How much should I be saving monthly for college?

There is no single figure because it depends on years remaining, expected return, and the type of institution. As a starting point, run the projected fund against the inflated cost of the specific course you expect, then adjust the monthly contribution until the shortfall closes to a level you are comfortable funding from income or loans at enrolment.

What return should I assume for a 529 plan?

Most 529 plans default into an age-based portfolio that holds more equities when the child is young and shifts toward bonds as enrolment nears, so the effective average return over the full period is usually lower than a constant equity-only assumption. A blended figure in the 5-7% range is a reasonable middle ground for a plan opened well before high school.

Does financial aid reduce the amount I actually need to save?

It can, but aid is not guaranteed and depends on income, assets and the specific institution's own formula, so it should not be built into the savings target itself. Treat the projected shortfall from this calculator as the amount to plan for before any aid offer arrives, and adjust once an actual award letter is in hand.

How does tuition inflation compare with general inflation?

Published tuition and required fees have historically risen faster than the broader consumer price index over multi-decade stretches, though the gap has narrowed in more recent years as many institutions have slowed sticker-price increases. A 4-5% assumption is a common middle-ground planning figure, but check recent trend data for the specific type of institution rather than assuming the historical average continues unchanged.

Whose name should the college savings account be in?

For US financial aid purposes, an account owned by a parent is assessed far more lightly than one owned by the student, so a parent-owned 529 typically preserves more aid eligibility than an account titled to the child or a grandparent, even though the underlying dollars are the same.

What happens to a 529 plan if the child does not go to college?

Funds can be redirected to another eligible family member, used for qualifying apprenticeship costs or up to a lifetime limit rolled into a Roth IRA for the beneficiary under rules introduced by SECURE 2.0, or withdrawn outright with income tax and a 10% penalty on the earnings portion. The contribution itself is returned without penalty since it was already taxed before going in.

College savings calculator

This calculator compounds whatever you have saved and contribute monthly, then compares the resulting fund against the full cost of the course once tuition has inflated for however many years remain before enrolment. The single most useful number it produces is the shortfall or surplus, because that figure tells you today whether the current contribution needs to change rather than leaving you to find out at the point the tuition bill arrives.

Reading the shortfall figure correctly

A fund of 75,350 built from 6,000 saved so far plus 300 a month at a 6% return over 12 years looks substantial until it meets a course that, at 28,000 a year today inflating at 4% for 12 years and running four years, will actually cost about 179,320 in total. That leaves a shortfall of roughly 103,970, or nearly 60% of the bill still uncovered even though the contribution schedule sounds reasonable.

The gap exists because tuition inflation and investment return are racing each other over the same stretch of years, and tuition usually wins unless the contribution is large or the return generous. Treat the shortfall as the number to shrink through contributions, not the projected fund as a number to feel good about on its own.

A fund that covers 90% or more of the projected bill is a strong position; below 50% means either the monthly contribution needs a meaningful increase or the family should plan on the difference coming from loans, current income, or a less expensive institution.

Three savings paths compared

Starting late with a large lump sum: 15,000 already saved plus 800 a month at 5% for the five years before enrolment grows to about 73,655. Against a course costing 32,000 a year today, inflating at 4.5% for five years and lasting four years, the future bill is about 159,510 — a shortfall near 85,860. Five years is simply not enough runway for compounding to close a gap this size, so the contribution itself has to do almost all the work.

Starting from birth: 2,000 saved plus 400 a month at 7% for 18 years grows to about 179,315. A 24,000-a-year course today, inflating at 5% for those 18 years and running four years, costs about 231,035 by the time it starts, leaving a shortfall of roughly 51,720. Eighteen years of compounding at a stock-heavy return closes far more of the gap than the same monthly amount could manage in five, even though the monthly contribution here is smaller than in the late-start example.

Mid-course correction: take the 12-year, 6,000-plus-300-a-month scenario above and raise the contribution to 700 a month once the 103,970 shortfall becomes visible. Re-running the same 6% return and 12-year horizon brings the projected fund to roughly 159,410 against the same 179,320 target — the shortfall shrinks to about 19,910. More than doubling the contribution partway through closes most, but not all, of a gap discovered late, which is the argument for checking this figure every year or two rather than once at the start.

