“How much should I save for college?” sounds like one question, but it contains several. What kind of school? How many years? Which expenses? How much is already saved? How much time remains? What investment return and cost inflation should be assumed?
Step 1: Choose a cost target
Begin with an annual cost in today’s dollars. It can come from a school’s published cost of attendance, a net-price calculator, or a family-created estimate. Add the number of school years you want to model.
Step 2: Estimate the future cost
The calculator applies the college-cost inflation assumption to each future school year. Because the second, third, and fourth years occur later, each can have a different estimated future cost.
Step 3: Project current savings
Current savings are compounded over the time before college. Monthly contributions are modeled separately and added to the projection. The calculator assumes deposits happen at the end of each month.
Step 4: Compare savings and cost
If projected savings are lower than estimated cost, the difference is displayed as a savings gap. If savings are higher, the calculator shows an estimated surplus.
Step 5: Solve for a monthly amount
The “monthly amount needed” estimates the monthly contribution that could grow to the college-cost target, after accounting for the projected future value of current savings.
Use a range instead of one return assumption
Run the calculation more than once. A conservative, middle, and optimistic return assumption can show how much the plan depends on growth that is never guaranteed.
Do not confuse a funding goal with a parental obligation
Families may choose to target 100% of estimated costs, a fixed dollar amount, tuition only, or another percentage. The calculator does not decide what a family must pay. It only makes the selected goal visible.