Your son’s kindergarten teacher asked what college you’re saving for. You smiled and changed the subject. The truth? You have no idea how much to save – or if you’re even saving enough. Every article throws different numbers at you, and none of them account for your actual situation.
I know this uncertainty because families ask me constantly whether their college savings will cover the actual costs. The answer depends on factors most calculators ignore – which schools your children might attend, how much financial aid you’ll qualify for, and whether your savings strategy matches your timeline. Here’s how to calculate realistic college savings targets that account for rising costs without creating panic.
College costs vary dramatically by school type and living arrangement. Understanding how much to save for college starts with acknowledging that a four-year degree at a Texas public university costs far less than private college – but both require strategic planning years before enrollment.
For students entering college in fall 2026, costs are projected to increase approximately 2.28% from 2025-2026 rates, with four-year totals ranging from $110,000 to $112,000 for public in-state to $260,000 to $265,000 for private universities.
How Much to Save for College: What Four Years Actually Costs in 2026-2027
College costs break down into published prices and actual net costs after financial aid. Published prices – the sticker price before any aid – create the headlines. Net costs reflect what families actually pay after scholarships and grants.
For the 2025-2026 academic year, average published costs for full-time undergraduates including tuition, fees, room, and board are:
- Public four-year in-state: $27,150 annually ($108,600 for four years)
- Public four-year out-of-state: $45,710 annually ($182,840 for four years)
- Private nonprofit four-year: $58,630 annually ($234,520 for four years)
- Public two-year (community college): $20,600 annually ($41,200 for two years before transfer)
Projected costs for 2026-2027 based on verified 2.28% average increase for four-year institutions:
- Public four-year in-state: $27,770 annually (2.28% increase)
- Public four-year out-of-state: $46,750 annually (2.28% increase)
- Private nonprofit four-year: $59,970 annually (2.28% increase)
- Public two-year: $20,940 annually (1.65% increase)
These numbers include tuition, mandatory fees, and on-campus room and board. They exclude books ($1,200 annually), transportation ($1,200 to $2,000 annually), and personal expenses ($2,000 to $3,000 annually). Add these costs and you increase total expenses by $4,400 to $6,200 per year.
Texas public universities charge in-state students lower rates than the national average. The University of Texas at Austin’s total cost for in-state students (including tuition, fees, room, and board) runs approximately $27,200 annually for 2025-2026, likely rising to $27,820 for 2026-2027 based on projected 2.28% increase patterns. Texas A&M University costs roughly $26,200 for in-state students in 2025-2026 (tuition, fees, room, and board), projecting to $26,800 for 2026-2027. Note that total cost of attendance—which includes books, transportation, and personal expenses—is higher, estimated at $32,446 for UT Austin and $30,608 for Texas A&M.
Private universities in Texas vary widely. Southern Methodist University charges approximately $79,000 annually for 2025-2026, likely exceeding $80,800 for 2026-2027. Rice University’s published cost exceeds $75,000 for 2025-2026. However, Rice provides substantial financial aid – the average net cost for families earning under $200,000 drops significantly below sticker price.
Four-Year Degree Costs: The Complete Picture
Calculating four-year costs requires accounting for annual increases. Recent projections indicate 2.28% average increases for four-year institutions through 2026-2027, with two-year colleges increasing 1.65%. Historical patterns show increases ranging from 2.7% to 4.0% depending on institution type and economic conditions.
A student entering college in fall 2026 faces these projected four-year totals assuming 2.5% average annual increases (conservative estimate based on recent trends):
- Public in-state: $110,000 to $112,000 total
- Public out-of-state: $194,000 to $200,000 total
- Private nonprofit: $258,000 to $260,000 total”
These projections assume the student completes their degree in four years. However, only 42% of bachelor’s degree-seeking students graduate within four years. The six-year graduation rate reaches 60%. Additional years add $28,000 to $60,000 depending on institution type.