Where the compounding assumption falls apart

The model assumes one constant annual return applied every month for the entire savings period, with no down years and no rebalancing out of equities as enrolment approaches. Real 529 portfolios use age-based glide paths that shift toward bonds and cash in the final few years specifically to avoid a market crash landing on the tuition due date, which lowers the return actually earned near the end compared with the flat rate this tool assumes.

It also assumes tuition inflation is a single constant rate for the whole horizon, when in practice published sticker prices have grown unevenly by decade and vary enormously between a public in-state school, a public out-of-state school, and a private nonprofit. Picking one inflation figure that matches the type of institution you actually expect matters more than getting the return assumption exactly right.

Finally, the tool ignores financial aid, scholarships, and any net-price discount off the published sticker figure, all of which can move the real bill well below the inflated number shown here. It also does not account for withdrawing the fund gradually across the four years of the course rather than needing the whole amount on day one, which changes how much can keep compounding while it is being spent.

Account types and timing rules that affect the outcome

In the United States, a 529 plan lets the growth and qualified withdrawals go untaxed at the federal level, and most states offer an income tax deduction or credit for contributions to their own plan, though a handful tax withdrawals used for K-12 tuition differently from those used for college. Contribution limits are set per state and are typically high enough not to bind a normal savings plan, but the annual gift tax exclusion still governs how much a grandparent can contribute without filing a gift tax return, so large lump-sum gifts should be checked against the current IRS exclusion amount before being made.

Financial aid formulas treat a 529 owned by a parent far more favourably than one owned by the student or a grandparent, since parent-owned assets are assessed at a much lower rate on the FAFSA than student income or assets held outside a parent-owned account. Where the account sits, not just how large it is, changes how much aid a family is offered.

UK families saving toward university costs have no direct 529 equivalent; a Junior ISA is the closest wrapper, growth is tax-free but there is no separate education-specific tax relief, and UK tuition fees are themselves capped and set by government rather than inflating freely like US sticker prices, so the inflation assumption in this tool needs to be set much lower, or to zero, for a UK scenario.

Frequently asked questions

How much should I be saving monthly for college?: There is no single figure because it depends on years remaining, expected return, and the type of institution. As a starting point, run the projected fund against the inflated cost of the specific course you expect, then adjust the monthly contribution until the shortfall closes to a level you are comfortable funding from income or loans at enrolment.
What return should I assume for a 529 plan?: Most 529 plans default into an age-based portfolio that holds more equities when the child is young and shifts toward bonds as enrolment nears, so the effective average return over the full period is usually lower than a constant equity-only assumption. A blended figure in the 5-7% range is a reasonable middle ground for a plan opened well before high school.
Does financial aid reduce the amount I actually need to save?: It can, but aid is not guaranteed and depends on income, assets and the specific institution's own formula, so it should not be built into the savings target itself. Treat the projected shortfall from this calculator as the amount to plan for before any aid offer arrives, and adjust once an actual award letter is in hand.
How does tuition inflation compare with general inflation?: Published tuition and required fees have historically risen faster than the broader consumer price index over multi-decade stretches, though the gap has narrowed in more recent years as many institutions have slowed sticker-price increases. A 4-5% assumption is a common middle-ground planning figure, but check recent trend data for the specific type of institution rather than assuming the historical average continues unchanged.
Whose name should the college savings account be in?: For US financial aid purposes, an account owned by a parent is assessed far more lightly than one owned by the student, so a parent-owned 529 typically preserves more aid eligibility than an account titled to the child or a grandparent, even though the underlying dollars are the same.
What happens to a 529 plan if the child does not go to college?: Funds can be redirected to another eligible family member, used for qualifying apprenticeship costs or up to a lifetime limit rolled into a Roth IRA for the beneficiary under rules introduced by SECURE 2.0, or withdrawn outright with income tax and a 10% penalty on the earnings portion. The contribution itself is returned without penalty since it was already taxed before going in.

Sources

IRS — 529 Plans: Questions and Answers — Explains federal tax treatment of qualified tuition program contributions and withdrawals (current guidance, checked 2025).
National Center for Education Statistics — Fast Facts: Tuition costs of colleges and universities — Reports average total cost of attendance for the 2022-23 academic year across institution types.