Overview
The 529 Plan Calculator is a simple online tool that helps you estimate the total value of your 529 plan after a specified number of years. It also calculates the projected cost of college education after the same number of years, based on the estimated cost of attendance and annual inflation rate. This calculator can help you plan and save for your child’s college education by providing you with an estimated shortfall or surplus between your savings and college costs.
Working of 529 Plan Calculator with Example
Let’s say you have $20,000 in your 529 plan, and you are contributing $250 per month. You expect your child to start college in 10 years, and you estimate the total cost of attendance to be $100,000. The annual inflation rate for college costs is 2%. Here’s how to use the 529 Plan Calculator to estimate your savings and college costs:
- Enter your current 529 plan balance ($20,000) in the “Current 529 Plan Balance” field.
- Enter your monthly contribution ($250) in the “Monthly Contribution” field.
- Enter the number of years until college (10 years) in the “Years Until College” field.
- Enter the estimated cost of attendance ($100,000) in the “Estimated College Cost” field.
- Click on the “Calculate” button to see the estimated total 529 plan value after 10 years, projected cost of college in 10 years, and shortfall or surplus between your savings and college costs.
In this example, the estimated total 529 plan value after 10 years is $60,352.44, and the projected cost of college in 10 years is $124,773.17. This means there is a shortfall of $64,420.73 that needs to be covered through other means such as scholarships, grants, student loans, or additional savings.
How to Use the 529 Plan Calculator?
To use this Calculator, follow these simple steps:
- Enter your current 529 plan balance, monthly contribution, years until college, and estimated college cost in the respective fields.
- Click on the “Calculate” button to see the estimated total 529 plan value after the specified number of years, projected cost of college, and shortfall or surplus.
FAQs
A 529 plan is a tax-advantaged savings plan designed to help families save for college education expenses.
The 529 Plan Calculator uses a default annual rate of return of 6%, which is an average estimate based on historical data.
No, the 529 Plan Calculator is specifically designed for calculating savings for college education using a 529 plan.
Conclusion
The 529 Plan Calculator is a valuable tool for anyone who wants to plan and save for their child’s college education. By estimating the projected cost of college and your savings, you can determine how much more you need to save or how you can cover any shortfall. Remember, the earlier you start saving, the more time your money has to grow and potentially cover a larger portion of college costs.