Living arrangements affect total costs substantially. Students living off-campus in high-cost areas might spend more than on-campus rates. Students commuting from home eliminate room and board expenses entirely – reducing annual costs by $12,000 to $14,000.
Projecting Future College Costs: Accounting for Inflation
College cost inflation runs higher than general inflation. While consumer prices increased approximately 2% to 3% annually in recent years, college costs rose at varying rates – recent projections indicate 2.28% average increases for four-year universities in 2026-2027, with two-year institutions increasing 1.65%.
Financial planners typically project college cost inflation between 2.5% and 4% annually for long-term planning. Conservative planning uses 4%. Moderate planning uses 3%. Current trends suggest lower increases around 2.5% to 3%, representing a slowdown from historical rates.
Here’s what today’s costs project to for children starting college at different ages, using 3% annual inflation (moderate estimate based on current trends):
- Newborn (18 years until college): Public in-state rises from $27,770 to $47,200 annually; Private rises from $59,970 to $101,900 annually
- 5-year-old (13 years until college): Public in-state rises to $40,600 annually; Private rises to $87,700 annually
- 10-year-old (8 years until college): Public in-state rises to $35,200 annually; Private rises to $75,900 annually
- 14-year-old (4 years until college): Public in-state rises to $31,300 annually; Private rises to $67,500 annually
Four-year totals using these inflated rates create larger targets. A newborn today needs savings targeting $200,000 to $210,000 for public in-state costs, or $430,000 to $450,000 for private college costs over four years when accounting for annual increases during college years.
These projections assume consistent 3% inflation. Actual increases vary by institution and economic conditions. Public universities depend partly on state funding – cuts in state budgets typically accelerate tuition increases. Private universities often moderate increases during economic downturns to maintain enrollment. Recent data shows increases slowing from historical 4% to 6% rates to current 2% to 3% ranges.
The Full-Funding Versus Partial-Funding Decision
Most families don’t fully fund projected college costs through savings alone. The average family covers college expenses through a combination of savings, current income during college years, student earnings, financial aid, and strategic use of debt.
Financial advisors typically suggest targeting these savings goals:
- One-third of projected costs: Savings covers approximately 33% of total expenses
- One-half of projected costs: Savings covers 50% of expenses, reducing debt needs substantially
- Two-thirds of projected costs: Savings provides majority of funding, minimizing debt
- Full funding: Savings covers entire projected cost, eliminating debt need
A one-third funding approach for a child born today means saving $67,000 to $70,000 for public in-state college, or $145,000 to $150,000 for private college. This assumes the family covers the remaining two-thirds through current income, student work, financial aid, and modest loans.
Full funding requires saving the complete projected amount – $200,000 to $210,000 for public in-state or $430,000 to $450,000 for private. Few families achieve full funding targets, particularly with multiple children.
Your appropriate target depends on several factors: family income during college years, expected financial aid eligibility, student’s potential earnings, willingness to use loans, and whether you’re saving for one child or multiple children.
Monthly Savings Requirements: Working Backward From Goals
Converting savings targets into monthly contributions requires assumptions about investment returns. 529 plans and other college savings vehicles invest in stocks, bonds, or balanced portfolios. Historical returns vary – stock-heavy portfolios returned 6% to 8% annually over long periods, while conservative bond-heavy portfolios returned 3% to 5%.
Using 6% average annual returns, here’s what families need to save monthly to reach specific targets:
For a newborn (18 years to save):
- $67,000 target (one-third public in-state): $220 monthly
- $100,000 target (one-half public in-state): $330 monthly
- $145,000 target (one-third private): $475 monthly
- $200,000 target (full public in-state): $655 monthly
For a 5-year-old (13 years to save):
- $67,000 target: $315 monthly
- $100,000 target: $470 monthly
- $145,000 target: $680 monthly
For a 10-year-old (8 years to save):
- $67,000 target: $595 monthly
- $100,000 target: $890 monthly
- $145,000 target: $1,290 monthly
These calculations assume consistent monthly contributions with 6% returns. Lower returns require higher monthly contributions. Higher returns reduce monthly needs. Returns also vary based on asset allocation – aggressive portfolios targeting higher returns carry more risk.
