Putting your children through college is one of the largest expenses that most families will ever face. For a newborn child, it's estimated that four years at a public school will cost more than $125,000, and for a private school you can expect to pay more than a quarter of a million dollars in college expenses…and that's only for one child! For most families, saving such an astounding amount of money seems impossible, and that's why planning ahead is so important.

How much will you need?
The first step to developing a savings plan is to determine specifically how much you’ll need to save. Check out the table below to get an estimate of what four years of college will cost and what you may need to save per month.

Your Child's Current Age	Years Until College	What Four Years Of College May Cost		What You Need To Save Per Month
		Public College	Private College	Public College	Private College
New Born	18	$125,728	$267,514	$262	$557
1	17	118,611	252,371	275	584
2	16	111,897	238,086	289	615
3	15	105,564	224,610	305	649
4	14	99,588	211,896	323	688
5	13	93,951	199,902	344	732
6	12	88,633	188,587	369	784
7	11	83,616	177,912	397	845
8	10	78,883	167,841	431	907
9	9	74,418	158,341	473	1,006
10	8	70,206	149,378	524	1,116
11	7	66,232	140,923	591	1,257
12	6	62,483	132,946	679	1,445
13	5	58,946	125,421	802	1,707
14	4	55,610	118,322	987	2,100
15	3	52,462	111,624	1,204	2,754
16	2	49,492	105,306	1,928	4,061
17	1	46,691	99,345	3,750	7,980

Once you've determined your college funding needs, it's important that you implement an investment plan that can make the most of the money you're saving. With college costs rising at a steady rate, it's important that you choose investments that can outpace these cost increases.

The Good News: The Taxpayer Relief Act of 1997

Congress has made it easier for parents to save for their child’s college education:

The Education IRA – Anyone who qualifies can contribute up to $500 a year per child and the money grows tax-free as long as it is used to pay for college expenses. To qualify your adjusted gross income must be less than $110,000 for single filers and $160,000 for joint filers. Anyone can contribute to this type of account, however each child may only have one Education IRA. With college costs rising at a steady rate, it’s important to choose investments that outpace these cost increases. That’s why money in an Education IRA is often invested in domestic and international stock mutual funds.

Penalty-Free Withdrawals from your IRA – Another good way to save for college is through the use of your Traditional or Roth IRA. The Taxpayer Relief Act allows for penalty-free withdrawals from your IRA to cover most college expenses.

Get Started Today!
It's never too soon to start saving for college…and the cost of waiting to invest can be higher than you think! Assume that two couples each have a newborn child, and both families have figured out that they'll need $150,000 to fund four years of a public college.

Kelly & David start as soon as their daughter is born, so the need to save $248 per month until she’s 18. Nichole & Sam don’t start until their son is 8 years old and now they need to save $727 a month to meet their goal.

Nichole & Sam invested a total of $87,240 to pay for school. Because their money had longer to grow, Kelly & David only had to invest $53,568 to reach their goal! For Nicole & Sam, the cost of waiting was $33,672!*

*The above figures assume at 10% return compounded annually. Source: American Funds.