College Cost Calculator: What Will Your Child's Degree Actually Cost?

College costs have risen at approximately 5-6% annually for decades. A 4-year in-state public university that costs $28,000 per year today will cost $45,000-$50,000 per year in 10 years.

The math is uncomfortable, but knowing the target is the starting point for any plan.

Current College Costs (2025-2026)

| School Type | Annual Cost (Room, Board, Tuition) | 4-Year Total | |-------------|-----------------------------------|-------------| | Public in-state | $28,000 | $112,000 | | Public out-of-state | $46,000 | $184,000 | | Private nonprofit | $62,000 | $248,000 | | Ivy League / Top privates | $88,000 | $352,000 |

Source: College Board annual surveys. These are average published costs. Net costs after grants and scholarships are often significantly lower.

Future Cost Projection

With 5% annual college inflation:

| Years Until Enrollment | In-State Public (Annual) | Private (Annual) | |-----------------------|--------------------------|-----------------| | 5 years | $35,700 | $79,100 | | 10 years | $45,600 | $101,100 | | 15 years | $58,200 | $129,100 | | 18 years | $67,200 | $149,200 |

A baby born today will face $67,200/year at a public university for their first year (18 years from now at 5% inflation), or a 4-year total of approximately $285,000.

How Much to Save Monthly

To reach these targets, assuming 6% annual investment return in a 529 plan:

| Target (Total 4-Year) | Years to Save | Monthly Contribution | |----------------------|--------------|---------------------| | $50,000 | 18 years | $156 | | $100,000 | 18 years | $312 | | $150,000 | 18 years | $468 | | $200,000 | 18 years | $624 | | $285,000 | 18 years | $889 |

The monthly amount to fully fund projected public university costs for a newborn is roughly $890/month at 6% growth. Most families cannot save this much, which is where financial aid, scholarships, and realistic school selection enter the picture.

The 529 Plan Tax Advantage

A 529 plan is the primary college savings vehicle:

• Contributions grow tax-free
• Withdrawals for qualified education expenses are tax-free
• Many states offer a state income tax deduction for contributions
• Anyone can contribute (grandparents, relatives)

529 tax benefit example (federal):

$10,000 invested in a 529 at 6% over 18 years: $28,543 $10,000 in a taxable account at the same return, 24% annual tax on gains: approximately $23,800

The 529 produces $4,743 more on the same $10,000 invested.

State tax deduction bonus: 33 states offer a deduction or credit for 529 contributions. In New York, contributions up to $10,000 (single) or $20,000 (married) are deductible at up to 6.85% state rate, saving $685-$1,370 annually.

FAFSA and Financial Aid Basics

The Free Application for Federal Student Aid (FAFSA) determines eligibility for grants, subsidized loans, and work-study. Key facts:

• A 529 plan owned by the parent is counted as a parental asset (5.64% expected contribution rate), not a student asset (20% rate). This minimizes financial aid impact.
• A 529 owned by grandparents does not count as an asset but distributions were previously counted as student income. Starting 2024-2025, grandparent 529 distributions no longer count as income on the FAFSA.
• The Expected Family Contribution (EFC) is now called the Student Aid Index (SAI) under FAFSA simplification.

What If You Cannot Save Enough?

Most families do not fully fund college before enrollment. Options for the gap:

1. Merit scholarships: Based on GPA, test scores, activities. Renewable each year if grades maintained.
2. Federal student loans: $27,000 maximum for a 4-year undergraduate program (subsidized + unsubsidized)
3. State and institutional grants: Many universities meet full demonstrated need for low-income students
4. Community college first: 2 years at $6,000-$8,000/year before transferring to a 4-year school
5. In-state vs out-of-state: The cost difference is $72,000+ over 4 years

See Best Investing Platforms for 529 plan options with low fees.

Use the CalcMoney Savings Goal Calculator to calculate how much to save monthly to hit your specific college savings target.

Frequently Asked Questions

Can 529 funds be used for room and board?

Yes. Room and board is a qualified 529 expense as long as the student is enrolled at least half-time. The amount you can claim is limited to the school's cost of attendance for housing.

What if my child does not go to college?

529 funds can be rolled over to a different beneficiary (sibling, cousin, even yourself). Starting 2024, up to $35,000 in 529 funds (for accounts at least 15 years old) can be rolled into a Roth IRA for the beneficiary, subject to annual Roth IRA contribution limits.

Should I save in a 529 or pay down my mortgage first?

This depends on your mortgage rate, expected college costs, and how much retirement savings you have. Generally: fund your retirement first, pay down high-interest debt, then address college savings. Student loans exist for college costs. There is no loan for retirement.