The formula
How it works
Estimate the future cost of a college education and whether your savings will cover it. Enter today’s annual cost, when study begins, how long it lasts, and your savings, to see the projected total and any shortfall.
FAQ
Why project the cost into the future?
College costs have historically risen faster than general inflation, so a course that costs a certain amount today will cost noticeably more by the time a young child enrolls. Projecting forward with a cost-inflation rate gives a realistic target to save toward, rather than planning against today’s lower price.
What does the required monthly saving mean?
It is roughly how much you would need to set aside each month, earning your assumed return, to close the gap between your projected savings and the projected cost by the time study begins. It is a planning guide, not an exact figure, since real costs, returns and aid all vary.
Does this include financial aid or scholarships?
No — the projection is based purely on the sticker price you enter, growing at your assumed inflation rate. Any grants, scholarships or aid you expect would reduce the real cost and the savings needed, so treat the shortfall shown here as a worst-case figure.
How should I choose an inflation rate?
College cost inflation has often run a couple of points above general inflation, so many planners use somewhere between 4% and 6% as a starting assumption. Using the specific school’s recent tuition history, if you know it, will give a more tailored estimate than a generic rate.
What if I am saving for more than one child?
Run the calculator separately for each child, since their years until enrollment and years of study will differ. You can then add the monthly saving figures together to get your combined target, or run each child’s numbers against a shared pot if you plan to fund them from one account.
Why does starting savings later increase the required monthly amount so much?
A later start gives your existing savings and new contributions less time to compound before the cost is due, so a bigger share of the total has to come from contributions rather than growth. Delaying even a few years can noticeably raise the monthly figure needed to reach the same goal.
Should I use a 529 plan or similar account for this savings goal?
This calculator does not model any specific account type, but tax-advantaged education savings accounts, where available, let your projected returns compound without an annual tax drag, which can make reaching the target easier than in a regular taxable account.
About the college cost calculator
This calculator projects what a college education will cost in the future and checks it against what your savings are likely to grow to. Because tuition tends to rise faster than everyday prices, a realistic plan has to account for years of cost inflation between now and enrollment. The calculator does that, sums the cost across all the years of study, and shows any shortfall along with a monthly saving target to close it.
How to use it
Enter the current annual cost of the college, how many years until enrollment, how many years the course lasts, and an assumed cost-inflation rate. Then enter your current savings and the return you expect on them. The calculator shows the total projected cost, your projected savings, the shortfall, and the monthly amount needed to bridge it. For example, $25,000 a year rising at 5% becomes far larger a decade out.
The formula
Each year’s cost is grown from today’s figure by inflation, , where is the current annual cost, the inflation rate, the years until enrollment and the year of study. These are summed across all study years for the total. Your current savings are grown at the expected return over the years until enrollment, and the difference is the shortfall.
Where it is used
Parents and students use it to set a savings goal for a 529 plan or education fund, and to see how starting earlier dramatically lowers the monthly amount required. Financial advisers use the same projection to frame education planning. Because it separates the rising cost from the growth of savings, it makes the trade-off between saving more now and facing a bigger gap later very concrete.