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College Savings Calculator Helpful Planning ToolSubmitted by Personal Money Planning on August 28th, 2013
Have you found yourself gazing at your infant (or teenager for that matter) and wondered if it’s time to start saving for college? How much will you need to save, what will college cost in 18 years? Well, your college savings questions have been answered! The “World’s Simplest College Cost Calculator” (their name for it, not mine) is a few clicks away at www.savingforcollege.com/college-savings-calculator. As a financial guy, I am particularly fond of calculators and this offers the quickest route to those tough college savings questions. So simple in fact, the only information required is the age of your child. Once entered, the calculator churns out how much college will cost and how much you need to put away each month to pay for it.
But that’s not all. You can customize the formula to more closely match your situation. The current annual cost of college entry defaults to $25,000 per year. But let’s say you are a diehard Mustang, Longhorn, Red Raider, or Aggie (sorry if I’ve left you out) and want to use specific college expenses. The “help” tool will lead you to the National Center for Education Statistics where you can search for the current cost and inflation of your alma mater. You can also adjust the defaulted entries to the specifics of your chosen school. Doing your homework and getting this data makes the results much more meaningful and something you can then use in your college savings planning.
A friend of mine, DaNella, who doesn’t run college cost analysis reports as part of her job (yet), gave this tool the old college try. She has 2 young boys so this is about as real as it gets. When she entered 6 as the age of her child the tool returned over $200,000 in college costs, a monthly cost of $765 over the next 15 years. “Because I’m saving for 2 kids, that’s equal to a house payment,” she said. In other words, she’s over budget. With a little tweaking-- the boys could attend MSU while living with grandparents (free room and board) her estimate changed to a more manageable $46,000, or $162 per month for her 6 year old and $123 per month for her 2 year old. “In as little as 5 minutes I was able to research the costs of the school of my choice and with a few changes I have created an attainable scenario to send my boys to college,” she told me.
An additional part of the calculator is a table logging each month’s contributions, earnings, and running total. The calculator also includes a graph detailing the growth and withdrawals over the time period, for which my tester considered “ineffective in my college savings decisions.” So much for being the perfect college savings calculator, but it’s certainly better than guessing sometime around your kids’ senior year in high school.
This article was published under the title "Calculate saving for kids' college"
in the WichitaFalls Times Record Newson February 17, 2013.