College Tuition Estimate

College Tuition Estimate

College Tuition Estimate

Hello $wanigans! Welcome back to The Green Swan. One of my annual personal finance to-do projects is to evaluate my 529 accounts and my college tuition estimate. I’ve started this annual project shortly after my little one’s birth, just over two years ago. My second review of the estimates was completed in April 2015 around the time of his first birthday and I am overdue for my next re-assessment. I blame the blog…it has been a pretty huge time commitment for me in recent months! But with the urge from Kalie at Pretend to Be Poor who left a comment on a previous post regarding how I prepare my college tuition estimate, I have recently completed my annual review and am ready to share my version 3.0 of my College Tuition Estimate! Thanks for the push to get it done, Kalie!


First, let me explain my process. As previously mentioned, my wife and I have a two year old and we wanted to start early with funding his college education to maximize its tax benefits. In order to understand how much I would need to contribute over time, however, I needed to have a decent estimate of what college tuition would cost in 2032.

As many of us are all too familiar with, college costs continue to go up and up and up.  In the last decade plus, it has been staggering the increase in tuition with some years seeing nearly double-digit percentage increases.

The chart below provided by The College Board outlines the tuition costs in 2015 dollars going back to 1975. This chart shows how the increases in tuition have consistently outpaced inflation by a wide margin!

College Tuition Cost

Tuition cost increases have outpaced inflation for the last 40 years! That makes the prospect of tuition costs in 2032 to be quite scary! Will the cost increases keep up at the same pace they have been historically? Some would say no, it is inconceivable for that to be the case because then basically nobody could afford it (you could argue that point today even!). But if it has been that way the last 40 years, who is to say it won’t continue for the next 18…

If historical price increases aren’t a good predictor of future price increases though, then how much will tuition increase in the future? For that question, I turned to the online community to find out what other folks were estimating college costs to be, and compiled a number of estimates to formulate my opinion.

2014 College Tuition Cost Estimate

As outlined in the chart below, in 2014, I compiled estimates from Saving For College, FinAid, and T Rowe Price as well as my own discretionary estimates based on the 2013 in-state cost of tuition at University or North Carolina per the US Department of Education with 5% and 7% inflation estimates. Not that I expect to be living in North Carolina still in 2032 (maybe, but maybe not…) nor do I know if the little one will prefer UNC or NC State or any other in-state schools. I simply just picked it in order to come up with a ballpark figure.

College Tuition Cost

With that background, you can see the estimates come in all over the board. Saving For College expected a 5% inflation, FinAid a 7% factor, and T Rowe Price a 6% factor. Based on my UNC estimates, you can see how much of a difference the inflation factor plays in the estimate given how far apart those two figures are (almost $100K difference!).

My initial conclusion was to expect public college to cost near $250K, or at least that’s what I narrowed in on.

2015 College Tuition Cost Estimate

In April 2015 I ran the estimates again, this time solely relying on Saving For College. I took this simpler approach since I was solely looking to confirm the 2014 numbers were still in the right ballpark. The addition I made in 2015 though was cost estimates for private universities as well as public (who knows, maybe the little guy will get accepted to Harvard…Yikes!).

College Tuition Cost

My conclusion in 2015 didn’t change much for the cost of public universities. While the ranges dropped because of lower inflation estimates, I don’t mind conservatively estimating approximately $200K – $250K still. For private schools, it is probably safe to estimate $350K or more.

2016 College Tuition Cost Estimate

In July 2016 I again ran the estimates, but I grabbed them from a few more sources to have a more complete view. I also ran both private and public universities again this year.

College Tuition Cost

Saving For College continues to use slightly lower inflation estimates than the other sources. Using the more conservative estimate with 6% inflation, T Rowe Price and American Funds continue to validate my range of $200K – $250K. The private university costs are pretty astronomical, ranging from $350K – $500K.

How Much We Plan to Pay

Every parent needs to determine how much they are willing and able to pay for their children’s college tuition. Our baseline was what our own parents paid for our tuition. My wife was fortunate that her parents wanted to pay for her entire 4-year degree and that was very generous. This certainly allowed her to focus on her schooling and any part time work was more discretionary. My parents were very generous as well, helping pay for half of my tuition and other college expenses. The part time and summer jobs I held helped pay for the remainder and having my own “skin in the game” helped motivate me to do my best.

With that background, we have begun to formulate our own opinions of what we want to do for our children. And while there are many questions up in the air with college (in-state, out of state, public, private, inflation factor, etc.), our end goal is to have enough saved in each 529 account for roughly 100% of a 4-year public school (or the equivalent of 50% or more of a 4-year private school).