Age-based 529 portfolios automatically shift from aggressive to conservative allocations as the beneficiary approaches college age. This protects accumulated savings from market downturns near enrollment but also reduces potential returns in later years.
Starting Late: Catch-Up Strategies When Time Is Short
Families starting college savings when children reach middle or high school face compressed timelines. The monthly contributions required grow substantially as the time horizon shortens.
Strategies for late starters include:
- Increase contribution amounts aggressively: Direct larger portions of income toward college savings, potentially reducing other discretionary spending
- Consider two-year community college start: Beginning at community college cuts total costs significantly while preserving four-year degree completion
- Plan for student employment: Students working 15-20 hours weekly during school can contribute $5,000 to $8,000 annually toward expenses
- Accept strategic use of loans: Federal student loans with favorable terms might cover portions of costs when savings fall short
- Target less expensive schools initially: Choosing public in-state universities over private schools reduces total funding needs
A family with a 14-year-old and no college savings cannot realistically save $200,000 in four years through monthly contributions alone. Saving $67,000 requires approximately $1,250 monthly – often unrealistic for middle-income families. This scenario demands combining modest savings with substantial current income allocation during college years, student earnings, and potentially loans.
Financial Aid Impact: How Savings Affect Eligibility
College savings affect financial aid calculations but less than most families expect. The FAFSA (Free Application for Federal Student Aid) assesses parent-owned assets including 529 plans at 5.6%. This means $50,000 in a parent-owned 529 plan increases the Expected Family Contribution by approximately $2,800 annually.
Parent income affects financial aid calculations far more than savings. The FAFSA assesses parent income at rates up to 47% after various allowances. A family earning $100,000 might contribute $20,000 to $30,000 annually toward college costs based on income, regardless of savings.
Private colleges using the CSS Profile for institutional aid apply more complex formulas. These schools might assess parent assets at higher rates and examine home equity, retirement accounts, and other resources the FAFSA excludes.
Families expecting substantial need-based aid should understand these dynamics:
- Low to moderate income families: Families earning under $60,000 often qualify for significant aid regardless of modest savings
- Middle income families ($75,000 to $150,000): Aid eligibility varies substantially by school; public universities provide less aid than well-endowed private schools
- Higher income families (over $150,000): Need-based aid rarely covers substantial portions of costs, though merit aid remains possible
Many families reduce savings to maximize aid eligibility – this strategy often backfires. The modest increase in aid eligibility rarely compensates for reduced savings accumulation and lost tax-free growth. A family reducing 529 savings by $50,000 might increase aid eligibility by $2,800 annually ($11,200 over four years) while sacrificing $50,000 plus years of tax-free investment growth.
Merit Aid and Scholarship Considerations
Merit-based aid doesn’t depend on financial need. Students with strong academic records, test scores, or special talents qualify for merit scholarships regardless of family income or savings.
Many public universities offer automatic merit scholarships based on GPA and test scores. Texas public universities provide various merit-based programs. Private universities often use merit aid to attract high-achieving students who might otherwise choose less expensive public options.
However, merit aid remains unpredictable when children are young. A kindergartener might develop into a merit scholarship candidate – or might not. Planning college savings around hoped-for merit aid creates risk. Better to save as if no merit aid will materialize, then benefit if scholarships reduce actual costs.
When merit scholarships do materialize, families with substantial 529 savings have options: apply the funds to graduate school, change the beneficiary to another child, or use the scholarship exception to withdraw funds without the 10% penalty on earnings.
Balancing College Savings With Retirement and Other Goals
College savings competes with retirement funding, emergency reserves, and debt reduction. Financial advisors frequently remind families that students can borrow for college but cannot borrow for retirement.
