College Savings Planner
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
The 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 average published costs of college, for
the 2009-10 school year, including tuition, room and board, books,
supplies, transportation and other personal expenses, as reported by
the College Board:
U.S. Undergraduate College Costs for 2009-10 School Year
Source: College Board's 2009 Trends in College Pricing, www.collegeboard.com |
| Type | Tuition and fees | Room and board | Total | Change from 2008-09 |
| Public 4-Year (in-state tuition) | $7,020 | $8,193 | $15,213 | 5.9% |
| Public 4-Year (out-of-state tuition) | $18,548 | $8,193 | $26,741 | 6.0% |
| Private 4-Year | $26,273 | $9,363 | $35,636 | 4.3% |
Room and board
The 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. Data provided by The College Board's "Trends in College
Pricing 2009" put tuition, room and board increases at approximately
6.4% per year, for the past 10 years.
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. This will also be the rate used if you end up with a
negative balance, and need to borrow money to meet your goal. The
actual rate of return is largely dependent on the type of investments
you select. For example, from December 1999 to December 2009, the
average annual compounded rate of return for the S&P 500 was -0.6%,
including reinvestment of dividends. From January 1970 to December
2009, the average annual compounded rate of return for the S&P 500,
including reinvestment of dividends, was approximately 10.1% (source:
www.standardandpoors.com). Since 1970, the highest 12-month return was
61% (June 1982 through June 1983). The lowest 12-month return was -43%
(March 2008 to March 2009). Savings accounts at a financial institution may pay as
little as 1% or less but carry significantly lower risk of loss of
principal balances.
It is important to remember that these scenarios
are hypothetical and that future rates of return can't be predicted
with certainty and that investments that pay higher rates of return are
generally subject to higher risk and volatility. The actual rate of
return on investments can vary widely over time, especially for
long-term investments. This includes the potential loss of principal on
your investment. It is not possible to invest directly in an index and
the compounded rate of return noted above does not reflect sales
charges and other fees that funds and/or investment companies may
charge.
Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
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