College Savings Calculator

College savings projections use compound interest growth combined with future cost estimates, then calculate the monthly contribution needed to close the gap.

Future College Cost Formula:

Future Cost = Current Cost × (1 + Tuition Inflation)^Years

Tuition inflation has averaged roughly 5–6% per year over the past 30 years, well ahead of general CPI.

Monthly Savings Needed Formula (Future Value of Annuity):

PMT = FV × r / [(1 + r)^n − 1]

• FV = Future college cost target
• r = Monthly return rate (annual rate ÷ 12)
• n = Months until college begins

Each year of college inflates further than the one before

This is where most college estimates go wrong, and where this calculator differs from the arithmetic you will see in a lot of articles. Freshman year is n years away; senior year is n + 3 years away and gets three more years of tuition increases. Inflating the whole four-year sticker price by a single n-year factor prices all four years at the freshman rate and comes out too low.

Future Cost = Σ (Annual Cost × (1 + inflation)^(years to college + year index))

Worked example: Child’s current age: 5 years old → 13 years until college Current 4-year public university cost: $30,000/year Tuition inflation: 5%/year

The shortcut version, $120,000 × 1.05¹³, gives $226,278. That is $17,544 short, most of a freshman year, and the error grows the longer the horizon.

Monthly savings needed to reach $243,822, assuming 7% annual return and nothing saved yet: r = 0.07/12 = 0.005833; n = 13 × 12 = 156 months PMT = $243,822 × 0.005833 / [(1.005833)^156 − 1] = $962.46/month

529 Plan advantages:

• Contributions grow tax-free when used for qualified education expenses
• Many states offer a state income tax deduction on contributions
• Funds can be transferred to another family member if the original beneficiary doesn’t attend college

Reference: estimated future costs at 5% inflation