The Quicken College Calculator
You can use the College Calculator to determine how much you need to save for your child’s education. Suppose that you have a child who may attend college in ten years, and you haven’t started to save yet. If the local university costs $20,000 per year and you can earn 5 percent annually, how much should you save?
Display the College Calculator.
Click the Planning tab. Click the Planning Tools button. Choose the College Calculator command. Quicken displays the College Calculator dialog box.
Enter the annual college costs.
Move the cursor to the Annual College Costs text box. Then type the current annual costs at a school Junior may attend. The figure shows this amount as $20,000.
Enter the number of years until enrollment.
Move the cursor to the Years Until Enrollment text box and type a number. For example, if Junior will start college in ten years, type 10.
Enter the number of years enrolled.
Move the cursor to the Number of Years Enrolled text box and type a number. Assuming that Junior doesn’t fool around, type 4 or 5.
Enter the amount of the current college savings.
Move the cursor to the Current College Savings field and type an amount. The figure shows this amount as $20,000. Perhaps Grandpa has really come through for little Junior on this.
Enter the annual yield that you expect the college savings to earn.
Move the cursor to the Annual Yield text box and type the percent. The figure shows the yield as 5 percent.
Enter the inflation rate anticipated in college tuition.
Move the cursor to the Inflation text box and type the inflation rate percent. The figure shows this rate as 4 percent.
Indicate whether you plan to increase your annual contribution as a result of inflation.
Select the Adjust Based on Inflation Rate check box if you plan to annually increase — by the annual inflation rate — the amount you save. The figure shows this check box selected.
After you enter all the information, click Calculate or move the selection cursor. The Annual Contribution field shows how much you need to save each year until the child graduates from college.
Just to beat this thing to death, The figure shows that the lucky student will attend five years at a college that currently costs $20,000 per year and that you expect to earn 9 percent annually and anticipate 4 percent annual inflation. Given these cold hard facts, you need to start saving $4,120.67 every year.
If you do embark on a serious college savings program for a child or grandchild, take a look at the Sec. 529 college savings plans that are offered by most banks, brokers, and mutual fund companies. With a Sec. 529 plan, neither you nor the future college student gets taxed on the interest the college savings earn as long as the money is ultimately used for college expenses.
To get more information on the annual deposits, tuition, and balance, click the Schedule button, which appears on the face of the College Calculator dialog box. Quicken whips up a quick little report showing the annual deposits, tuition, and ending college savings account balances for each year you add to, and Junior withdraws from, the college savings money.