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How Much Money Should I Save for College?

Editorial Note: Articles published are intended to provide general information and educational content related to personal finance, banking, and credit union services. While we strive to ensure the accuracy and reliability of the information presented, it should not be considered as financial advice and may be revised as needed.

College is an exciting but expensive stage of life. While student loans might seem like a simple way to pay for your tuition, you will be starting your career in debt. And, when you factor in interest, you will also owe more than you initially borrowed.

That's why it's a great idea to file your FASFA early, explore scholarships, talk to your college’s financial aid department, and find other forms of financial assistance to cover as much of your tuition as possible.

But how will you pay for gaps in your tuition funding, books, housing, and other expenses? The best way to prepare for these costs is to save. The sooner you start, the more money you can save.

Now is the time to set up a checking and savings account. You can have your paychecks deposited directly into your account, track your spending, automate your savings deposits, and pay any bills you may have.

Consider Following the Rule of Thirds

It's time to work out how much you and your family should come up with, but how much do you need to save?

As you plan how much to save, a good rule when it comes to paying for college is the Rule of Thirds.

  • One-third of your college tuition costs come from financial aid, scholarships, and grants.
  • One-third comes from you or your parent’s savings and investments.
  • One-third comes from student loans—of course, the goal is to keep this as low as possible to avoid costly debt.

How Much Does College Tuition Cost?

College costs vary greatly depending on whether you choose to study in or out-of-state. If you attend a public college in your home state the cost is significantly lower, so the simplest way to keep costs down is to choose a public university in your home state.

Here's a comparison of some of Alabama's most popular colleges:

*Tuition rates below refer to one academic year only.


University NameIn-State Undergraduate Tuition & Fees*Out-of-State Undergraduate Tuition & Fees*
Auburn University$12,536$33,944
The University of Alabama
$11,900
$33,200
University of Alabama at Birmingham
$11,040
$27,330
University of Alabama in Huntsville
$11,878
$25,460
University of North Alabama
$12,800
$25,600

*Tuition rates are for the 2023-2024 academic year.

So Exactly How Much Money Should I Save for College?

Let's say you decide to follow the Rule of Thirds. If you choose Auburn University, and you're from Alabama (in-state):

  • The total tuition is $12,536 per year.
  • You need to save one-third of $12,536, which is $4,178.
  • It's a four-year college, so you need to save $4,178 x 4 for a total of $16,712.

However, keep in mind that this example is for tuition only. You will also need to include housing, food, books, and any additional living expenses in your calculation.

How to Find College Scholarships

The Rule of Thirds says you can reasonably aim to get about a third of your college education costs paid for through scholarships and financial aid. But how do you find college scholarships and how do you know if you're eligible?

The first place to start is your high school counselor. They should know of scholarships that you may be able to apply for locally. Make sure you meet all scholarship submission deadlines and fully complete the applications.

Also, explore the website of your potential college and make an appointment to meet with their financial aid department. They will be a valuable resource to you throughout your college career and will be able to help you find additional scholarships and grants that you can apply for. Regardless of the number or amount of scholarships and grants you receive, you will still need to file your FAFSA.

Lastly, check your credit union for scholarship opportunities. For example, as yet another way to support our community, Listerhill promotes higher education by funding endowment scholarships through local colleges.

How to Save for Your College Education

Let's do a quick recap. A good rule of thumb is that you can expect to pay for a third of your college costs through scholarships and other financial aid. You can then pay for another third through student loans. This means you and your family will be responsible for the remaining third.

Luckily, saving is simple once you open a dedicated account. At Listerhill Credit Union, you can open a Share Savings Account with just $5 and earn interest not just on your balance but on quarterly dividends as well.

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Related: How to Save Money Fast On a Low Income


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Frequently Asked Questions

  • How can I avoid overdraft fees?

    All Listerhill checking accounts are eligible for 3 Overdraft or NSF Fee refunds per year. To request a refund, visit a Listerhill branch or call 1-800-239-6033.

    Additionally, we provide our members with overdraf services like:

    • Standard Overdraft Coverage

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  • Do I have to pay any monthly service fees for having a checking account at Listerhill?

    Our Everyday Checking account comes with no minimum balances and no monthly service fees, so if you choose this account, you won’t have to pay any monthly fees, no matter what your daily balances are.

    If you’re interested in Growth Checking, you’ll have to pay a $10 monthly fee is your average balance is below $1,000. You can easily waive the account fee by keeping $1,000 or more in your account. That way, you can earn interest on your deposits without paying any monthly maintenance fees. It’s a win-win!

  • Why should I open a Growth Checking account?

    Growth Checking is the perfect account for those who want to see their money grow faster. This account offers high returns on your deposits for a small monthly service fee. You can waive the monthly fee by keeping $1,000 or more in your account. What’s even better is that the more you keep in your account, the higher the interest rate you’ll earn, so it makes sense to keep higher balances in your Growth Checking!

    If you want to put your money to work for you, open a Growth Checking account. Simply click here to start your online application as a new member or log into online or mobile banking to open your checking account if you’re already an established member. It normally takes 10 minutes or less to complete!

  • What is everyday checking?

    Everyday Checking is our free checking account. This account is convenient and simple with benefits like no minimum balances and no monthly service charges.

    If you're seeking a hassle-free checking experience coupled with top-rated online and mobile banking services, as well as options for overdraft protection and customizable account alerts, Everyday Checking is the ideal choice for you.

    Plus, our online application makes getting your new checking account easier than ever. Simply click here to start your online application as a new member or log into online or mobile banking to open your checking account if you’re already an established member. It normally takes 10 minutes or less to complete!