Whether it is all used for the desired purpose or not is to be determined, but the good news is 529 plans offer a lot of flexibility. This helps us plan for a use of the money with contingency plans. This includes:

  • 529 investments can be withdrawn penalty free for more than just tuition, including room & board, books and supplies, computers and related equipment, as well as qualified special services
  • We could change the beneficiary of the account to another child, and potentially grandchildren as a inheritance strategy and a way to utilize excess funds
  • If children receive scholarships, withdrawals are allowed penalty free; however, tax on earnings would be required (in effect making the 529 plan act similarly to a normal taxable brokerage account)
  • Also noteworthy, if the children elect to go to a U.S. service academy for further education, from a tax and withdrawal standpoint it is treated like a scholarship
  • We could always elect to incur the 10% withdrawal penalty for non-qualified withdrawals as a last resort

Timeline for Contributions

While we have no idea whether he or other future children will ultimately decide to go to college at all, a 2-year program, a 4-year program, an Ivy League school or a service academy, we want to be prepared to help out.

Beginning in 2014, the little one’s birth year, the state of North Carolina passed new tax legislation that took away the favorable state tax deduction of 529 contributions. So given there was no motivation to space out contributions to maximize the tax deductions, we figured the sooner we contribute and get the money working the better because it would have longer to compound on a tax free basis.

With that as our guideline, we targeted a contribution of one year’s worth of school in each of his first four years. Just like all our other investments, we intend to Invest to Win and won’t taper back much of the investments to more conservative assets until college is a few years away if at all. Assuming an average 8% annual return on investment, and 18 years until college starts it was a simple math equation as to how much we’d ultimately need to invest.

Our conclusion was approximately $70K – $80K in total contributions in our children’s first four years. We may ultimately choose $70K and preserve optionality on the remaining portion to see how the investments are performing as years go by as well as how the college tuition estimate evolves over time.


I wanted to go back into this post and add in some of my favorite recommendations. Half of the battle of responsibly paying for college is to know the ins and outs of the process. If you are looking for help with figuring out how 529 plans work, and what your best options are, check this post by Clark. If you need help understanding the financial aid process in general, check this post by the Department of Education. If you want to learn more about student loans – including the differences between federal and private student loans, what your best options for private student loans are (if you have to take them out), and how repayment works – then check out this post by The Student Loan Report. If you are looking for alternatives to student loans, check out this post.


There is no doubt college for our children will be expensive. I think the lesson is to take advantage of the tax benefits of 529 plans and to start early to allow the contributions to compound. While college may cost $250K in 18 years, by starting early and letting approximately $70K compound over time can make it an easier pill to swallow.

How do you all plan to save for your children’s college? How have you estimated the college tuition cost? How much do you plan on paying for? Does your state offer special tax benefits that mine doesn’t? Let me know in the comments below.

Thanks for taking a look!

The Green Swan

Work Harder, Work Smarter, Retire Earlier and Find Your Beach







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63 Comments on "College Tuition Estimate"

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Brian @ Debt Discipline

Great that you already have a plan in place. We got a late start on our college saving. We use a 529, but we will end up cash flowing some of the cost. We have twins so we will have a double bill for four years. At one point we will have three children in college for one year.

At what age do you plan to discuss what you are saving or have saved with you child? I think that so important that parent make their children aware what their plan is early on so their children understand the expectations for college.


250k$ for 4 years of college is an insane number!
I understand the logic behind the calculations, but man, that’s an unbelievable number. Plan for the worst, hope for the best…
We’re having our first child next month so I’ve started to think about this and the 529 plans. As I understand it, it’s one of the only accounts you can open for a kid and fund straight away without income limits for contributions (as opposed to a roth IRA for example). I quite like that.
Are there account types that would offer the benefit of long term growth from birth?

Matt @ Optimize Your Life

Thanks for the thorough analysis – this is really helpful!

$250k for four years sounds like so much money, but $70k over four years sounds much more feasible. Definitely shows the benefits of starting early. I imagine most people don’t consider this until they are far too close to needing to spend the money.

Did you do much analysis on the “should we pay for college” question that seems to be a constant topic of debate in the PF community? Or was it more of a gut decision based on knowing what worked for you and your wife? I’m always curious as to how other people come to decisions like this that don’t have a clear right or wrong answer.

First thing, you can use any state’s 529 plan, so shop around for one that fits your situation best. You’re not relegated to plans “only in your state.” I think we went with a NW state (OR or WA) because of tax benefits and the like, but I remember Mrs. SSC shopping them to find the best fit for us. Secondly, what field makes a degree worth $250k or more a winning option? If someone wants to become a teacher and make ~$60k/yr how does a $250k degree even come remotely close to paying out? Ugh… It’s an idiotic and broken system. We fund our kids through a 529 and plan on having enough to fund most of state school degree. I say most, because… Read more »

I think the 250k is in future dollars not today’s dollars, so teachers will be making more than 60k in 18 years. At least I hope. With so many states cutting funding for education to the bone who knows.

