College Calculator Methodology

To calculate the cost of college when college starts

 

Where:

L = the number of years in college

C = the current annual cost of college

g = the growth rate of college costs

i = the rate of interest earned on savings during college

F = the amount of savings need when college starts

N = the number of years until college starts

To calculate the value of savings at the time college starts

S = amount of savings today

A = annual additions to savings

n = number of years of saving

r = assumed rate of return

V = value of savings in n years

To calculate the percentage of costs covered by client’s savings

Where:

F = the amount of savings needed when college starts

V = value of savings in n years (

q = fraction of costs covered by savings

To calculate the dollars needed to fund the specified percentage of costs when college starts

V = qF

Where

V = dollars needed to fund specified fraction of costs when college begins

Q = fraction (in percent)

F = cost of college at the time college begins (derived from previous step)

 

To calculate the amount of annual additional savings needed to fund percentage of costs specified

Where:

S = amount of savings today

A = annual additions to savings

n = number of years until college

r = assumed rate of return

V = value of savings in n years