Question 1

Why does this calculator use 5% education inflation?

Accepted Answer

College tuition has historically risen at 5–7% per year — significantly faster than general inflation of ~3%. This means a college costing $25,000/year today could cost $45,000–$55,000/year by the time a 5-year-old enrolls at 18. Using 5% is a conservative-to-moderate estimate; some private universities have seen 6–8% annual increases.

Question 2

What is a 529 plan and how does it help?

Accepted Answer

A 529 plan is a tax-advantaged savings account specifically for education expenses. Your investments grow tax-free, and withdrawals for qualified education expenses (tuition, housing, books) are also tax-free. Many states offer additional state income tax deductions for contributions. Unused funds can now be rolled over to a Roth IRA up to $35,000 (with conditions), removing the 'use it or lose it' concern.

Question 3

Should I prioritize retirement or college savings?

Accepted Answer

Almost universally, prioritize retirement first. Your child can borrow for college; you cannot borrow for retirement. Max your employer 401k match (free money), then consider an IRA, before funding a 529. That said, if retirement is on track, starting a 529 early gives compounding 13+ years to work. Even $100/month starting at age 5 can grow to $30,000+ by age 18.

Question 4

What hidden college costs does the calculator not include?

Accepted Answer

Room and board, books, and supplies typically add 40–60% to tuition costs. The true 'all-in' cost for a private 4-year college can exceed $75,000/year. This calculator focuses on tuition; multiply your result by 1.5–1.75 for a comprehensive budget that includes living expenses.

Future College Cost Calculator