1. 1
    About Your Student
  2. 2
    Savings Plan & Goals
  3. 3
    Your Results
Student #1
Student #2
Student #3

Assumptions Used in the Calculator
(in today's costs)

Average annual inflation in college costs6%
1 year of in-state public school$23,410
1 year public-commute (no room and board)$10,364
1 year of out-of-state public school$37,229
1 year of private school$46,272
The above values will be applied if a value is not entered into Annual Cost Estimate

Using the College Savings Calculator

About Your Savings Plan
Taxable vs. Non-Taxable Accounts
Your savings are the available funds or investments from taxable and/or non-taxable accounts. These accounts may be in the form of tax-deferred college savings plans (e.g. 529 plans) or taxable stocks and bonds that are invested specifically for college use. Taxable accounts will have short term capital gain taxes associated with investment gains as well as a portion of withdrawals for college expenses. Tax deferred accounts will grow tax free and it is assumed that all withdrawals will be used solely for qualifying college expenses.
For All Accounts
  • Savings contribution happens in one lump sum at the beginning of the year.
  • College costs are incurred in one lump sum at the beginning of the year.
  • When both taxable and non-taxable accounts are held college costs are split equally.
  • All investment gains occur during the course of the year and then added in one lump sum at year end.
  • When the account balance becomes negative, all compounding ends and the contributions and deductions are made without compounding.
In Taxable Accounts
All investment gains are taxed at ordinary income tax rate in every year.
In Non-Taxable Accounts
The calculator assumes investment gains and withdrawals are not taxed.

The per student contribution limit is $365,000. For a particular simulated savings scenario, the calculator multiplies $365,000 by the number of students entered into the scenario. When the simulated balance considered to be invested in non-taxable accounts exceeds this total, the calculator will consider all additional simulated contributions to be invested in a simulated taxable account.

About Your Goals
Average Annual Rate of Return
The average annual rate of return is the annual return that you believe you will receive on your investment. Your estimate here will be based on the risk profile of your portfolio (Short Term, Conservative, Moderately Conservative, Moderate, Moderately Aggressive, or Aggressive). Note that the growth rate you estimate will remain constant over the course of the investment horizon.
The projections and other information you will see here about the likelihood of various outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. The tool does not consider the specific securities or other assets actually held by you and does not attempt to predict their future value.
The annual growth rate will depend on your risk tolerance and your time horizon. Schwab provides reasonable long-term return estimates for various portfolio types:
Risk ToleranceGeneral Time HorizonAnnual Compound Return Estimates
Short Term1-3 Years2.4%
Conservative3-5 Years3.4%
Moderately Conservative5 Years4.4%
Moderate10 Years5.1%
Moderately AggressiveAt Least 10 Years5.7%
AggressiveAt Least 15 Years6.2%

Schwab has six investor risk profiles that vary in their expected rates of return and risk characteristics. Each of the six risk profiles (Short Term, Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive) are assigned a 'model portfolio' that has a specific target weight in each of the five asset classes used in this tool (Large-Cap Stocks, Small/Mid-Cap Stocks, International Stocks, Bonds, and Cash). The more aggressive model portfolios contain larger allocations to stocks and smaller allocations to bonds, resulting in higher expected returns and risk when compared to the more conservative model portfolios. The more conservative models contain higher allocations to bonds and smaller allocations to stocks, producing relatively lower expected returns and risk when compared to the more aggressive models.

Note that the tool does not use your actual brokerage holdings, positions, or current asset mix when conducting the analysis. The tool instead relies on the risk profiles and corresponding model portfolios that you select. It is critical to pick a model portfolio that best suits your true risk profile and to make sure your actual portfolio is invested and diversified in a manner consistent with the asset allocation chosen for use in the analysis. You should not select a risk tolerance or model portfolio based solely on its expected returns (e.g., choosing the Aggressive model just because it has the highest expected returns). You should pick the risk profile that is most appropriate for your goals, time horizon, and risk tolerance. Although higher expected returns will improve the estimated sustainability of a savings plan, often times, the increased risk will negatively impact the plan more than the increase return will improve it.

Why this matters: Your federal income tax bracket determines how much income tax you'll pay this year, which is a key consideration in deciding whether a Roth IRA conversion makes financial sense for you.

Your federal income tax rate is the starting marginal percentage at which conversion assets will be taxed. The calculator automatically calculates an estimated income tax rate based on the taxable income you entered, not including any potential conversion income which could move you into a higher tax bracket for the year you convert. For the most accurate result, make sure you've correctly entered your taxable income that is subject to ordinary income tax.

The calculator does not consider the alternative minimum tax (AMT). As converted funds are taxable, it is possible that the conversion amount could make you subject to the AMT. Be sure to consult your tax advisor.

Federal Income Tax Bracket:
2016 Federal Personal Income Tax Rates
Single FilersMarried Filing Jointly & Surviving SpousesHead of HouseholdMarried Filing SeparatelyFederal Tax Rate
$415,051 or more$466,951 or more$441,001 or more$233,476 or more39.6%