How much to save for college?

I have been writing a lot about how to get into college and how to save for college. Now is the time to write about how much to save for college.  This is an important question to ask so that we are well prepared when it’s time to pay those tuition bills.

The first question comes to people’s mind is: should the children not pay for college themselves? By paying for their college, are we not setting them up for an entitlement trap? That’s a good question. I am of the opinion that the responsibility can be shared. I, as a parent, am willing to pay for my kids’ education, provided the kids exhibit good performance, discipline and an eagerness to share the burden.

How can kids share the burden? The kids can share the burden by working harder in High School and/or in the first years of college. There are many things they can do. Here are a few items (what works best depends on the temperament of the child):

  • Go to a community college for the first two years and then transfer to a 4-year school at the end of their sophomore year.
  • Take college credits in High School by attending a community college while also attending High School and then transfer some of those credits to their 4-year college. This requires understanding what classes their prospective colleges will accept.
  • Take AP (Advanced Placement)/IB (International Baccalaureate) classes in High School and transfer those credits to college when starting the 4-year program.  Again, which classes will be accepted at the prospective college, has to be found out in advance.
  • Enroll in a Middle College instead of a traditional high school in the 11th grade. This way, the child will earn a lot of college credits while in middle college. An example of such a program in my area is Tri-Valley ROP.

The moral questions aside, let’s run the worst-case and best-case numbers, provided you are a high-income family who will not receive any means based scholarship. I will write a separate post regarding the means based scholarship strategy.

Starting with worst-case:

Let’s say, my son who is 3 right now, will attend Stanford University (private, expensive school) when he goes to college at 18. I have already saved a lot for his college but for the purposes of this worst-case simulation, let’s assume that I am starting with ‘0’. Running the numbers on  Vanguard College Cost Estimator,


Worst case scenario for someone whose child is 3 and will be going to Stanford eventually. 

It seems that I will need $407,640 to cover his cost of college. Again, assuming the worst-case that he does not receive any scholarships and he does not get any credits transferred, I will have to save $13,176 every year, invested in an index fund with 6% returns, while the college cost is increasing by 3% every year. $407,640 includes tuition, books, room, board and everything else.

Now, the best case:

Let’s say, my daughter who is 10 right now, first goes to a community college for the first two years and then transfers to an in-state school the University of California- Berkeley for the remaining two years. Let’s also say that somehow she manages to stay with us at home this entire time and also get’s some partial merit scholarship (say 25%), while at University of California- Berkeley (we live fairly close to Berkeley). The math will work out like this:

Cost for 2 years of community college eight years from now: $9180. Need to save $720/year for that in the 6% Rate of Return index fund.


Best case scenario for someone whose child is 10 and will be going to a community college first.

Cost for 2 years of University of California Berkeley: $36857 (tuition & fees only) Only $27,758 needed to cover 75% of the tuition if she gets a 25% scholarship. Let’s say I am starting from 0 (which I am not), I only need to save $1710/year to cover this.

If you are having your child now, you only need to save $348/year for the first two years of community college and $1176/year for the two years of UC Berkeley, totaling ~$1500/year.


Best case scenario for someone whose child is 10 and will transfer to UC Berkeley for the last two years of college, also scoring a 25% scholarship. Note that I selected 20 for “Age Starting College”

Hence, in this best-case scenario for a family like mine, we need to save $2430/year for the next 8-10 years, if we are starting when our child is 10 years old and has everything working out for her. The total amount needed is roughly $37,000.

The worst-case scenario for a high-income family is that you have to save $13,176/year for the next 15 years if you are starting out when your child is 3 years old and has to stay on the campus and does not get any scholarships and goes to an expensive private school for all 4 years. The total amount needed is $408,000.

You can see that this is a big range $37K-$408K, so what should you target for?  Of course, the paramters I chose were a little arbitrary as well. For the purposes of this analysis, I chose the ages of my children and started with “0” as the starting point. I chose a 3% increase in college costs annually and I chose a conservative 6% index fund return. However, the important point is that you can use the tools above and estimate your target costs. You should first look at your target schools and their costs and go from there. In general, in today’s dollars, $90,000 is the average cost of a 4-year college degree at an in-state public school (room and board included) and the corresponding number for a private school is $200,000. It is worth highlighting that the average out of state cost at a public school will be roughly $160,000 in today’s dollars.  Now, depending on your children’s ages, you might have to save either conservatively or aggressively.

