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College Savings Plan
Saving for your children's education requires a long-term plan. And, like saving for retirement, the earlier you start your plan the better. Use this calculator to help develop or fine-tune your education savings plan. Click the "View Report" button for a detailed look at the results.
Definitions
- Age of children
- Current age of your children. This calculator is based on each child beginning their college education at age 18. The difference between their current age and 18 is the number of years you have to save.
- Annual tuition
- Current estimated cost of one year of tuition and books. This amount should be per child and be specific to the school they may be interested in attending. The cost of college for the 2001-02 school year, including tuition, room and board, books, supplies, transportation and other personal expenses, as reported by the College Board was $12,000 for one year at a four-year public college and $26,000 for one year at a four-year private college. For the purposes of this calculator all expenses are assumed to be due at the end of the year.
- Room and board
- Current estimated cost of one-year room and board. Like tuition and books, this amount should be per child and specific to the school they may be interested in attending. For the purposes of this calculator all expenses are assumed to be due at the end of the year.
- Education cost inflation
- This is the percentage that you expect educational costs to increase per year.
- Current amount
- The total amount you currently have saved for your child's (or children's) education.
- Monthly contributions
- The dollar amount you plan to save per month toward your child's (or children's) education. All amounts are assumed to be added to your account at the beginning of the month.
- Rate of return
- This is the annually compounded rate of return you expect from your investments. The actual rate of return is largely dependant on the type of investments you select. For example, for the last thirty years the average annual rate of return for domestic equity stocks has been about 10%. Savings accounts at a bank pay as little as 2%. For the purposes of this calculator taxation is not factored into the results. If you pay taxes on the interest, dividends or capital gains from these investments you may wish to enter your after tax rate of return.
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