Retirement contributions through employer plans often provide matching funds – free money that college savings cannot replicate. A family contributing enough to capture full employer matches (typically 3% to 6% of salary) before funding college savings makes mathematical sense.
Emergency reserves prevent families from raiding college savings or retirement accounts during financial crises. Maintaining three to six months of expenses in accessible savings takes priority over aggressive college funding.
High-interest debt reduction typically beats college savings returns. Paying off credit cards charging 18% to 24% interest provides guaranteed returns exceeding what college savings accounts can reasonably achieve.
A reasonable priority sequence for most families:
- First priority: Contribute enough to employer retirement plans to capture full company match
- Second priority: Establish emergency fund covering three to six months of expenses
- Third priority: Eliminate high-interest debt (credit cards, personal loans)
- Fourth priority: Split additional savings between retirement and college funding based on timeline
- Fifth priority: Additional goals including house down payment, car replacement, other savings
This sequence ensures financial stability while building college savings. Families derailing retirement savings to fully fund college accounts often regret the choice when retirement approaches.
Multiple Children: Scaling Savings Across Siblings
Saving for multiple children requires realistic expectations. A family saving $500 monthly for one child’s college might struggle to save $1,000 monthly for two children or $1,500 monthly for three.
Strategies for multiple children include:
- Equal contributions per child: Split available college savings equally, accepting that each child receives less than full funding targets
- Frontload older children: Direct heavier contributions toward children approaching college age, then shift focus to younger siblings
- Shared family strategy: Maintain one family education fund understanding that distribution might vary by actual costs and circumstances
- Differential funding by likely costs: A child targeting expensive private schools might receive larger allocations than siblings attending public universities
Age spacing affects strategy. Children four years apart never overlap in college – the family handles one tuition bill at a time. Children two years apart create two-year overlaps requiring simultaneous funding. Close spacing can actually benefit financial aid calculations since multiple children in college simultaneously reduces expected contributions per student.
Setting Your Family’s College Savings Target
Determining how much to save for college requires honest assessment of your situation: your children’s ages, your income during their college years, expected school types, and your tolerance for using loans.
A realistic approach for most Texas families targeting public in-state universities:
- Start early if possible: Beginning when children are young reduces required monthly contributions substantially
- Target one-third to one-half of projected costs: This provides substantial foundation while acknowledging other funding sources will contribute
- Use age-appropriate investment allocations: Aggressive growth investments when children are young, shifting to conservative options as college approaches
- Adjust contributions as income grows: Increase monthly savings when promotions or raises provide additional income
- Consider Texas 529 plans for state-specific benefits: Texas plans offer up to $500,000 contribution limits with no state income tax complications
Families targeting private universities need higher savings goals – potentially $145,000 to $215,000 per child for one-third to one-half funding. However, many private universities provide substantial financial aid that public schools cannot match. A family earning $125,000 might find private school net costs similar to out-of-state public costs after institutional aid.
The most important step involves starting consistent contributions. Saving $220 monthly from birth generates approximately $67,000 by age 18 with 6% returns – covering roughly one-third of projected public in-state costs. Saving $330 monthly generates approximately $100,000 – covering one-half of costs. These amounts lie within reach for many middle-income Texas families prioritizing education funding.
College savings represents one component of comprehensive financial planning. The decision about how much to save should account for your complete financial picture – retirement needs, emergency reserves, debt management, and other goals competing for the same dollars.
If you’re unsure whether your current college savings strategy aligns with realistic targets for your children’s education, reviewing your approach with a financial advisor creates clarity. The interaction between savings accumulation, projected costs, financial aid eligibility, and your family’s specific timeline determines whether you’re on track or need to adjust your contributions.
Disclosures:
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
The above targets are estimates based on certain assumptions and analysis made by the advisor. There is no guarantee that the estimates will be achieved.
