# How much should you save in a college fund?

## Price of Education

Ever wonder why parents are so, well, pushy about how their children are doing in college? Ever wonder why the first and last words out of a parent's mouth before their child leaves for school are "study hard"? Parents are pushy because they love their children. They're also pushy because those children are an investment. Did you know that 37 percent of the average cost of paying for college comes out of mom and dad's savings accounts and paychecks, while an additional 10 percent comes from loans in their names? [source: Rampell].

Many parents begin socking away college money even before their little tykes are born. And it's not an easy row to hoe. In 2010, Fidelity Investments estimated the amount of money new parents would need to save each month for 18 years in a 529 college savings account (more on that next). Assuming that cost of college would rise 5.4 percent annually during that period, Fidelity concluded the following:

• A household making \$55,000 a year would need to save \$48,000 over 18 years to send their kid to a four-year public university, and \$107,000 to pay for a private college. That translates into saving \$160 a month for public college, and \$410 a month for a private university.
• Households with an annual income of \$75,000 would need to save \$51,000 -- or \$190 a month -- to send their children to a public university; and \$115,000 -- or \$410 a month -- to send them to a private school.
• A family pulling in \$100,000 a year needs to save \$55,000, or \$250 a month for 18 years to send their child to a public university and \$123,000 -- or \$460 monthly -- to send them to a private college [source: Schultz].

Fidelity based its calculations, not only on annual household income, but on an assumption that a family doesn't want to take out any loans. Fidelity then estimated how much in gifts, grants and scholarships a student would receive based on their household incomes. Fidelity subtracted that amount from the expected cost of college [source: Schultz].

However, the guidelines do not take into account costs such as health care and transportation, two expenses not covered by 529 plans. Parents can expect to pay upward of \$2,500 more a year to cover such costs, the company said [source: Schultz].