Tuition and More: Calculating the True Cost of College
When students and their families are navigating the costs of college for the first time, they may be unfamiliar with some of the additional fees and living expenses that need to be factored in. While it’s tempting to only notice the cost of tuition when making a decision, ancillary costs such as technology fees, housing, parking, and meal plans can all add up to thousands of dollars quickly.
When calculating the total cost of a college education, these are the components that should be taken into account:
Resources: College Cost Calculators
Once all of the fees associated with attending college are ascertained, students and their families can take advantage of numerous college cost calculators to better prepare themselves for what’s to come. The roundup below highlights some of the best calculators on the market today – all of which are free to use.
Big Future’s College Cost Calculator
Students can enter info like annual costs, years of attendance, and how much money is available via savings to get an idea of how much college will cost.
College Cost Projector
FinAid allows users to see how much inflation will increase costs based on when a student begins college.
CNN Money Calculator
Use this tool to search for specific schools and find out their current tuition rates and the percentage of students receiving institutional funding.
Several institutions provide their own college cost calculators, as evidenced by The University of Chicago’s “Calculate Your Cost” tool.
Net Price Calculator Center
This service provided by the U.S. Department of Education lets prospective students check different schools to see how much it will cost to attend.
The Cost of Borrowing Money for School: College Loan Calculators
Understanding college loans can be a confusing process, and often students and families are under a time crunch to arrange funding and don’t really get a chance to learn all the ins and outs of how these funding sources work. College loan calculators are a great resource when it comes to getting a sense of the actual numbers involved, including how long it will take to pay off a loan, what the monthly repayment plan will be, and how much interest will be charged.
Learn more about student loans & financial aid with the following guides:
Resources: College Loan Calculators
After gaining a fuller understanding of types of loans available, total costs of college, and how much will be needed, future college students can select from a range of college loan calculators to get a sense of the repayment process.
Financial Aid Need Estimator
The standardized testing company ACT offers this calculator, which helps students figure out exactly how much they’ll need to borrow.
A great tool provided by the U.S. Department of Education to estimate payments for federal loans.
Student Loan Calculator.
The most detailed calculator available is College Board’s, which asks a series of questions about subsidized and unsubsidized loan amounts to provide an accurate estimate.
Estimated Family Contribution
When students fill out the Free Application for Federal Student Aid, the U.S. Department of Education collects information related to their families’ taxed and untaxed income, assets and benefits while also ascertaining the total number of family members and if any others will be attending college during that academic year. All of this information is then sent through a formula that helps determine the Expected Family Contribution. Families with a higher annual income may receive less financial aid – particularly funds earmarked for need-based students – while those with lower income may qualify for more federal assistance.
Resources: Estimated Family Contribution Calculators
Simulating the FAFSA application, families can enter their information to get a close idea of how much they may be expected to put towards a college education.
The EFC Formula, 2016-2017
This document, provided by the U.S. Department of Education, provides a comprehensive and detailed explanation of how and why EFCs are used and includes an example of the paperwork that will need to be filled out on the FAFSA.
Planning Ahead: College Savings Calculators
One of the best ways to avoid loan debt later on is for parents who are able to begin setting aside funds long before a child will be heading off to college. While this may not be a realistic task for families with financial need, even a few dollars set aside each month – when invested properly – can make a big difference.
What’s a 529 savings plan?
Also called a tax-advantaged savings plan, 529s were designed to help parents save for future college costs by allowing them to make contributions that are exempt from federal taxation. Two types of plans exist under the 529 federal tax code: prepaid tuition and college savings investments. The first plan allows individuals to lock in the current cost of tuition and avoid the average four percent annual inflation. Funds placed into a prepaid tuition account can only be used for in-state tuition at a public institution, making them more limited. College savings investment plans allow account holders to invest funds in stocks, bonds or money market funds to propel steady growth over time. These funds may also be used at any type of college or university.
How much should I start saving for college?
Answering this question requires a family to consider a couple factors to ensure they have a full picture of what is needed. College Board found that tuition costs are rising between 3 and 4 percent annually, and parents need to factor inflation when deciding how much to save. In the previous academic year, tuition at private institutions rose by more than $1,100, meaning a child born today would pay approximately $20,000 more for their education than someone who is currently 18 and entering college. The benefit of a younger child is, of course, time. Parents who are able to begin saving when their child is born – or even before – have more time and can therefore contribute smaller amounts than parents who don’t start saving until their child enters middle school.
Learn more about saving for college with the following guides:
Resources: College Savings Calculators
College Savings Calculator
Use this tool to see how much tuition and fees are expected to inflate by the time your child goes off to college.