Holly Johnson

Since I assume my income will prevent our children from receiving much help for college, we have been saving for them for a long time. I would like to pay for their college experience in its entirety, but I’ll be happy if I am able to pay for a huge chunk of it! Those predicted costs for future years are ridiculous!

Frugal Familia

As our first child is due in November I have already begun thinking about a 529. Having had my parent ‘help out’ with school costs, I do think it’s important to have some skin in the game and probably would not have taken it as serious if I hadn’t. I do wonder if technology will shake things up in the educational landscape over the next 10-20 years. I think that online Universities will become more accepted and respected over the years.


We intend to have six figure sums in each 529 account for our boys when we retire in two years. Another decade of growth in the markets will then have us at a place we are comfortable with. And no more. There has to be balance and a healthy dose of what is realistic in what Mr. SSC described above is a flawed and very broken system. If any of our kids have the aptitude / desire to compete for an IVY league school, they can also have the aptitude / desire to help fund it. That is our philosophy and our game plan.

Amanda @centsiblyrich

While we have enough in 529s to cover a year (or two at a community college) for our kids, they will be on the hook for a portion of their college expenses. We will help them along the way, as needed, but feel they need to have some of the fiscal responsibility as well. Hopefully we can help guide them along the way to prevent huge student loan debt.


My wife and I do not have children yet, but I’m already dreading the massive bills. The statistics you shared shouldn’t surprise anyone, as the rising costs of tuition have been a problem for years now. But I found myself feeling a bit shocked anyway.

I’m cautiously optimistic that something will have to give in the next 5-10 years, as the current model of educational pricing does not seem sustainable, IMO. Otherwise, we may be looking at another bubble waiting to burst.


The difference between public & private school tuition isn’t always as much as the “experts” would have you believe. Our son is leaving for college next month and he will be attending a great private 4-year university. Each college has a “net price calculator” on their website and it will shock you how much scholarship & gift aid $$$ are available at the private schools. Yes, they want students with good grades and ACT/SATs, but I think you will find that the difference in cost between private & public is negligible. I published a couple of posts on this if you are interested in understanding the public vs private college choice more.

Vicki@Make Smarter Decisions

Yes, this is a great point! We are in full college search now. Here is another interesting example – my son can go to a state university (out of state) and get a merit scholarship that makes it about $3000 less than our in-state public universities (that don’t offer merit scholarships). His plan is to finish in 3 years (due to AP/community college credits) too. Definitely look at the net price calculators and at merit based scholarships too.

Penny @ She Picks Up Pennies
Tuition (and education) is on my mind so much all the time, but especially with being back in the classroom now. Part of me hopes that if we have kiddos, by that time, there will have been a shift or an overhaul. However, as someone who’s worked in public education for a while now, I know how glacial any kind of reform moves. And sometimes I think the bottom will just fall out, more than any actual reform. I really like your estimate, though. And I appreciate the careful breakdown. The most fascinating part of all of this to me is that it was actually much, much cheaper for me to attend a private college due to the generous scholarship offers. I’m curious to see… Read more »

Thanks for compiling those! Pretty staggering numbers! But they are only staggering if you start too late. We started a 529 years before our daughter was born. I was the initial beneficiary, but now our daughter is. Spreading the accumulation over 20+ years makes the annual savings pretty manageable.
We also don’t plan to pay *the entire* college bill for our daughter. She shouldn’t view this as an all-expenses-paid 4 year vacation but rather have some skin in the game. We can always help her later paying off her student loans.

Apathy Ends

This is a great topic for a post Mr Swan, will have to bookmark and come back when we start a 529 plan. We plan on helping as much as we can, starting out with small contributions every pay period and letting it grow for a long time – probably wont cover all of it, but if I can help prevent the situation I started out in it will be a huge improvement.

Jon @ Be Net Worthy
You’re smart to have started so early. I started a 529 for each of our two kids the day they were born and have added to them consistently each month since. Now, we didn’t have a lot of free cash flow back in the day, but at least we were consistent! They are 14 and 16 now and we will have approximately half the cost of an in-state college socked away, about $70k each. I’m thinking they should cover the rest with scholarships and work, but we’ll see if I cave when the time actually comes! We’ve been very fortunate in that both kids have straight A’s so far all the way through, but the AP classes start kicking in this year, so we’ll see… Read more »
Colin @ rebelwithaplan

It’s so great you are putting so much thought and planning into this! It would have been awesome to have my parents help pay for my college. They paid for my car insurance and health insurance subsidized cost but as for actual college and other cost of living expenses, it was on me. I went from 2012-2014, got my bachelor’s degree in 2.5 years and graduated with $21,000 in student loans. Making good progress on aggressively paying them off though!

Emily @ JohnJaneDoe

Scary numbers. It’s good to plan on funding college based on conservative estimates, but I’m not sure that colleges can realistically expect parents and lenders to come up with tuition rises at their current rates. The current model will likely have to change.

