Financial planning involves a series of complex processes and considerations, depending on your current lifestyle, expenses, and future goals. Paying monthly bills and other debts can be challenging enough, let alone saving for retirement. If you have children, you'll have even more monthly expenses and may also want to set aside money for their college education.
Here's a look at the average costs of postsecondary education options, along with strategies for saving and tips for adjusting your retirement plan as your child ages.
The Rising Cost of a College Education
Tuition at private and public colleges increased once again in 2025-26, continuing a decades-long trend. In September 2025, U.S. News & World Report, citing an annual College Ave survey, reported that tuition and fees for in-state and out-of-state students increased 3.3 percent and 3.7 percent, respectively, at highly ranked public schools, like UCLA, the University of Michigan, and the Georgia Institute of Technology. The average cost for in-state students was $11,371, while out-of-state students can expect to pay an average of $25,415.
While it is an increase from last year, these costs are significantly lower than tuition and fees for private institutions. The average tuition for private colleges in 2025-26 was $44,961. This doesn't include housing, textbooks, and food, among other expenses. Many private and public schools, however, offer needs-based grants that can dramatically lower tuition costs.
The average tuition at four-year public and private institutions increased 20.8 percent and 33.7 percent, respectively, from 2012-13 to 2022-23. Moreover, average tuition inflation outpaced wage inflation by 111.4 percent from 2000 to 2020.
Factors That Influence Savings
Inflation is a major factor that will influence how much you need to save for your child's education, but there are several others you need to consider. These include the type of institution (four- or two-year public or private college), program of study, location, and your child's current age.
Florida, Wyoming, and Nevada are among the states with the lowest average tuition costs, while Pennsylvania, New Jersey, and Vermont have higher-than-average costs. Your child's career aspirations can also significantly impact your savings goals. Tuition for a postgraduate medical program is a lot higher than a four-year bachelor’s program.
The sooner you start saving, the more money you'll have when it comes time to pay your tuition due to a longer time frame and compound interest. If your child is in their teens and you have yet to set aside money, you may need to take a more aggressive savings approach.
Monthly Savings Estimates
Let's assume your child will one day attend an out-of-state public college which, as of 2026, costs an average of $25,415, annually or $101,660, for four years. While this might seem daunting, if you start saving early it's not that big of a financial commitment. Assuming a modest 6 percent return rate and $300 in monthly contributions, you could see your funds grow to more than $110,000 over an 18-year period.
Savings Options and Accounts to Consider
There are many different savings vehicles for education planning, some of which are designed specifically for school expenses.
529 college savings plans are tax-advantaged accounts that offer a number of benefits. Withdrawals are not subject to federal income tax, and most states also exempt earnings from income tax as long as the money is used for qualified education expenses. There is no annual contribution limit and relatives and family friends can also contribute. If your child doesn't use the funds, they can be transferred to another family member.
Coverdell Education Savings Accounts function similarly to 529 plans, but have contribution limits and income restrictions: $110,000 for single filers or $220,000 for married couples filing jointly. Custodial accounts, as well as traditional savings accounts and Roth IRAs, can also be used to save for education expenses.
Beginning in July 2026, if you've had or have a child born between January 1, 2025 and December 31, 2028, they qualify for a Trump Account. By making an election on the IRS Form 4547, your child receives $1,000 from the U.S. Treasury Department, deposited into an investment account in their name. This grows tax-free and you can make additional deposits of up to $5,000 each year. Your child can withdraw the funds once they turn 18 and use them for education or other big expenses, like purchasing a home.
"For families and financial planners, the relevant question is not whether Trump accounts are inherently good or bad, but how they fit within a broader savings strategy," said certified financial planner Luke Delorme. "Used thoughtfully alongside 529 plans and IRAs, they may offer a meaningful head start on long-term financial security."
Adjusting Plans As Your Child Gets Older
As your child gets older, you may have to make minor or major changes to your educational savings investment strategy, depending on their college plan. 529 college savings plans offer some degree of flexibility, allowing you to transfer funds to other qualifying family members, making it an ideal option for families with multiple children.
Otherwise, traditional savings accounts may be a more flexible option, as you can decide how to spend the money. However, these have lower interest rates compared to other alternatives and do not offer tax advantages.
Consult a Professional College Planner
One of the best investments you can make on the college planning front is to meet with or hire a College Aid Pro, such as my colleague here in central New Jersey, Perry DeFontaine, who recently authored the excellent and very helpful book, “Pay For College Without Going Broke”.