How Will I Manage to Pay for My Child to Attend College?

Posted by Busey Bank on May 28, 2024 9:45:00 AM
Busey Bank

Being able to send your child to college is near the top of the wish list for many parents, but that diploma doesn't come cheap. It's difficult to sit on the sidelines for years and then suddenly find the money to pay for college when your child is ready to go. The best thing to do is to start saving as early as possible, even if you're able to save only a small amount at first.

Two women pose with another woman wearing a graduation cap and gown.

How much does college cost?

For the 2023-2024 academic year, the average annual cost of tuition, fees, housing and food for college is an estimated1:

  • $24,030 for four-year public colleges (in-state students)
  • $41,920 for four-year public colleges (out-of-state students)
  • $56,190 for four-year private colleges

It's a likely bet that costs will continue to rise, but by how much? Annual increases in the range of 3% to 6% would certainly be in keeping with historical trends. But keep in mind that the actual percentage increase in any year could be higher or lower, and the rate could vary from public to private college.

How will I pay for it?

Year after year, thousands of students graduate from college. So how do they do it? Many parents save less than 100% of their child's education costs before college. Typically, they put aside enough money to make a down payment on the college tuition. Then, they can supplement this down payment by using:

  • Current cash flow
  • Loans
  • Investments (e.g., mutual funds, 401(k) plan, IRA)
  • Federal and college need-based or merit financial aid (e.g., student loans, grants, scholarships, work-study)
  • Child's savings, investments and/or earnings from a part-time job
  • Gifts from others

How much should I save?

First, you'll need to determine how much of the cost you would like to cover. Do you expect your child to contribute from their own savings or do you expect them to work part-time during college? Next, take a closer look at the projected costs. The more money you put aside, the less you or your child will need to borrow later. Finally, use a financial calculator to determine how much you'll need to save to meet your goal.

In many cases, the amount of money you should save comes down to how much you can afford. Every situation is different. You'll need to take a detailed look at your family's finances in order to determine what you can afford to save for your child's college expenses.

Start a savings program early

Perhaps the most difficult time to start a college savings program is when your child is young. New parents face many financial strains that always seem to take over—the possible loss of one income, newly added child-related spending, the competing need to save for a house, your retirement or a car, and the demands of your own student loans. Yet this is the time when you should start saving.

When your child is young, you have time on your side. You can evaluate your options and you will benefit from compounding. With regular investments spread over many years, you may be surprised at how much you may be able to accumulate for your child's college costs.

Don't feel bad if you can't put aside hundreds of dollars every month right from the start. Start with a small amount, say $25 or $50 a month, and add to it whenever you can. You'll have a head start and can feel good knowing you're doing the best you can.

The professionals at Busey Wealth Management are here to help as you map out your financial future. To learn more about our comprehensive services, visit


1 College Board, Trends in College Pricing and Student Aid 2023

This is not intended to provide legal, tax or accounting advice. Any statement contained in this communication concerning U.S. tax matters is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties imposed on the relevant taxpayer. Clients should obtain their own independent tax advice based on their particular circumstances.

This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities.

This presentation is for general information purposes only. It does not take into account the particular investment objectives, restrictions, tax and financial situation or other needs of any specific client.

Investment products and services through Busey Wealth Management are:
Not FDIC INSURED | May lose value | No bank guarantee


Topics: Personal, Student, Financial Planning

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