How to use the college savings calculator
- Enter the years until college starts and the years in college.
- Enter the yearly cost in today's dollars and the yearly rise in college costs. These are your own numbers, so look up the schools you have in mind.
- Enter the share of the cost you plan to cover, what you have saved so far, your monthly contribution and the expected returns before and during college.
- Read the projected cost, the amount needed at the start of college, whether your savings will cover it, and the monthly saving that closes the gap.
Formula
Cost in college year k = today's cost x (1 + rise)^(years until start + k - 1)
Needed at start = sum of share x cost(k) / (1 + return during / 12)^(12 x (k - 1))
Projected savings = saved x (1 + i)^n + monthly x ((1 + i)^n - 1) / i
Monthly saving needed = (needed - saved x (1 + i)^n) x i / ((1 + i)^n - 1)
Each college year is paid at the start of that year. The fund keeps earning while it is spent, so later years need less money set aside at the start. Deposits are made at the end of each month at i = yearly return / 12.
Worked example
Start college in 10 years, stay 4 years, at $30,000 a year in today's dollars with costs rising 4% a year. The first year costs $44,407.33, and the four years total $188,574.12 in future dollars.
With a 3% return during college, the amount needed at the start is $180,122.95. Saving $8,000 now plus $300 a month at 6% grows to $63,718.98, a shortfall of $116,403.97. The monthly saving that exactly covers it is $1,010.31.
If you plan to cover only half the cost, start 5 years out with $40,000 saved and $500 a month at 5%, you need $44,989.36 and project $85,337.39, a surplus of $40,348.03.
Use your own cost numbers
College costs vary enormously by school type, residency, housing choice and aid, so this tool contains no built-in tuition figures. Enter the total yearly cost you expect, including tuition, fees, housing, food, books and travel, taken from the schools you are considering or from their own cost estimates.
The rise in costs and the investment returns are example values. Small changes make big differences over ten years, so try several. Setting the rise to 0 shows the plan in today's dollars.
Covering part of the cost
Few families plan to pay every dollar from savings. The share field lets you cover only a portion, such as 50%, with scholarships, income during college or loans covering the rest. The result is only about the share you enter. Loans, aid and scholarships are not calculated here.
For other goals running at the same time, the savings goal calculator divides a monthly budget between them, and the compound interest calculator shows how a lump sum grows.
Accounts and taxes
Tax-advantaged education accounts have their own rules on contributions, withdrawals and what counts as a qualified expense. Those rules change and depend on your situation, so this calculator ignores taxes and plan fees. Check the current rules with the plan provider or a qualified adviser before you decide.
Assumptions and limits
- All costs, the cost rise and both returns are numbers you enter. No tuition data is built in.
- Each college year is paid in one amount at the start of the year.
- Savings earn the first return until college starts and the second return while it is being spent. Both compound monthly and stay constant.
- Contributions are made at the end of each month and stay constant.
- Taxes, plan fees, financial aid, scholarships beyond the share you enter and market losses are not modeled.
- This is a planning estimate, not financial or tax advice.
Frequently asked questions
How much should I save for college each month?
It depends on the cost, time and return you use. With $30,000 a year today, 10 years to go and $8,000 saved, covering all four years takes about $1,010.31 a month at the example returns. Enter your own figures.
Why does the amount needed at the start differ from the total cost?
Later college years are paid later, so the money set aside for them keeps earning in the meantime. The total cost is $188,574.12 but only $180,122.95 is needed at the start in the example.
How does tuition inflation affect the plan?
Rising costs raise every future year, and the effect compounds. At 4% a year a $30,000 cost is $44,407.33 ten years out. Try 0% and your own higher rates to see the range.
Can I plan to pay only part of the cost?
Yes. Set the share you plan to cover to a number below 100. The tool then sizes the savings goal for that share only and ignores how the rest is paid.
Does this work for graduate school or more than four years?
Yes. Set the years in college to the length of the program, up to ten, and enter the yearly cost you expect. The same formulas apply to each year.