Saving for college: How much is enough?

Paying for college is one of the largest financial goals many families face. While the benefits of a college education are significant—from expanded career opportunities to lifelong connections—the cost can feel daunting without a clear plan.

College expenses vary widely depending on the type of school, location, and living arrangements, which is why it’s important to start with a realistic understanding of what college may cost before deciding how much to save. A thoughtful, long-term savings strategy, often using various types of college savings plans, can help families prepare for these expenses in a steady, intentional way, while keeping other financial priorities in view.

Here’s how to think about college costs, and what to consider as you and your child plan how much to save.

Most families can expect annual college costs to fall somewhere between the low-$20,000s and the mid-$60,000s.^*

College Board data shows that this wide range reflects major differences between public two-year colleges and private nonprofit four-year institutions, once tuition, fees, housing and everyday living expenses are factored in. Understanding that spread can help families focus less on headline prices and more on estimating costs based on the types of schools and living situations they’re considering.

College costs have also changed over time, though not evenly. Inflation-adjusted College Board data indicates that tuition and fees at public four-year institutions increased substantially over the past few decades, while costs at private institutions rose more gradually. In more recent years, cost growth has slowed and, in some cases, leveled off—a reminder that future increases aren’t guaranteed, but uncertainty remains.

There’s no single right amount to save for college, but there is a practical way to estimate what makes sense for your family. How much you save depends on the type of school your child may attend, how much you expect them to contribute, and how college fits alongside your other financial priorities. If you’re starting early, it’s okay if those details are still unknown—you can adjust your plan as your child’s interests and options take shape.

Starting early matters more than predicting costs perfectly. Even modest monthly savings—such as $50 to $100 per month starting at birth—can add up meaningfully over time. By combining time, compound growth, and tax-advantaged college savings accounts, families can reduce how much they’ll need to rely on loans later and keep more options open when college decisions arrive.

The examples below illustrate how consistent monthly savings can grow over time under different timelines and return assumptions.

The best way to save for college is the one that fits your timeline, tax situation and overall financial priorities. Many families use a combination of savings tools, rather than relying on a single account, to balance flexibility, growth potential and tax-efficiency.

Here are the six most common options to consider:

• Best for: Families who want a flexible, tax-advantaged way to save for education over time and keep options open as plans evolve.

A 529 savings plan is a tax-advantaged way to save for education and is often the foundation of a college savings strategy. Plans are sponsored by states or educational institutions and managed by investment companies.

Contributions aren’t deductible for federal income tax purposes, but many states offer a state tax deduction or credit. Earnings grow tax-deferred, and withdrawals used for qualified education expenses are generally tax-free at the federal level.

Most 529 plans allow for high contribution limits, with total account balance caps commonly ranging from $250,000 to $500,000, depending on the state.

Qualified education expenses typically include tuition and fees, books and supplies, required equipment, and certain room and board costs for eligible students. If funds are used for non-qualified expenses, earnings may be subject to income taxes and a 10% federal penalty, and any state tax benefits received may need to be repaid.

• Best for: Families confident their child will attend an in-state public college or a participating private institution.

A 529 Prepaid Tuition Plan allows you to lock in today’s tuition prices by purchasing credits or units that can be used toward future tuition and fees at participating colleges and universities. When your child enrolls, those credits are applied to cover some or all of the eligible tuition costs, and you pay any remaining expenses at current rates.

Most prepaid plans are offered by states for in-state public colleges and are typically limited to state residents. In addition, a private college 529 plan can be used at nearly 300 participating private colleges and universities nationwide.

If plans change, refund and transfer options for unused credits vary by program, making it important to understand each plan’s rules before contributing.

• Best for: Families who want maximum flexibility in how funds can be used and are comfortable with the child gaining full control of the money in early adulthood.

A Uniform Gifts to Minors Act/Uniform Transfers to Minors Act (UGMA/UTMA) account is a custodial account that allows you to save or invest money for a child’s future. The account is legally owned by the child, but managed by an adult custodian—often a parent or grandparent—until the child reaches the age of majority (typically 18 or 21, depending on the state).

Contributions to an UGMA/UTMA account are considered gifts. For 2026, you can contribute up to $19,000 per donor per beneficiary without triggering gift tax reporting. While most families won’t reach lifetime limits, it’s worth noting that gifts above the annual exclusion count toward the federal lifetime gift and estate tax exemption.

Earnings in the account may be taxable each year, generally at the child’s tax rate, though higher balances can trigger the “kiddie tax” rules. Unlike 529 plans, withdrawals can be used for any purpose, not just education, as long as the money benefits the child. Once the child reaches the age of majority, they gain full control of the account.

• Best for: Families who want tax-free education withdrawals and flexibility to cover K–12 or college expenses, and who are comfortable with lower contribution limits.

A Coverdell Education Savings Account (ESA) is a custodial account that offers tax advantages when used for qualified education expenses. Contributions aren’t tax-deductible, but earnings grow tax-deferred, and withdrawals used for qualified education expenses are tax-free.

Coverdells can be used for both K–12 and higher education expenses, but they have a $2,000 annual contribution limit per beneficiary. Income limits may restrict individual contributors, though trusts and corporations can contribute. Any remaining balance generally must be distributed by the beneficiary’s 30th birthday.

• Best for: Families who want flexibility, are balancing college with other priorities like retirement, or prefer savings options without education-specific rules.

Some families choose to use general savings or investment accounts alongside education-specific options, often to preserve flexibility or balance college costs with other priorities, like retirement. The goal isn’t to fund college at any cost, but to avoid running out of money while paying for it.

For families with a longer time horizon, taxable brokerage accounts can offer broader investment choices and flexibility if funds are ultimately needed for non-education goals. More conservative options, such as certificates of deposit (CDs), government bonds, or high-yield savings accounts, may also play a role, particularly for near-term expenses or families who prefer stability and easy access to funds.

These approaches don’t offer the same tax benefits as education-specific accounts, but they can be useful as part of a balanced, flexible college funding strategy.

• Best for: Families with relatives who want to contribute and are comfortable setting clear expectations upfront.

Some families receive help with college costs from grandparents or other relatives, either as gifts or loans. If family support is part of your plan, it’s important to talk through expectations in advance, such as whether the assistance is tied to academic performance or other conditions.

It’s also helpful to understand the tax implications. Loans that don’t follow IRS guidelines may be treated as gifts, which could have tax consequences for the giver. Clear communication can help ensure that any support complements your overall college savings strategy without unintended surprises.

Related: Considerations for gifting money to grandchildren

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How much should you save for college? Use our college savings calculator to estimate your goal and build a plan that fits your family.

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You don’t have to navigate college savings on your own. A Thrivent financial advisor can help you move beyond general guidance to a plan tailored to your family’s goals, values, and timeline, so you can prepare with clarity and flexibility as college approaches.