College-cost inflation is the assumed yearly increase applied to today’s cost estimate. Small changes in this input can create large changes over a long timeline because the increase compounds year after year.
A simple example
If an annual cost is $30,000 today and rises by 5% each year, it does not increase by a flat $1,500 forever. The next year’s increase is applied to the already-higher cost. That compounding is why long-range estimates can become large.
Why the calculator inflates each college year separately
A student’s first year of college and fourth year do not occur at the same time. The calculator therefore estimates each year’s cost based on how far that year is from today, then adds the annual amounts together.
Use more than one inflation assumption
- Run a lower assumption to understand the best-case pressure on the plan.
- Run a middle assumption for the family’s working estimate.
- Run a higher assumption to stress-test the target.
Replace generic assumptions as college gets closer
Years before college, a broad planning estimate may be all a family has. As school research begins, replace that number with current school-specific costs, net-price calculators, and realistic housing and travel expenses.
What this model leaves out
The estimate does not model school-specific tuition guarantees, financial aid formulas, changes in attendance status, transfer paths, or family tax effects. Treat it as a planning range, not a bill.