Let’s say your parameters are:

  • Average 4-year in-state public school.
  • Room and Board included.
  • No scholarships expected.
  • Starting when your child is born.
  • 3% increase in college costs expected annually.

Putting the numbers in a regular FV calculator in an excel spreadsheet will give you ~$153,000. (18 is the number of years, 1 is the number of terms/year since I am using annual rate increase)

College Cost

However, assuming a more aggressive annual increase of 5%  in college costs, the numbers bloat to ~$217,000.

College Cost

So, this is tricky. It is better to oversave than undersave. The right number depends on various parameters and you have to estimate those parameters based on your judgement and the information available and put them in some of the calculators suggested above.

My next post will be on how to win scholarships for college, so stay plugged in. Having high income works against you for scholarships and we will go over some of the options with both low income and high income.


Cruise through College Admissions

What if I told you that all the pundits who are asking you to drown yourself and your kids in activities for college admissions are dead wrong.  What if there is a simpler and a more organic way to cruise through college admissions. I read a book written by Cal Newport on this topic and I totally buy this new philosophy. Read below to find out how this works.


The basic premise of this philosophy is that admission officers are bored to death by looking at the same kinds of applications over and over again, with lots of activities in different fields. Nobody will disagree that SAT scores and GPAs are important but how should kids approach the extracurriculars. Cal Newport argues that there are three main laws to follow, to position yourself as an interesting candidate for college admissions.

  • The Law of Underscheduling.
  • The Law of Focus.
  • The Law of Innovation.

These laws can be explained with examples.

  • The Law of Underscheduling
    • This law argues that there should be plenty of time in High School for unstructured and leisurely exploration.
    • This kind of unstructured exploration has the potential of making you interesting. 
    • He gives the example of Olivia, who earned a prestigious full-scholarship at the University of Virginia. She was exploring marine animal life in her leisure time, which led to an internship at a Marine Biology Lab because a neighbor worked there and she had shown interest. This led to her exploring the behavior of Horse Shoe Crabs. When the scholarship committee interviewed Olivia, they were amazed by her depth of understanding of her research topic and she won full scholarship even when her competition was with other high school students with more activities under their belts. The scholarship committee found her very interesting. 
    • He also gives the example of a relaxed kid, who took a gap year after high school, published a book and became a public speaker at radio shows and universities. This guaranteed his admission at a good college.
  • The Law of Focus
    • The main premise of this law is that one should not be distracted by too many activities. This will lead to a better outcome and again, will make you more interesting. Also, one should NOT use the law of under-scheduling to be lazy and play video games all day.
    • Cal gives the example of a boy Michael, who while being in High School, focused on Clean Energy initiative (and nothing much else in the way of extracurriculars) and ended up prototyping and deploying solar-powered golf carts. He made it to a good college easily.
    • Cal suggests that when the kids start practicing “The Law of Focus”, three effects start showing up in their lives:
      • The Superstar Effect: There is plenty of research that suggests that the best beats the second best by big margins in overall outcomes, even if the two are separated by a very small margin in their performances. The Law of Focus helps you in getting the Superstar Effect.
      • Matthew Effect: This just means that Good Begets Good. When you focus on one or a small number of things and get good at it, many other good things start happening to you. An example would be that if you focus on your ability to help other kids at school, you will be naturally selected for many or all leadership roles at school.
      • Countersignaling: This suggests that once you get really good at what you are interested in, you don’t have to talk about your abilities and your work. Others start paying attention to you and your work and hence your side channels and your references do the talking for you (which is way better), instead of you yourself.
  • The Law of Innovation
    • The main premise of this law is that the Law of Underscheduling and Law of Focus have given you the opportunity to first explore and then hone skills in a particular area and with the Law of Innovation, you can innovate in that area, which will put you in a much better position, compared to the other children who are drowning themselves in myriad different activities to fill their resumes.
    • Failed Simulation Effect: Cal suggests that your innovation should lead to a Failed Simulation Effect. This means that when people read your accomplishments, it should not be easy for them to simulate in their minds as to how you would have achieved the results.  For eg., somebody won a violin competition. This does NOT create a Failed Simulation Effect since it’s not very hard to understand what a violin player would have done to reach such skill levels.  A lot of practice and a lot of training. However, if you hear that Kara designed a health curriculum for tackling diabetes, which was adopted by a few organizations; that leads to the Failed Simulation Effect.
    • Cal proposes three rules for innovation, for high schoolers:
      • Don’t think up innovations from scratch.
      • Innovators join closed communities and pay their dues.
      • Innovators leverage their way up to the innovation.
    • An example to explain the rules of innovation:
      • Kara’s curriculum for tackling diabetes was a revamping of a previous anti-drug curriculum of an organization where she was working.
      • Kara joined the organization in question and did a lot of small tasks for them (paying her dues).
      • Kara first finished a reasonably important project with full commitment before proposing the revamping of the curriculum project. Hence, she leveraged her way up to the innovation.

