s not the reality, in my opinion, for some families,” he says.
  • Apply for all the need- and merit-based aid you qualify for anyway. You might be pleasantly surprised, Ducoff says. “The net cost of college is actually flat over the last few years as more colleges have increased discounting,” he says, adding that only one in eight families pays the full price.
  • Be open to less-expensive and nontraditional alternatives. And finally, remember that a pricier school doesn’t necessarily mean a better education. A new survey from Fidelity Investments found that more than one in five recent graduates say that, if given the benefit of hindsight, they would have chosen a less-expensive school. “There are many alternate pathways, including transfer, online degree programs, and employer benefits that could offer a more affordable approach,” says uAspire’s Keane.

Disclosure: Fidelity is a Fall 2019 advertising partner with MONEY. This article was produced independently and meets MONEY’s editorial guidelines.

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