college Savings: Age-Based Benchmarks for Funding Success

Updated June‍ 19, 2025

College⁤ costs continue to climb, making early planning essential‍ for families. The average cost ranges from $11,610 for in-state public tuition to $43,350 for private schools, according to recent data. A strategic savings schedule, with annual milestones tied to your target schools’ yearly cost of attendance, can definitely help ensure your child’s ⁤college fund stays on track.

T. Rowe Price⁤ suggests using age-based benchmarks to create a ⁢realistic college funding timeline. The‍ idea is to save a‍ certain percentage of your target ⁢college’s current annual ‍cost of attendance each⁢ year,increasing the‍ percentage as your child gets older.

The specific schedule depends⁣ on the ⁣target college and when you began ⁣saving. For example,if one year ‍of college currently costs $25,000,the following benchmarks coudl be used:

• By age 5: Save 60%,or $15,000.
• By age 10: Save 110%, or $27,500.
• By age 15: Save 155%, or ⁣$38,750.
• By age 18: ⁣Save 175%,or $43,750.

These savings targets don’t ⁣cover all four years, but they are a good start. A common rule of thumb is to ⁣cover about one-third of total⁣ college costs with savings. The remaining two-thirds should come from current income, ⁣student loans, scholarships, and other financial aid.

The earlier you start⁣ saving, the more time your money has to⁣ grow through compound interest.

Utilizing 529 College Savings Plans

A 529 college savings⁢ plan is a popular tool for many families. These state-sponsored plans typically allow tax-free withdrawals of earnings, provided that the ⁤funds are used for qualified education ‍expenses.

You can usually choose from various investments to match your risk tolerance. because of the potential for higher interest⁤ earnings, ⁢a 529 plan can substantially reduce⁢ the amount you need to save compared to a traditional savings ⁢account.However, 529‍ plans also have fees and other expenses that vary from ⁣plan to⁣ plan.

While ⁤there’s no federal annual contribution limit, contributions exceeding $19,000 per year (as ⁣of 2025) might potentially be subject to a gift tax. Some states also offer tax deductions or credits ⁤for contributions to in-state plans.

What’s⁣ next

college is a major expense, ⁤but early⁤ planning can make it more manageable. Start saving early, save consistently, and explore all available options, including 529 plans. By taking advantage of these tools, you can confidently prepare for your child’s⁤ higher education.