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
The 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 2004-05 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 2004-05
School Year
Source: Trends in College Pricing 2004, The College Board, www.collegeboard.com
Type
Tuition
Room & Board
Total
Change from 2003-04
Public 4-Year (in-state tuition)
$5,132
$6,222
$11,354
7.8%
Private 4-Year
$20,082
$7,434
$27,516
5.6%
For the purposes of this calculator all expenses are assumed to be due at
the end of the year.
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 2004" put
tuition, room and board increases at approximately 6.5% per year, for the last
ten 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
dependant on the type of investments you select. From January 1970 to December
2004, the average compounded rate of return for the S&P 500, including reinvestment
of dividends, was approximately 11.5% per year. During this period, the highest
12-month return was 64%, and the lowest was -39%. Savings accounts at a bank
pay as little as 1% or less. It is important to remember that future rates
of return can't be predicted with certainty and that investments that pay higher
rates of return are 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.
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 can not 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.
