College Savings Calculator Formula
Understand the math behind the college savings calculator. Each variable explained with a worked example.
Formulas Used
Estimated Total Cost
total_cost_out = total_costMonthly Savings Needed
monthly_needed = gap > 0 ? (monthly_rate > 0 ? gap * monthly_rate / (pow(1 + monthly_rate, num_months) - 1) : gap / num_months) : 0Current Savings Will Grow To
future_savings_out = future_savingsVariables
| Variable | Description | Default |
|---|---|---|
annual_cost | Annual College Cost(USD) | 30000 |
college_years | Years of College(years) | 4 |
years_until | Years Until College(years) | 10 |
current_savings | Current College Savings(USD) | 5000 |
annual_return | Expected Annual Return(%) | 6 |
total_cost | Derived value= annual_cost * college_years | calculated |
monthly_rate | Derived value= annual_return / 12 / 100 | calculated |
num_months | Derived value= years_until * 12 | calculated |
future_savings | Derived value= current_savings * pow(1 + monthly_rate, num_months) | calculated |
gap | Derived value= total_cost - future_savings | calculated |
How It Works
College Savings Calculation
Total Cost = Annual Cost × Years
The monthly savings needed is calculated by finding the gap between the total cost and what your current savings will grow to, then solving for the PMT needed to fill that gap.
Worked Example
$30,000/year for 4 years, 10 years away, $5,000 saved, 6% returns.
annual_cost = 30000college_years = 4years_until = 10current_savings = 5000annual_return = 6
- 01Total cost = $30,000 × 4 = $120,000
- 02Current savings in 10 years = $5,000 × 1.005^120 = $9,097
- 03Gap = $120,000 - $9,097 = $110,903
- 04Monthly savings needed = ~$679
Ready to run the numbers?
Open College Savings Calculator