FINRA College Savings Calculator
The Financial Industry Regulatory Authority allows users to enter costs, current savings, annual return, and inflation rates to get a better idea of how far their savings will go.
How Much Do I Need to Save?
Vanguard helps answer this question with its college savings planner than can be used for multiple children.
Savings Growth Projector
FinAid offers this calculator to help parents understand how savings will grow over time in an interest-bearing account or investment fund.
Savings Plan Yield Calculator
For those looking to get more into the nitty-gritty of interest rates, this calculator helps parents understand the annual interest rate they’ll need to find to meet their savings goals.
Financial Stability: Student Budgeting Calculator
Let’s be honest: students in college are often strapped for cash. In the midst of completing an expensive education, they also need money to live their daily lives. So how can these students balance busy schedules and the lack of time to cook meals at home with trying to keep their spending low during this season of life?
What should you budget for?
Students looking to understand projected monthly expenses versus actual spending and how those differences add up can use the Affordable Colleges Online budget template to get started and learn more about student budgeting.
Resources: Student Budgeting Calculators
Students can enter things like housing, food, transportation, and personal spending to see if they’ll have a surplus or shortfall.
Calculate Your College Expenses
Bankrate lets students enter all their monthly expenses then set payment schedules based on whether they are monthly, annual, or one-time costs.
Mapping Your Future
This handy calculator allows students to enter monthly income and expenses to see if they have enough money or need to scale back their spending.
Not sure how much is being spent each month? Trackers like Mint can be set up on your phone or computer to track expenses and get an idea of actual expenditures.
From the Expert
Mark Kantrowitz is Publisher and VP of Strategy for Cappex, a website that helps students achieve their college dreams by connecting them with colleges and scholarships. Mark is a nationally-recognized expert on student financial aid, scholarships and student loans. His mission is to deliver practical information, advice and tools to students and their families so they can make smarter, more informed decisions about planning and paying for college. Mr. Kantrowitz has written for the New York Times, Wall Street Journal, Washington Post, Reuters, Huffington Post, US News & World Report, Money Magazine, Forbes, Newsweek and Time Magazine. Mark is the author of four bestselling books about scholarships and financial. He serves on the editorial board of the Journal of Student Financial Aid, the editorial advisory board of Bottom Line/Personal, and is a member of the board of trustees of the Center for Excellence in Education.
Interviewwith Mark Kantrowitz
How can students and their families use the various types of calculators available most effectively?
The most important type of calculator is a net price calculator. The net price is the difference between total college costs (e.g., tuition, fees, room, board, books, supplies, equipment, transportation, and miscellaneous/personal expenses) and gift aid (grants, scholarships and other money that does not need to be earned or repaid). This represents the real cost of the college and is needed to determine whether the college is affordable or not. If total resources (savings, contributions from current income, and reasonable debt) is less than the four-year net price, the college is affordable, otherwise not.
The next most important calculator is a loan calculator that can determine the monthly payment, total payments and total interest paid over the life of the loan, given the amount borrowed, interest rate and repayment term.
The third most important calculator is a college savings calculator that calculates how much you must save per month, given a college savings goal, earnings interest rate, contribution frequency and duration of contributions (e.g., from birth, from when the child enters high school, etc.). Also useful is a college savings growth calculator that shows how much money you will have given a particular savings contribution amount.
How can families best decide how much money they should be setting aside for college?
Families should start with the net price calculator, to determine the net price for several colleges their child will consider. Include a variety of college types, including an in-state public college and a private non-profit college. This will give you an idea of the current net price. If the child will not be enrolling in college for several years, assume that the net price will increase by 6% to 7% each year, on average.
Next, calculate the total amount of savings available to pay for college costs. If college is several years away, use a college savings calculator to figure out how much you can save in total or how much you need to save per month. Use about a third of the sticker price or net price as the goal if you don't have another goal already.
Student loan debt is reasonable and affordable if total debt at graduation is less than your expected annual starting salary. So, use the student's future annual income as the loan amount.
Combine the debt and savings figures with the amount of money the family expects to be able to contribute from income each year the child is in college. Compare this total with the four-year net price. If it is less than the net price, the college is affordable. Otherwise, the family will have to stretch to afford the college.
What are some of the costs that students and their families may forget to include when calculating costs?
There are many hidden college costs, such as class-specific fees, technology and printing fees, the cost of outfitting a dorm room, and various other fees. Assume that there will be $250 to $500 a month in such hidden fees.