The overall summary is that if you follow the three main laws properly- Underscheduling, Focus and Innovation, you will come out with some interesting achievements, which will strongly differentiate you in the college admissions marketplace.

College Prep High Schools in Bay Area

Some parents asked me to list a few private college prep high schools in bay area. Here are some:

  • Bellarmine, San Jose
  • Harker, San Jose
  • St. Francis, Mountain View
  • Mitty, San Jose
  • Saint Lawrence Academy, Santa Clara
  • BASIS, San Jose
  • Oakwood High School, Morgan Hill

To help get into these High Schools, there are high school placement preparation agencies like SASO- HSPT.

Of course, there are popular public high schools like Cupertino High or Lynbrook High.

Middle College

Various schools now offer this program called Middle College. Middle College is like taking high school and entry level college classes at a local community college. So, you won’t have to go to a high school in your 11th and 12th grade. You would rather go to a community college. What are the advantages? Since you are going to a college, you can knock off more college level classes in your 11th and 12th grade.

Credits from Middle School To High School

There were some interesting discussions on a forum asking if kids can take credits in middle school which can waive some requirements in high school. I am pasting those discussions below for the benefit of parents and students.


I have recently learned that kids can do things in middle school (things like advanced math, music, foreign language etc) which would get them credits in high school.

I wanted to know more details around how these things work and what type of credits are generally available, so I called up the counselor at my middle school.

The counselor was not willing to talk about it as these are considered “out of school” activities. So I called up the high school counselor and she would not help as my child was not in her school.

So I am reaching out to our parent community to learn about the options that are available to a middle school student if he wants to take advantage of them.

Appreciate your help.


I have heard of very  few instances of a middle school student getting high school credits and none have been at a traditional public school.

This really doesn’t match the school funding model.

I have heard of it in private schools when a student was gifted beyond the skill set of teachers at the school.

My nephew did start taking music classes at a community college when he was 11,  theoretically those credits will be there for him later to add to his college classes but he probably won’t chose to do this.

If I wanted to try this and I was fortunate enough to live in an area where the middle school and high school were in the same district,  I contact the district office.


Hi all,

I have two high school student in Los Gatos High School district (Freshman and Senior).  Here is what I can tell you:

Math: If a student takes Algebra 1 equivalent in 8th grade, it carries over as a “credit” to high school. Essentially the student has covered that requirement for HS graduation and will be eligible for Geometry.

Languages: If the student takes a language 7th and 8th grade AND passes a test at the end of 8th grade leading into HS transition, they can count the two years as Spanish1, French1, etc and progress to Spanish2, French2 in high school.

That is all.  AP classes in high school are a different matter entirely.  Students can take AP classes for weighted grades, with or without opting in for the College Board standardized AP exam at the end of second semester. If students opt to take the AP exam, and meet the minimum score equivalent for their target college of choice (usually 4 or 5 of 5), they will carry over a college equivelent credit for that course.  The other appeal to AP courses is grade “weighting,” but there are benefits and risks to that strategy as well, so in the end it is most important that students opt for AP courses for the right reasons — based on their own interests, motivation, and commitment, not their parents’ goals.



>> Math: If a student takes Algebra 1 equivalent in 8th grade, it carries over as a “credit” to high school.

>> Languages: If the student takes a language 7th and 8th grade AND passes a test at the end of 8th grade

Yes, the above two are valid even in Fremont High Schools. Only that the school has started to become a little more stricter in terms of accepting the credentials. Previously, students would pass some Spanish prelim course from universities such as Ohlone etc., but then the school authorities started to become stricter in accepting such courses.

