What college really costs - and how much should you save?

There's no getting around it. College is expensive. It may, however, cost less than you think.

While the price listed on a school’s website may be jaw-dropping, remember the published price is like the sticker price on a car. It doesn’t always reflect the true cost, which is referred to as the net price.

The net price is the sticker price minus any scholarships, need-based grants, or other types of financial aid a student receives and doesn't have to repay. When thinking about how much you may have to pay for your child's college education, try to focus on the net price.

Here are the average costs for 2018–2019, including tuition, fees, and room and board:

  Public college, in-state student
Private college
Average sticker price $21,370 $48,510
Average net price $14,880 $27,290

Source: Average price and average net price from The College Board, "Trends in College Pricing 2018."


How much to save


College costs can be daunting for a lot of people. One strategy that can make it less overwhelming is to set a goal for saving. Perhaps it’s saving a percentage of the 4-year cost—maybe a third, or 33%—with the expectation that a combination of income during the college years and loans will cover the remainder.

So let's look at an example using that as the savings goal. We'll assume you have a 3-year-old daughter and haven't started saving for her college education. You expect she'll begin at age 18, so we'll estimate the cost of college 15 years from now.

Projected net college prices for a 3-year-old

  Public college, in-state student
Private college
Average 4-year cost $133,330 $244,531
33% saving goal $43,999 $80,695

In this example, you'd be able to reach the public school goal by saving $129 a month. For the private college goal, you'd have to save $237 a month.

Source: Calculated using Vanguard's college savings planner. The average 4-year cost of college was calculated by using the current net prices of $14,880 for a public college and $27,290 for a private college, and a cost increase of 5% annually. The monthly savings amounts are based on a 5% average rate of return on your savings. This hypothetical example doesn't represent the return on any particular investment and the rate is not guaranteed.


Save what you can

If saving over $100 a month isn’t realistic, save what you can. And remember—every dollar you can save is one less your child will potentially have to borrow!

The information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice.

For more information about New York's 529 College Savings Program Direct Plan, download a Disclosure Booklet and Tuition Savings Agreement or request one by calling 877-NYSAVES (877-697-2837). This document includes investment objectives, risks, charges, expenses, and other information. You should read and consider them carefully before investing. Before you invest, consider whether your or the beneficiary's home state offers any state tax or other benefits that are only available for investments in that state's 529 plan. Other state benefits may include financial aid, scholarship funds, and protection from creditors.

All investing is subject to risk, including the possible loss of the money you invest.

The Comptroller of the State of New York and the New York State Higher Education Services Corporation are the Program Administrators and are responsible for implementing and administering the Direct Plan.

Ascensus Broker Dealer Services, LLC, serves as Program Manager and, in connection with its affiliates, provides recordkeeping and administrative support services and is responsible for day-to-day operations of the Direct Plan. The Vanguard Group, Inc., serves as the Investment Manager. Vanguard Marketing Corporation provides marketing and distribution services to the Direct Plan.