How to use the College Funding planner

Income Lab offers a tool that you can use to create simple or detailed plans to fund college education. The tool accounts for planned institutions and their specific costs, per-student and general family resources saved for college funding, Federal student aid and loans, merit-based loans, post-education 529-to-Roth conversions, and more.

You can find the College Funding tool under the Education planning focus in Penny.

If you already have students saved in the plan, you will immediately see a college funding plan. If you do not, add the students, the school they may attend, and their current college savings accounts (529s or other accounts).

Inputs

College Plan

If you want to plan without naming a target college, choose “Cost Tier” under “Cost Estimation Method” and plan for the cost of an average public or private 4-year school, or a 2-year community college.

If instead you want to explore or plan for the cost of a specific school, choose ‘Specific School’ and search for your desired institution.

The tool gives you access to a database of detailed cost information for each institution. You can choose to model in-state or out-of-state residency (relevant for public schools) and on-campus, off-campus, or living-at-home housing. (Living at home removes housing and food costs.) You can also choose to include or exclude any of four specific line-items: Tuition & fees, Housing & food, Books & supplies, or Transportation & personal. If you want to explore institution-specific costs even more, you can access the school's net price calculator through a link in this section. This can help you estimate how much aid the institution might offer. Financial aid is covered elsewhere in this tool, but this school-specific resource can help in the college option exploration process.

Finally, you can specify how much of the total is eligible for qualified distributions from 529s and Coverdell ESAs.

You can also simply enter a manually entered cost amount.

You can also add a post-graduate program to the plan, choosing from medical school, law school, dental school, and many other options. The graduate school section does not have individual program costs, but it does default values to average costs and correctly uses program CIP codes for proper handling of aid and loans.

College Savings

By default, each new student added to the tool gets empty 529 and taxable accounts. You can add balances to these and add or delete accounts.

You can access additional advanced settings for these accounts using the gear icon to the right of the table. You can also set the overall asset allocation approach at the bottom, choosing from an age-based Glidepath, a Static asset class mix, or a stated flat expected rate of return.

Household Accounts

The household accounts section lets you specify investment accounts owned by the clients that can be used to fund any student's needs.

Financial Aid

The financial aid inputs tab lets you choose to include Federal grant aid (Pell grants, etc.) and to include any estimated future merit-based or non-federal aid.

Federal aid is estimated here using per-student Student Aid Index (SAI) estimates. You might also want to explore the SAI calculation and estimate in our Student Aid Index tool. (The SAI is the current version of what used to be called Expected Family Contribution.)

You may use a simple approach to this estimate, which uses the same values to estimate aid in all years of the plan, or you may switch to “Per Year” and enter all per-year values to find different estimates for different years. The tool will automatically pull in future-year projected values from the Income Lab plan you have chosen at the top of the page, if any.

Loans

Federal loans are handled on the Loans input tab. Here you can model federal student loans and Parent PLUS loans, set caps on each student's annual borrowing in the plan, and set an overall max.

Other Settings

The Other Settings tab contains a variety of advanced settings, the most commonly used of which is the ability to set limits on the amount that the college funding plan will cover, either as a % of total costs, an annual cap for the household, or a per-student cap.

Also important to note here is the “Allow transfer of surplus 529 balances” option. This defaults to “On”, which allows a sibling to take advantage of excess funds in another sibling's 529 account(s). If this is turned off, the plan will often be less efficient and require more savings.

Post-education Reserves

The final input section allows the plan to include a provision for 529 plans to carry an end-of-plan balance that beneficiaries can use for 529-to-Roth conversions. The maximum amount you can convert is $35,000 (not adjusted for inflation over time). But you must follow a variety of other rules.

The purpose of this option is not to plan a perfect amount to be left in the 529s, but rather to help make this planning option visible and to add a provision for it in the plan.

Outputs

The college funding plan can be viewed with a monthly savings goal, annual savings, or a single lump-sum need.

The education plan begins with a graph showing how the education savings in the plan would grow and be used.

This graph includes annual balances and milestones for when different students are in school.

Next is a full college funding “recipe”, with notable totals across the top in cards and a per-student breakdown of where the funding comes from (current balances, additional savings, loans & aid).

You can click on the student to see more details of how the different funding sources are used, including information on when 529 balances move from one student to another.

You'll note that, if the plan cannot or was not designed to cover the entire projected cost of school, the unfunded or outside-of-plan amount is also stated.

At the bottom of the plan, outputs are a variety of more in-depth analysis information and tables.

Reports

You can create a PDF report of any college funding plan by clicking “Print” and choosing which elements you'd like to include in the report.