For Math, skipping Pre-Algebra in grade 7 is possible if the students pass a placement test as they enter the Middle school (grade 7), and they directly get into Algebra-1. And then they take Geometry in Grade 8, and Algebra-II in grade 9 and so on.



The kids in HS usually take more than the required number of credits. I have attached the Lynbrook requirements.  (If you need a better scan, ping me or possibly available online).

Notice that the Lynbrook requires 22 classes. Almost all kids I know,  take at least 6 classes per year. That is 24 classes. Most take 7 classes when they can.

Also, notice that the language requirements: UC has 2, 3 preferred. As Amit and others mentions below if a child takes language in 7th and 8th grade, it is counted as 1 year of HS. In math, one can easily be 1 yr ahead. Some kids challenge the classes and get even more ahead. I know kids who took Math classes in summer  (there is some school permission or some process involved) and challenged  and passed the class at the beg of the year and moved on to next class. This puts them 2 years or more.

My daughter’s experience:

My daughter had a lot of “extra credits” with such adv classes in MS and AP credits.  When she joined USC, they examined her results and waived her from many fundamental classes like bio, chem, language etc. One way is that if you get 5 in AP placement test, then you get a waiver. I am sure each college has its own rules.  However, this is what happened: My daughter is now taking the language and biology classes (even though it  is not required for Under Grad) because it is a requirement for some branches of further study such as medical.

LHS requirments (2)


Is this skipping of classes applicable to private high schools as well ?

I will have to get my 7th grader to start taking extra language courses now. We have Spanish as a part of the extended care offering but don’t know as yet how structured it is or will the kids be able to get credit for it in high school.

Advanced Placement (AP) classes

Advanced Placement (AP) is a buzzword among high school kids and their parents. This article is an effort to understand what it means and how can you benefit from it.

Advancement Placement Classes are college entry level classes which can be taken during High School. Why would you want to do that? There are lots of benefits. Listed below are some:


  • Making a major choice early-When you get to take a college level class early, you get to decide whether you like a certain area or not early. For eg. if you always wanted to be a Psychologist and you took the AP Psychology class and hated it, you will understand it better if you truly enjoy Psychology or not.
  • Increasing your High School GPA- AP Classes are graded on the scale of 5 and High School GPA is on the scale of 4. Hence, if you get an “A” or “5” in an AP class, that increases your GPA and if you are straight As High School student, your GPA will turn out to be greater than 4 on the scale of 4.
  • College admissions- An AP Class on your transcript informs the admissions panel at colleges that you are serious about college and hence made the extra effort of trying out college level classes in high school.
  • Advanced Placement itself- AP means that when you enter college, you will be given preference for intermediate/advanced classes of the subject whose AP exam you have already passed. The preference is needed because college classes have limited student intake and not everyone who wants to take a certain class, gets to take that class.
  • Saving money- High School (if public) is free while college (public and private) is expensive. So, if you knock off some of your college credits in High School, you save money paying for college.

So, how would you proceed about AP?

  • Try to take classes in summer after 9th/10th grade etc. so that you can knock off some other classes in place of which you will take an AP class in Spring or Fall Semester of High School.
  • Take the AP class in the regular school year.
  • At the end of the AP class, you take the standard AP exam through College Board, offered in your High School itself.
  • Once you pass the class, the grade appears on your High School transcript.
  • Here is the link to understand what colleges accept:

Hope this information was helpful!

What is PSAT and who should take it?

It’s important to know about the different tests out there because they offer opportunities in some form or other. Take the example of PSAT. Not many people know about it but it is a very useful test for college bound kids.



Kids take this test in their 11th grade. The scores are used for the following:

  • Scholarship screening of National Merit Scholarship Program.
  • Recognition of Outstanding Hispanic/Latino students- offered by College Board.
  • National Scholarship Service- college preparation guidance for African American kids.
  • Telluride Seminar Scholarships- scholarships for gifted 11th grade kids.
  • Feedback on SAT preparedness and a study plan- since the pattern is same as SAT.
  • Feedback on strengths and weaknesses for SAT- you receive a personalized analysis.
  • AP Success Potential- you know if you can do well in Advanced Placement classes (I will write about AP later).
  • Online College Planning Starting Guide.
  • College Connection- financial aid information.

