College Savings Calculator
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Find answers to college savings questions
How much will you need to save to help your child get a college education? This College Savings Calculator can help you figure out how much to save each year.
Begin planning and saving early
College can be very expensive, so an early start to saving is a good idea. This calculator can help you begin your college savings plan.
Include more cost factors than just school
With this template, you can include costs for K-12 and High School, as well as college. If your college plan includes a study abroad, mission, or some other major cost, you can include that, too.
College Savings Calculator
for Excel or Google Sheets
Download
⤓ Excel (.xlsx)License: Personal Use (not for distribution or resale)
Description
How to Create a College Savings Plan using this template
- Include costs for grades K-12, High School, College, and other major events.
- Add extra deposits within the yearly savings schedule.
- Make a copy of the worksheet for each child.
- Automatically solve for the monthly deposit amount or choose a different deposit frequency.
Important: The default inputs in the college savings spreadsheet are simply for illustration. You will need to change the values to fit your needs.
You may also want to check out the free College Budget Template.
Using the College Savings Calculator
Year vs. Age vs. School Year
The investment year is assumed to start at the beginning of the school year (in August for example). Annual deposits are made at the end of the year and school costs are withdrawn at the beginning of the year.
The Age and School Year columns are for convenience in identifying when the child will be in what grade level. The calculator makes the assumption that the child enters kindergarten at age 5. Change (or fudge) this age as needed, because the School Year column is what you are mainly using for entering costs.
College, School, and Other Costs
The estimated School Year Costs in the yearly schedule section of the worksheet will require you to make estimated guesses about future costs. It is up to you to enter the costs associated with each year of school.
You can enter costs for more than just college. High school can be pretty expensive (club fees, class fees, band instruments, music lessons, travel, etc.), and if your child attends a private school, that can really eat at your budget as well.
All the costs for the year are assumed to be withdrawn at the beginning of the school year. That is probably not how it will really happen, but the exact timing of the withdrawals likely won't make a huge difference. The calculator will err on the conservative side, because if you left your funds in the account longer, you'd make more interest than the calculator predicted.
If your college savings plan is anything like mine, you'll probably find that interest earned is very small compared to the amount you will need to invest, unless you are funding the account at a level to put your kid through Harvard.
If you are planning for a mission or study abroad, you can include the cost in the years C-2 and C-3 or whatever the case may be.
Solving for the Monthly Deposit Amount
The college savings plan calculator is set up by default to calculate a monthly deposit amount based on what you have entered as the Initial Savings, Annual Deposits, Costs, and any Extra Annual Deposits made within the schedule.
NET Value: If this value is Zero then you will just break-even, or in other words, you will have saved just enough to cover all the costs. If you want to solve for an input other than the deposit amount, you can manually enter the deposit amount and then use Goal Seek or Solver to set NET to zero while changing one of the other inputs (like Initial Savings, Annual Deposit, or the Interest Rate).
Years to Make Deposits: The calculation to solve for the deposit amount will only work if the years to make deposits is less than or equal to the year before the last payment.
Example Scenario
Let's try an example: We will begin saving for my child's college education when he turns eight years old. We think he will attend the local public university full-time. We will cover his books and tuition for his undergraduate degree. We researched savings options and found a CD (Certificate of Deposit) with a 2% interest rate and decided on that because we know the money will be in there for some time.
We plan on making payments for ten years until he graduates from high school. Tuition inflation will occur over that time period. We use the Inflation Calculator and the current figure of $7,020, adding 6% to every year and discover that tuition and books will cost around $12,572 the first year, as shown in the screenshot of the Inflation Calculator below.
We estimate the costs to be $13,326, $14,126 and $14,974 for the following 3 years. We put the cost for each of the 4 years of college into the "Costs This Year" column of the College Savings Calculator as shown in the screenshot below.
The calculator shows us that we'll need to save about $383 each month if we are going to be able to pay these college costs (see image below). We'll have deposited $48,000 and earned more than $7,000 in interest during that 10 years of saving. The total cost of tuition and books for our child will be $54,998.
We might be able to find a better interest rate using some other type of account or investment, but one of the reasons we selected a CD instead of a 529 or Coverdell account is flexibility. If our child receives a scholarship or uses other financial methods, we can apply any excess funds to retirement or other investments.
How Much Should I Save for College?
Average Cost of College
When you are not sure where your child will go to college, it's common to base your plan on an average college cost. According to CollegeBoard.com, the average cost of tuition and fees in 2022-23 is $10,940 per year for in-state and $28,240 for out-of-state. Private four-year tuition and fees are in the neighborhood of $39,400. This College Finder tool can help figure out approximate costs of public or private schools by entering the name of the college or state where your child will attend school.
Not all students begin their education at a four-year university. Students can obtain general education credits or an Associates degree at junior or community colleges. The average cost for a two-year school tuition and fees is about $3,860 for the current school year. Most end up saving money when starting off this way. Another incentive is that kids can boost their GPA if needed. Students should make certain the credits they take with transfer to their future university.
There is no set formula to determine how much college costs will increase over time. To estimate how much you may have to pay for college in the future, you could use the Inflation Calculator (entering the inflation rate and the current cost of college as the Present Value). It will benefit you to keep up-to-date with inflated college costs so that you can adjust your savings plan as needed.
Shoud Your Child Help Pay for College?
The answer is yes (see this article), but how much is something you will need to decide. Some students get a job to pay for the day-to-day expenses, but parents cover the tuition and other tax-deductible expenses. The benefit to this approach is that it can help teach them better money management skills — something they definitely need to learn. Involving your child in the budgeting will help them know what they need to pay for.
Consider Using a 529 College Savings Plan
Have you heard of the 529 college savings plan? A 529 plan is a savings plan specifically for families savings for future education expenses. Although monetary contributions to this type of savings plan are not tax-deductible, it does grow tax-free and qualifying education expense withdrawals are also tax-free.
Withdrawals from a 529 account can be used for things like tuition, books, fees, and possibly even room and board. It can also be used for K-12 tuition, up to $10,000 per year. The SECURE Act of 2019 also allows for the use of a 529 savings account to pay off some student loans.
Other Savings Calculators and References
- 401k Savings Calculator by Vertex42.com - For 401k calculations, where you have an employer match, increasing salary, etc.
- Savings Calculator by Vertex42.com - The college savings calculator was based on this general savings calculator.
- NPV Calculator - by Vertex42.com - Creating this Net Present Value Calculator and writing the article on discount factors is what gave me the idea for how to solve for the deposit amount in the college savings calculator.
