When to start saving up for college tuition: 38% don’t have savings

It’s no secret that college costs a lot of money, but saving for that milestone in advance can help families avoid taking on unhealthy levels of student debt. Thankfully, 44% of parents have started to save for a college education before their child’s 11th birthday, according to a new Citizens Bank survey. The problem? Another 38% haven’t set funds aside for college at all.

If you have a child who’s expected to attend college at any point in the future, it’s imperative that you save early on. Otherwise, there’s a good chance that degree will come with an unwanted pile of hard-to-shake loans.

It’s never too soon to save

Many parents struggle to set funds aside for college when their children are very young and they’re first grappling with the outrageous expense that is child care. But if you don’t make an effort to save for college many years ahead of that milestone, you’re likely to come up short.

Imagine you wait until your child is 14 to start building a college fund, at which point you contribute $500 a month. Even if your investments do relatively well and generate an average yearly 7% return during that time (which, for the record, is more than doable with a stock-heavy portfolio over a lengthier time window, but iffier with a four-year span), you’ll wind up with $26,640. Now that’s not a negligible amount of money – but seeing as how the average cost of a single year’s tuition at a four-year, public out-of-state college cost $26,290 this past academic year, it’s not a ton of money to work with.

Colorado, Wyoming: The colleges with the most drug and alcohol arrests

Even in-state schools are no bargain. The average cost of tuition at a four-year, public in-state is $10,230. It would take over $40,000 in savings to cover tuition alone at the current rates, which are likely to climb. And that doesn’t even begin to include the cost of room and board for those who need it.

That’s why it’s crucial to start saving for college earlier on, even if it means cutting back on other living expenses to make that happen. If you’re able to set aside $300 a month starting when your child turns eight, you’ll have $49,740 by the time he or she reaches 18, assuming that same average annual 7% return. That’s almost double the total in our previous example despite the lower monthly contribution amount, and it highlights the benefit of giving your investments more time to grow.

Speaking of investing your college savings, you have several options in this regard, but a good choice to consider is a 529 plan. These state-sponsored savings plans give you tax-free growth on your money, assuming you use it for qualified education purposes. And while you don’t get a federal tax break on the money you put into a 529, some states offer tax incentives for making contributions.

Detained immigrants file lawsuit: Medical help ignored, wheelchair requests denied

Of course, a 529 plan isn’t your only college savings option. You might also consider building a college fund in a Roth IRA. Though these accounts are traditionally used as a means of retirement savings, you’re allowed to take withdrawals to pay for college. Just be aware that if you’re a higher earner, you may not be eligible to save in a Roth. Also, Roth IRA contributions max out at $6,000 a year for savers under 50, and $7,000 a year for those 50 and over. If you’re behind on college savings and want to aggressively fund an account to catch up, you may be held back by these limits.

It takes a lot of money to put a child through college these days. If you want to avoid piles of debt, start setting money aside for education as early on as possible. You’ll be thankful you did when the time comes to start filling out those applications.

The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

Offer from the Motley Fool: The $16,728 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.