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By egstark
September 21, 2015

When it comes to saving for college, every little bit helps. Each dollar you save and invest is one dollar you won’t have to borrow, come up with later, or rely on someone else to provide. So even if you get a late start or are only able to set aside a small amount, you’ll still be better off than if you’d saved nothing at all.

Use this calculator to set a goal: How much should I be saving for college?

Note that you can enter today’s annual total cost of tuition, room and board at your target college (look up the sticker price for more than 700 schools at the Money College Planner). Or you can set a lower bar. One common savings guideline is to aim to put aside a third of your kids’ expected college costs by the time they’re on campus. The next third can come out of your income—plus grants and scholarships—when tuition comes due. For the final third, you or your kid can turn to student loans.

You may also want to adjust the assumptions for how much college costs will go up and your savings will grow. In recent years, college inflation has slowed at around 4% a year thanks to improved state budgets and growing price competition among private colleges. That’s probably a reasonable assumption to use for the coming years.

Read More: Find the best college for your needs—and your wallet.

Also, even though stock have returned 8% on average over the long run, remember that you need a more conservative stock/bond mix for college savings that you’ll be tapping within 20 years, or maybe in less than a decade. In that case, figure on a 4% or 5% annual return instead, which is the more typical return for conservatively managed 529 college savings plans.

Advertiser Disclosure

The purpose of this disclosure is to explain how we make money without charging you for our content.

Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.

Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

To find out more about our editorial process and how we make money, click here.

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