Saving Money for College: The Things You’re Saving For

According to — a free resource that helps students and parents financially prepare for college — a “moderate college budget for an in-state public college for the 2015–2016 academic year averaged $24,061. A moderate budget at a private college averaged $47,831.”

Considering these estimates are for a single year of college, students can easily owe six figures after fully financing a four-year education with student loans. This is why many  prospective college students and their parents decide to save to pay for college without borrowed funds.     

When saving, it’s important to follow a plan that gives enough money to afford everything. To help with the planning, below are four areas of expense that need to addressed, with cost averages for each. All numbers are provided courtesy of the College Board and are based on expenses for the 2015-2016 academic year at 4-year institutions.

Tuition / Fees

On average, the cost of tuition and fees came in at $32,405 for private colleges, $9,410 for residents who attend public colleges in their state, and $23,893 for students who attend out-of-state public institutions. If you can find an in-state public school that has a good program for the desired area of study, it can make it a lot easier to pay for college with savings.

Housing / Meals

The second most significant expense after tuition and fees is housing and meals. Less than a year ago, the average expense for room and board at public colleges was $10,138. The average expense at private institutions was $11,516.

Many colleges provide room and board estimates for students living off-campus near college grounds. These estimates are especially helpful for colleges located in cosmopolitan areas, such as New York University, where apartments normally cost far more than on-campus housing.       

Books / Supplies

Just prior to 2016, those who plan to pay for college with savings needed to budget $1,298 for books and supplies at public colleges. Books and supplies for private college students came in a bit lower at $1,249. Remember that the cost of supplies can differ significantly by academic major. For example, fine arts majors usually pay more for supplies than business majors.   

Personal / Transportation 

College is a place to study. It’s also a setting for young adults to grow socially. To enjoy time together outside the classroom in 2015-2016, students at public colleges were recommended to set aside $3,215 per year, while those enrolled at private schools were advised to have $2,661. In addition to transportation, expenses contributing to these amounts include: clothing, personal items such as cosmetics and smartphones, and entertainment.    

Start Saving Today 

Paying for college with savings instead of covering the cost with a loan can save thousands of dollars in interest payments. It also helps students begin life after college debt-free, which helps them afford significant, upcoming purchases, such as new automobiles and homes.    

If you’re ready to start saving for college, American Eagle Credit Union’s Coverdell savings accounts will address those future college expenses. To learn how the accounts work and why they’re a great choice for saving wisely, call us today at (800) 325-9905, or fill out our contact form, to schedule an appointment with a savings specialist.

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