Frequently asked questions
Why is education inflation higher than general inflation?
College costs have historically risen 5–8% annually due to increasing administrative costs, facility investments, reduced state funding (for public schools), and rising demand. Using general CPI (2–3%) significantly underestimates future costs.
What return does this assume on my savings?
The calculator assumes a 5% annual return on savings, which is conservative for a diversified portfolio over a 10+ year horizon. Adjust your monthly savings up if you invest more conservatively (savings accounts, CDs).
Should I include financial aid in the calculation?
Use the net cost after expected grants and scholarships rather than sticker price. However, merit aid isn't guaranteed, and need-based aid depends on future income. Planning for full cost is the safest approach.
What counts as college cost besides tuition?
Include tuition, fees, room and board, books, supplies, and personal expenses. For the 'annual cost' input, use the total Cost of Attendance (COA) figure that colleges publish, not just tuition.
Is a 529 plan the best way to save?
529 plans offer tax-free growth and withdrawals for qualified education expenses. They are usually the most tax-efficient vehicle for college savings. Some states also offer a state tax deduction for contributions. The trade-off is limited flexibility if the funds aren't used for education.