We have a 529 plan for our daughter, and we’ve made contributions, as have her grandparents. We’ve also picked up an extra rental property with the idea that when it comes to college we can sell it if need be. But I think we’ll also put limits: she’ll either have to go to a public college or come up with enough scholarships, grants, jobs and loans to make up the difference at a private one.


That’s a great plan. We front loaded our kid’s 529 plan too. He’s five years old and his account finally increased over $50,000 this year. We’ll keep contributing about $4,000 per year until he’s ready to go to college. Time flies.

Kelsey @ Tealmama

Hello! We have not completely estimated college costs, but I was figuring ~$200K without any real data to back that up. We’ve started 529 plans for both of our children with scheduled contributions. (We looked at different options, but ultimately decided on 529s for tax reasons.) My parents are also contributing to their accounts which is awesome. It’s important to them. Very interesting post!

Travel Travel & Retire!
I was JUST doing some more math about that as we originally had thought 100k each (529s) but we are revising it down to 75k each. I am seriously brainwashing my kids into looking at free colleges in places like Germany, and trying to teach them my mother tongue so they can go to many more countries and study there at a fraction of the cost.. Urgh, now on to think about wills and life insurance…. I was very fortunate to have a full ride to a pricey private college due to athletic abilities, but I agree with the skin in the game part…my husband worked like crazy and we finished paying our loans last year (included grad school which we self funded). It was… Read more »
Travel Travel & Retire!
actually another thing we are considering is moving to another country with them while we retire and they go to college so that we can share housing costs and use cheaper college options (we did our masters abroad, it was awesome), AP courses, community college lasses first, etc. I am also starting to investigate alternatives (though they are over a decade away lol) like online classes (I myself am taking the MIT free computer science classes online – I taught myself high-school while traveling all over the world competing with my sport, so I know you can still learn a lot without a regular education), some fun programs where you intern, travel and take classes and it counts as credit (hey maybe they will actually… Read more »

We’re definitely of the mindset that some help would be good, but the kids should be contributing towards expenses as well. We’re working really hard to get rid of our debt, then we can invest more for ourselves and our children.

These numbers are pertty scary – and motivating to get moving on fixing our finances.

Wow, those numbers are pretty scary. Unfortunately I can see these numbers projected for a few more decades. My husband and I plan on using our Canadian Child Tax Benefit (we live in Canada) and any other generous benefits the Government of Canada provides for families with kids. These monies will be put into an RESP (which is fancy for an account that holds money for your kids education and any gains or losses on these accounts are not taxed until your child goes to post-secondary and they will be taxed against their income not ours). If we implement some effective tax planning, we can probable get about $230-$300/month from child benefits for each child. Instead of using these monies for child expenses, we will… Read more »

We’ve actually made the decision to stop investing via 529 plans for a few reasons. One reason is that we don’t necessarily want to push our kids towards college because that’s where the money is. I would rather encourage them to start experimenting with their career as early as possible.

The other reason is that I don’t find the Tax Advantages compelling enough to potentially pay a penalty.

I hope to continue having an aggressive savings/investment plan, so we could sell a few assets or cashflow college if that’s the direction our kids go.

Finance Solver

Wow 250k.. I can’t imagine paying more than 100% of my income to pay for my future child’s college (which is a long ways away as I’m not married or engaged). I don’t think average income levels will rise the same rate as a college tuition’s rate and that is scary!

On the flip side, education is a fantastic business to be in, they’re basically recession proof because more people go back to school in times of a recession. I’m hoping that online courses will take foot and lower education costs significantly over time. Hopefully they’ll figure how to educate people better through online means in the next 10 years.

Cash Lab

Great analysis! I’d like to be able to fully pay for our children’s college education as my parents paid for mine. I never gave it much thought on what the potential cost could be when we started contributing to a 529. We put in $2,000/yr and that should provide a nice cushion to cover costs. If anymore money is needed then we should be able to provide it.

Dividends Down Under

That’s very nice and generous of you JW to help your child out that much, whatever you end up saving – it’ll make a huge difference. I hope it’s all worth it, haha.

Anyway, to me as an Australian – those prices are gigantic and crazy, but I guess to get ahead you have to do it.


Ten Factorial Rocks
I feel your pain on this one JW. I started out with $100k estimate for Junior’s college fund, and now am being told to prepare for up to $200k for private college! Yikes! He could buy a house outright in many parts of the country with this kind of money. If he gets a full ride, that will be his contribution to his old man’s FIRE plan! Also, do you think by 2025+ traditional college as we know it would morph into something lot more affordable like mix of online courses with minimal campus presence? Higher education needs a major hack! Let’s hope it happens before our kids reach college. The present trajectory on college costs is crazy and unsustainable.

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