How Much Does College Cost?

Key facts

  • The cost of college is increasing faster than inflation, and this trend is expected to continue.
  • Many families are choosing to start savings for their children’s education as early as possible.
  • State-sponsored 529 college savings plans are a tax-advantaged solution used to grow college savings.

As college costs continue to rise, many families want to start saving for their children’s education right away. However, it’s hard to decide how much to set aside if you don’t have a sense of the expected price tag of a four-year degree. The type of school your child chooses will impact the price of tuition, and there are a variety of additional expenses to consider for a holistic estimate of the total.

Calculating the Cost of College Tuition, Fees, Room and Board

The basic college costs include tuition, fees, room and board, which are known collectively as TFRB. This amount varies dramatically from school to school, depending on whether the institution is private or public and whether your student receives the in-state or out-of-state pricing.

Higher education expenses are increasing even faster than inflation. The least expensive four-year schools are beating inflation by 2% when it comes to TFRB. More expensive private four-year colleges are increasing at 2.2% of inflation. The total amount for TFRB that families must save depends heavily on when children will enter college.

The table below compares the estimated cost of secondary education today with the projected costs 18 years from now. Note that the projections below are based on costs continuing to rise at current rates.

Type of School Average TFRB (2015 – 2016) Four Year Total (2015 – 2016 One Year Average TFRB (2033 – 2034) Four Year Total (2033 – 2034)
Four-Year Private College $43,921 per year $175,684 $92,107 per year $368,428
Four-Year/In-State Public College $19,548 per year $78,192 $39,600 per year $158,400
Source: Wealthfront College Savings White Paper

Unfortunately, these basic expenses aren’t the only costs of going away to school. Depending on location, there could be travel expenses, and students attending school now can expect the average cost of books to be $1,200 per year.

Lab fees may be associated with certain math and science classes, and various majors come with a long list of specific supply requirements. For example, musicians need instruments, audio and visual engineers need sound and video equipment, and almost every class requires access to at least a basic personal computer. The resulting total sticker price for a four-year college is quite a bit more than basic tuition.

College Savings Solutions Combat Rising College Costs

While setting money aside in any sort of savings or investment account is a good start, many families find that a 529 college savings plan is a better choice. Designed specifically for the purpose of saving for college, 529 plans offer tax advantages that other investment accounts do not. Contributions to a 529 plan are counted as regular income on your federal tax returns, but the account’s earnings grow tax-free.

Each state sets up its own version of the 529 plan, so you can shop around to find the plan that will best suit your needs over time. Some states do offer additional tax savings for their own residents.

A U.S. citizen or resident alien with a valid social security number or taxpayer identification number who is at least 18 years old can open a 529 plan for any beneficiary. In some cases, adult students may wish to open a 529 account for their own benefit. Each plan can only have a single beneficiary, but an account owner can change the beneficiary without incurring federal income tax or penalty if the new beneficiary is an eligible family member of the original beneficiary.

Students can fund qualified education expenses from a 529 plan at a variety of eligible institutions. As long as their selected college or university is accredited, offers degree programs and is eligible to participate in federal student aid programs, the school is likely to be eligible for payments from a 529 plan.


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This article is not intended as tax advice, and Wealthfront does not represent in any manner that the outcomes described herein will result in any particular tax consequence. Prospective investors should confer with their personal tax advisors regarding the tax consequences based on their particular circumstances. Wealthfront assumes no responsibility for the tax consequences to any investor of any transaction. Investors and their personal tax advisors are responsible for how the transactions in an account are reported to the IRS or any other taxing authority.

For information on any 529 college savings plan contact the plan provider for details on the investment objectives, risks, charges, expenses, and other important information included in the Plan Description and Participation Agreement; read and consider it carefully before investing.

Please Note: Before investing in any 529 plan, you should consider whether you or the beneficiary’s home state offers a 529 plan that provides its taxpayers with favorable state tax and other benefits that are only available through investment in the home state’s 529 plan. You also should consult your financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state’s 529 plan(s), or any other 529 plan, to learn more about those plans’ features, benefits and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

Earnings on nonqualified withdrawals are subject to federal income tax and may be subject to a 10 percent federal tax penalty, as well as state and local income taxes. The availability of tax and other benefits may be contingent on meeting other requirements.