Venessa Wong

Tue, Jun 17, 2025, 10:14 AM11 min read

American families face ongoing college-affordability and student-debt crises as new technologies like artificial intelligence transform the workplace, casting doubt on the value of higher education in the future.

Despite these challenges, financial planners say it remains wise for parents to prepare for the rising costs of education by saving — a lot — for college, and talking to their children about their options.

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If your newborn today plans to attend college, you should plan to save roughly $105,000 in a college fund by the time they turn 18, which would cover nearly 50% of their total college expenses — tuition, fees, housing and food — at a four-year, public in-state university. That’s the latest advice for parents from T. Rowe Price TROW, an investment firm that offers college-savings plans.

In order to achieve this staggering figure, parents today could invest $280 each month per child from the time they are born into a 529 college-savings account that earns 6% annually, which could grow to more than $19,000 by age 5, almost $45,000 by age 10, about $64,000 by age 13, and nearly $105,000 by the time they turn 18. That six-figure total is approximately 1.75 times the $59,972 estimated annual cost of college by that time. To fully cover 50%, parents would continue saving through the four years their child is enrolled in school.

The analysis assumes the other half would be covered by student loans, scholarships and grants. Almost 30% of undergraduates receive federal student loans.

Setting aside $280 per month for two children would add up to $6,720 per year. For a family of four making the average gross income of about $146,000, according to the Bureau of Labor Statistics, that would translate to 4.6% of gross income.

“That’s achievable. They just have to control their spending,” Mark Kantrowitz, author of “How to Appeal for More College Financial Aid,” told MarketWatch. Reaching this savings goal might require sacrificing wants, like vacations, but “vacation is a luxury, not a necessity, so that should be the lowest priority,” he said.