What You Need to Know to Calculate College Savings
What you’ll need to have handy as you calculate your savings needs for your children’s college education:
- Current ages of your children
- Age to begin college (18 is default but could be any age up to 25)
- Current tuition and fees per year at the college of choice
- Current room and board per year at the college of choice
- Education cost inflation (College Board estimates it at 4.8% per year for the past 10 years)
- Current amount saved toward college
- Amount you plan to contribute monthly
- Rate of return, which depends on the type of investment. Consult your financial advisor for different investment options.
- Investigate all the education savings plans available to you (federal 529 savings, state 529/Prepaid Tuition, Coverdell ESA). You might need to calculate each one separately to cover all expenses.
Once you have gathered all your information, it’s fast and easy to calculate a savings plan.