How Much Should You Be Saving for College in 2026?

IN THIS ARTICLE:

• The Real Cost of College: Beyond the Sticker Price
• Projecting Future Costs: The Impact of Inflation
• Strategic Funding: Balancing Education and Retirement
• The Role of Professional Guidance

The Real Cost of College: Beyond the Sticker Price

Understanding the "All-In" Cost

When you see headlines about the average cost of college, those numbers often tell only part of the story. For the 2025–26 academic year, published tuition and fees at public four-year institutions average $25,850 for in-state students.¹ Private nonprofit four-year colleges average $60,920.¹ These numbers represent the published "sticker price" but don't capture the full cost of attendance or the reality that many families often spend considerably more than these averages suggest.

The difference between tuition and the total cost of attendance is significant. When you add room, board, books, supplies, transportation, and personal expenses, the total cost of attendance for public four-year institutions reaches approximately $38,700 for in-state students, while private nonprofit colleges average around $56,600.² For families accustomed to a certain standard of living, actual expenses frequently exceed even these comprehensive estimates.

Room, Board, and Lifestyle Factors

One of the most commonly underestimated expenses is room and board. The average cost of on-campus room and board for the 2024-2025 school year was $12,917 for four-year public institutions and $13,842 for four-year private nonprofit institutions.³ These costs can equal or even exceed tuition, particularly when students move off campus after their freshman year.

Beyond the basics, lifestyle factors add up quickly. Study abroad programs, participation in Greek life, extracurricular activities, and travel home during breaks all contribute to costs that university estimates rarely capture. These expenses are part of the college experience for many students, and they should be factored into your savings strategy from the beginning.

Projecting Future Costs: The Impact of Inflation

How Much Does 4 Years of College Cost (Now vs. Later)?

Understanding how college costs will grow over time is essential for effective planning. The average annual cost of tuition at public colleges has increased at an average rate of 3.21% over the past three years.⁴ Looking ahead, statistics indicate that average tuition at all postsecondary institutions will increase 3.25% for the 2026–27 academic year, with four-year universities projected to see a 2.28% average increase.⁴

While these inflation rates have moderated compared to historical peaks (the 1980s saw tuition increases of 151%⁴), even modest annual increases compound significantly over time. For a child who is currently five years old, by the time they're ready for college in 2039, a four-year degree that costs $100,000 today could cost approximately $145,000, assuming a 3% annual inflation rate.

The key to managing these rising costs is to start saving early. The earlier you begin, the more time your investments have to grow, potentially outpacing college cost inflation. This is where strategic planning becomes crucial.

Strategic Funding: Balancing Education and Retirement

It's a Decumulation Challenge, Not Just Savings

For many families, especially those nearing retirement, paying for college goes beyond accumulating savings to strategic withdrawal planning, often called decumulation. This means carefully coordinating how and when you draw from various accounts to pay for education expenses while preserving your retirement security.

The goal is to fund your child's education in a way that supports your broader financial priorities. This might mean balancing current income, existing savings, and strategic use of education-specific accounts. The important principle is that paying for college should enhance your family's future, not jeopardize it.

Smart Funding Strategies

Tax-advantaged accounts, such as 529 college savings plans, offer significant benefits for education funding. Contributions to 529 plans grow tax-free, and withdrawals used for qualified education expenses are also tax-free. This may result in substantial savings over time compared to taxable accounts.

However, an effective strategy often involves more than just one type of account. You might combine current income, 529 plans, and other savings vehicles to create a comprehensive funding approach. Exploring whether your students might qualify for merit-based scholarships or other forms of non-need-based aid can reduce the overall burden.

The key is to develop a holistic plan that considers your complete financial picture, including your retirement timeline, other savings goals, and your family's specific circumstances. With the right approach, you can fund your child's education without taking on unnecessary debt or compromising your retirement security.

The Role of Professional Guidance

Navigating College Prep with an Advisor

Financial planning for college involves complex decisions about savings strategies, withdrawal timing, tax implications, and balancing multiple financial goals. This is where professional guidance can make a significant difference. A financial advisor who understands these challenges can help you create a personalized plan that addresses your specific situation.

An advisor can help you:

• Estimate the real cost of college based on your family's lifestyle and expectations
• Develop a savings strategy that aligns with your other financial goals
• Navigate the tax implications of different funding approaches
• Create a decumulation strategy that preserves your retirement
• Adjust your plan as circumstances change over time

For families with complex financial situations, the value of personalized advice cannot be overstated. The right guidance can help you feel confident that you're making informed decisions that support both your child's education and your family's long-term financial health.

Moving Forward with Confidence

Planning for college costs can feel daunting, but it doesn't have to be. By understanding the real cost of attendance, accounting for inflation, and developing a strategic funding approach, you can support your child's education without sacrificing your other financial priorities. The key is to start early, stay informed, and seek professional guidance when navigating complex decisions.

Whether your child is a toddler or a teenager, now is the time to review your college savings strategy and ensure you're on track. With the right plan in place, you can approach this significant expense with confidence, knowing you're building a solid foundation for your family's future.