Kids can test twice, by taking the test once in 10th grade and once in the 11th.

Happy PSATing!!


College admissions decoded: the path to formal education demystified

College education is still very relevant if you choose the right major and the right schools. A lot of preparation is warranted for college admissions. Here is what you need to do if you want to get your undergraduate (Bachelors, Associates) degree in the US. An article can be written separately on each of these steps but for now, manage with just this one

  • Major selection: Let’s say you are a senior in high school and you exactly know what sort of work you want to do in your life, then you can pick a major easily. For eg. If you want to design computer chips, go for Electrical and Computer Engineering; if you want to get a degree in acting, go for Bachelors in Theater. But if you don’t know your desires yet, you can skip this step for now.
  • Shortlisting colleges: There are thousands of colleges in the US. You should pick the ones which fit your bill. There are several parameters you should look at- quality of the program for your intended major, employment opportunities post-graduation, entrepreneurship culture on campus, cost and scholarship opportunities. If you don’t strongly feel for a major yet, look for colleges with overall good undergraduate programs along with the other aforementioned parameters. You don’t need to declare your major until the end of sophomore year in most of the US colleges. Once selected, you can also change it at least once in some colleges. You might ask where to look for information and the answer is that there are several websites which cater to this market- “College Board”, “US News” and “FastWeb” to name a few.


  • College Application: First thing you would want to find out would be the application deadlines for your desired colleges. Let’s say you want to start in fall (Aug/Sept) of 2015, the colleges will have their deadlines anywhere between November 1st 2014 and July 31st It’s more likely that the deadlines will be between December 15th 2014 and April 15th 2015 but early and late deadline colleges are not entirely unheard of. Please find out the specific requirements of college application from each college’s website but they will more or less follow this template- General Information, SAT scores, Letters of Recommendation, Transcripts, Resume, Essay, specific requirements for your major(if any), TOEFL (or other English proficiency tests) for international students.
  • General Information: This is the easy one. You list your professional details and the different schools and colleges you have attended.
  • SATs: One of the criteria for college admissions is the SAT score. SAT is the Scholastic Aptitude Test, a test on English, Math and Writing. You can find the test syllabus and sample tests on SAT’s website (google it). You take this computer based test and send your scores to your colleges of interest. Please take this test ahead of time so that scores are available at your desired colleges before the college application deadline.
  • Letters of Recommendation: This will give you shivers. You have to go back to the teachers whom you probably disregarded at some point in time and ask them to write letters recommending you for the college programs. Please be careful about whom you choose because in most cases you don’t end up seeing what they write. Please pick an ex-manager or a teacher who really was impressed with your capabilities and work. In most cases, each college application needs two or three such letters.
  • Transcripts: Fortunately or unfortunately, research has shown that high school GPA is the strongest predictor of college completion and success in the US. So, colleges want to see your transcripts and yes, they want to see a lot of A’s. Please order official transcripts from your schools to be directly sent to colleges, before the deadline.
  • Resume: Please prepare a one page resume enlisting all your scholastic and extra-curricular credentials. Remember, colleges are also looking for diverse, well-rounded individuals. So, if you have volunteering hours under your belt, that’s a brownie point for you. If you are a star athlete, that’s the whole brownie for you. Colleges look for both types- they like the focused ones (excelling in one particular field, eg. brilliant musician, teenage inventor) and the well-rounded ones (with diverse experiences and good academics).
  • Essay: I think this to be a very important piece in the application puzzle. Here is your chance to tell who you are and why do you want to go to college. Start with your personality. Tell them about your short term goals and long term goals. Tell them what you have done so far to achieve those goals. Tell them how college will help you achieve those goals. And tell them how their college can help you achieve your goals.
  • Specific requirements: Always check if your desired college or major has some specific requirements. For eg. Bachelors in Theater program at UCLA needs foreign language proficiency (Spanish, French or German). Some majors need Subject SATs.
  • English Proficiency: This is for international students from countries where the mother tongue is not English. Most colleges need you to take TOEFL (Test Of English as a Foreign Language), so make sure you take these and send the scores before the application deadline.

I will elaborate on some of these steps in my future posts but you got your framework, right? So, tie your shoe laces and get ready to tread the busy path of college applications.