College Cost Calculator
The College Cost Calculator can help determine rough estimates of what to expect from college costs, and in turn, how much to begin budgeting for it. To estimate the costs of more specific colleges, this calculator is mainly intended for use in the U.S.
Modify the values and click the Calculate button to use
Including federal, state, and local tax
use 0% for 529 plan savings
What is a College Cost Calculator?
A college cost calculator is a financial planning tool that helps you estimate the future cost of college education and determine how much you need to save regularly to meet those costs. It considers factors such as current college costs, inflation rates, investment returns, and the time horizon until college begins.
College Cost Calculation Formula
The calculation of future college costs and required savings typically involves several financial formulas:
Future Value of College Costs:
$$FV = C \times (1 + r)^n \times y$$
Monthly Savings Requirement:
$$M = \frac{G - S \times (1 + i \times (1-t))^n}{PMT((1 + i \times (1-t))^{1/12} - 1, n \times 12)} \times P$$
Where:
- C = Current annual college cost
- r = Annual college cost inflation rate
- n = Years until college
- y = Years of college attendance
- S = Current savings amount
- i = Expected annual return on investments
- t = Tax rate on investment returns
- P = Percentage of costs to be covered by savings
College Types and Their Costs
Average Annual U.S. College Cost, Including Tuition, Fees, and Living Costs for 2024-2025:
| 4-year private: $62,990 |
| 4-year public (in-state): $29,910 |
| 4-year public (out-of-state): $49,080 |
| 2-year public: $20,570 |
Source: the College Board
How to Use This Calculator
1. Enter today's annual college costs or select a college type from the dropdown.
2. Adjust the college cost increase rate (typically 5-6%).
3. Set the expected duration of college attendance (typically 2-4 years).
4. Specify what percentage of costs you plan to cover through savings.
5. Enter your current college savings balance.
6. Set your expected investment return rate on savings.
7. Enter the applicable tax rate on investment returns (use 0% for 529 plans).
8. Indicate how many years until college begins.
9. Click the Calculate button to see your results.
College Savings Options
529 Plans:
Tax-advantaged savings plans designed specifically for education expenses. Earnings grow tax-free and withdrawals for qualified education expenses are not taxed.
Coverdell ESAs:
Education Savings Accounts that allow tax-free earnings for qualified education expenses, with annual contribution limits.
UTMA/UGMA Accounts:
Custodial accounts that allow adults to transfer assets to minors, with potential tax advantages for a portion of earnings.
Savings Bonds:
U.S. savings bonds offer tax advantages when used for qualified education expenses.
Financial Aid Considerations
Your savings plan should be considered alongside potential financial aid options:
- Grants and Scholarships: Money that doesn't need to be repaid, based on need or merit.
- Student Loans: Federal and private loans with varying interest rates and repayment terms.
- Work-Study Programs: Part-time employment opportunities that help students earn money for education expenses.
- Asset Impact: Be aware that certain savings vehicles may impact financial aid eligibility differently.
Important Notes
- • This calculator provides estimates based on the information you provide and certain assumptions.
- • Actual college costs may vary based on the specific institution, location, and program.
- • Investment returns are not guaranteed and may fluctuate over time.
- • Consider consulting with a financial advisor to create a personalized college savings plan.
College Savings Tips
1. Start Early: The power of compound growth means that even small contributions can grow significantly over time.
2. Automate Savings: Set up automatic monthly transfers to your college savings account.
3. Use Tax-Advantaged Accounts: 529 plans and Coverdell ESAs offer tax benefits specifically for education savings.
4. Reassess Regularly: Review and adjust your savings plan annually as circumstances change.
Frequently Asked Questions
When should I start saving for college?
Ideally, start saving as early as possible—even before your child is born. The longer your money has to grow, the more you can potentially accumulate through compound interest.
How much of college costs should I plan to save?
Many financial experts suggest aiming to save around 1/3 of expected college costs, with the remainder coming from current income, financial aid, and possibly student loans.
Will saving for college hurt our chances for financial aid?
While savings are considered in financial aid calculations, the benefits of saving typically outweigh the potential reduction in aid. Also, some savings vehicles (like 529 plans owned by grandparents) may have minimal impact on aid eligibility.
What if my child doesn't go to college or gets a scholarship?
If you've saved in a 529 plan, you can change the beneficiary to another family member, use it for your own education, or withdraw the money (though you'll pay taxes and penalties on earnings for non-qualified withdrawals).