College Savings Calculator
Calculate how much to save monthly for college using a 529 plan.
See how starting early and compound growth reduce your monthly savings needed.
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 approximately 5–6% per year over the past 30 years — significantly higher than 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
Worked example: Child’s current age: 5 years old → 13 years until college Current 4-year public university cost: $30,000/year ($120,000 total) Tuition inflation: 5%/year Future cost = $120,000 × (1.05)^13 = $120,000 × 1.886 = $226,300
Monthly savings needed to reach $226,300, assuming 7% annual return: r = 0.07/12 = 0.00583; n = 13 × 12 = 156 months PMT = $226,300 × 0.00583 / [(1.00583)^156 − 1] = ~$840/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 (5% inflation):
| Years Until College | $30K/yr Today Becomes |
|---|---|
| 5 years | $38,300/yr |
| 10 years | $48,900/yr |
| 15 years | $62,400/yr |
| 18 years | $72,200/yr |