How the College Cost Calculator Works
College costs a lot, and the price keeps rising. If a child will start college in ten years, what matters is not what a year costs today, but what it will cost then. The College Cost Calculator projects the future cost, shows how much of it your savings could cover, and finds the gap you would still have to fill by saving more or borrowing.
What you enter
- Yearly costs in today's dollars: tuition and fees, room and board, and books, travel and other costs. Your chosen college's website shows them.
- Scholarships and grants: money you expect that does not need to be repaid. It is taken off the yearly cost.
- Years until college starts, and years of college: for example, 10 years until it starts, and 4 years of study.
- Yearly rise in college costs: your guess for how fast costs increase.
- Your savings: what you have saved so far, what you add each month, the yearly return, and whether you keep saving once college starts.
- The student loan: an interest rate and a term, in case you borrow what savings do not cover.
Step 1: the cost of each year
The cost rises every year, like compound interest. A year of college that starts after t years costs:
cost in a future year = (yearly costs today - grants) x (1 + yearly rise)^t
Each year of college is one year further out, so it costs more than the year before.
Step 2: growing and spending the savings
The calculator runs your savings month by month. Every month, the balance earns a month of growth, and your monthly saving is added. When college starts, the first year's cost is paid from the balance. The money that is left keeps growing until the next year's bill, and so on. If the balance is not enough for a year, the part that is missing is the gap.
A worked example
A year of college costs $27,000 today: $12,000 for tuition, $12,000 for room and board, and $3,000 for other costs. College starts in 10 years and lasts 4 years. Costs rise 4% a year. You have $5,000 saved, and you add $300 a month at a 6% return, stopping when college starts.
| Year of college | Cost | Paid from savings | Gap |
|---|---|---|---|
| 1 | $39,967 | $39,967 | $0 |
| 2 | $41,565 | $19,423 | $22,143 |
| 3 | $43,228 | $0 | $43,228 |
| 4 | $44,957 | $0 | $44,957 |
| Total | $169,717 | $59,390 | $110,328 |
By the time college starts, your savings have grown to $58,261. That pays for the first year and part of the second. The total cost is $169,717, which is about 57% more than four years at today's prices ($108,000). Your savings cover 35% of it, and $110,328 is left.
Chart: each year of college
The dark blocks are paid from savings, and the light blocks are the gap:
Year 1 ████████████████████████████████████ $39,967 Year 2 █████████████████░░░░░░░░░░░░░░░░░░░░ $41,565 (gap $22,143) Year 3 ░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░ $43,228 (gap $43,228) Year 4 ░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░ $44,957 (gap $44,957)
Closing the gap
The calculator finds the monthly saving that would cover every year. To do that it tries different amounts, until the gap is zero. In the example, saving $890.53 a month instead of $300 would pay for all four years. If you borrow the gap instead, a 10-year student loan of $110,328 at 6.5% would cost $1,252.75 a month, with $40,002 of interest. That estimate does not include any interest that builds up while the student is at school.
Ways to lower the cost
| Change to the example | Gap | Monthly saving to cover it all |
|---|---|---|
| None | $110,328 | $890.53 |
| Keep saving $300 a month through college | $99,226 | $741.75 |
| $5,000 a year in scholarships and grants | $78,442 | $715.34 |
- Change to the example: None
Gap: $110,328
Monthly saving to cover it all: $890.53 - Change to the example: Keep saving $300 a month through college
Gap: $99,226
Monthly saving to cover it all: $741.75 - Change to the example: $5,000 a year in scholarships and grants
Gap: $78,442
Monthly saving to cover it all: $715.34
Other ways to help include saving early, choosing a lower-cost school, living at home, starting at a community college, and using accounts that give tax benefits for education, where you live.
What this calculator does not include
- Taxes, and the rules of education savings accounts, which differ from place to place.
- Changes in financial aid, which depend on income and assets.
- Interest that builds up on loans while the student is in school.
- Costs that differ each year of study, such as a semester abroad.
This tool gives an estimate for general information only. It is not financial advice. Real costs and aid depend on the school and your situation, so check with the college's financial aid office.