- 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 2005-06 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 2005-06 School Year
Source: Trends in College Pricing 2005, The College Board,
www.collegeboard.com |
| Type |
Tuition |
Room
& Board |
Total |
Change
from 2004-05 |
| Public
4-Year (in-state tuition) |
$5,491 |
$6,636 |
$12,127 |
7.1% |
| Private
4-Year |
$21,235 |
$7,791 |
$29,026 |
5.9% |
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 2005, the average compounded rate of return for the S&P
500, including reinvestment of dividends, was approximately 11.4%
per year. During this period, the highest 12-month return was 61%,
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.
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