College Cost HERO

Welcome

Cost HERO is a free calculator that guides you through the

design of a four-year college budget using your rules.

It is best used as a high level view of what is affordable for you.

When you have a budget that works, you are ready to begin the

college search as a buyer not a seller!

Please share this tool with others who need it.

Be a HERO to your friends and colleagues with college bound children.

Step 1

	College Cost HERO

	Step 1: In this step you will gather information about your non-retirement savings and investments. You will also gather
	information about your student's savings and investments. The goal is to identify the funds available for college expenses.
	Enter the appropriate amount in Lines 1-4. Then decide how much - the percent of each - to use for this student.
	The total is automatically calculated for you, and will be visible in Step 3.

		Enter data in blue cells

Enter account balance and percent (0-100%) you want to use for this student		Balance	% to use
1	Coverdell & 529 Savings (Enter total for all students)
2	Other Savings/ Investments (stocks, bonds, mutual funds, CDs, etc)
3	Student Savings/Investments
4	Anticipated gifts from relatives or others
5	Total (based on the percent you want to use for college)

	Note: This tool shows you how to budget for one student over four years of college.

Step 2

	College Cost HERO

	Step 2: In this step you will gather information about your household income, loan payments and other obligations. Identify how
	much income you generate each month and enter the cost of living items in Lines 9-17. Note that some of your current costs
	will be reduced or eliminated when your student begins college. For example, you will no longer pay private school tuition.
	You may decide to stop contributing to a 529 Savings plan. Most parents report lower overall costs for food, utilities, fuel, auto
	insurance and more. Think about all the money you spend on a teen living at home! Much of that will be available to use for
	college. College students usually work part time during school and full time during vacations and summers. How much will you
	expect your teen to contribute toward college? And finally, ask yourself how much monthly income you could find by cutting non-
	non-essential expenses by 10%. Enter that amount on line 17.

		Enter data in blue cells
7	For the following, enter monthly amounts
8	Total Monthly Income From All Sources (Parents)
9	Housing costs (principal, interest, taxes, insurance) or Rent
10	Auto Loan or Lease Payments (all)
11	Monthly payments for ALL consumer or educational loans
12	Current contributions to 529 or other College Savings Plan
	Funds from income to be used for college are calculated below
13	If willing to suspend all or part of Line 12 above, enter amount per month
14	* Monthly cost reduction for food, gas, utilities, etc. (see note below).
15	Amount you expect student to earn monthly (suggest $200 minimum)
16	Private high school tuition & other costs no longer incurred each month
17	Additional monthly income you can use for college with a 10% budget cut
18	Total

	* Remember - college students don't create the day-to-day costs
	you've been absorbing for the past 18 years! For example, your electric bill
	will be reduced. Your grocery bill will go down. You will be putting fuel in your
	vehicles much less frequently. And more. Do some math and arrive at a figure
	that works for you. A reasonable amount would be $300 per month.

Step 3


	Cost HERO Step 3: Your Plan
	Below is the plan you just created! To finish, you'll need to do a few more simple things. The first is to enter Y or N to the
	question of student loans. If you enter Y you wil see the max amount that students can borrow under the Federal student
	loan program. Just above the gray border line, you see the year-by-year totals. That's what your plan says you can afford
	for each year of college with no parent borrowing. Once you have that number, you can begin using Net Price Calculators
	(NPC) on college websites to compare your budget with the NPC estimated cost.

	Should you decide to borrow, enter the amount you need in line 26, and Cost HERO will calculate your loan payments.
	Note that it is assumed you will borrow the same amount each year. Therefore, the loan paymentsincrease each year.
	This does not end well! Note that in most cases, the loan payment in Year 4 is more than half the loan amount!


		Your College Budget

19	Sources of Money For College	Total	Year 1	Year 2	Year 3	Year 4	Total

20	From Parent Income
21	From Savings
22	From Student Earnings
23	From Federal Student Loan? (enter Y or N)
24	From Federal Tax Credit (AOTC)³
25	Total For This Plan by Year- No Parent Debt


26	To add a Parent loan, enter amount in blue cell¹
27	Less Loan Payments (10 year payment plan)²
28	Total For This Plan by Year- With Parent Debt

29	Note 1: Based on Federal Parent Loan for Undergraduate Students (PLUS) 2024-25
30	Note2: This is the standard 10-year repayment plan. Current interest rate is 8.09%.
31	Note 3: AOTC is a tax credit awarded to families who have a student in college and report Adjusted Gross Income of less than $180,000 (Married Filing Joint)

Step 4

		Buy College Like You Are Buying a Home
				How Lenders Set Guardrails
		The "Rule of 36/43" is the debt to income (DTI) ratio that lenders use to assess how much you can afford for rent or a home mortgage and other debt. Lenders prefer that your rent or monthly mortgage costs (principal, interest, property taxes and homeowners insurance) not exceed 36% of your total monthly income. They also prefer your total monthly payments (mortgage or rent, auto, credit cards, education loan payments, etc.) to be less than 43% of your total monthly income. We apply this rule to borrowing for college in order to prevent you from getting overextended. The calculation below does the math for you using data you've already entered. If you entered a parent loan in Step 3, you'll see the payment after four years factored in below. Think ahead to what you might need after college for things like a new roof, a new car, a vacation, home upgrades. And what about unforseen medical issues? Will your credit be in good enough shape - after college - if you need to borrow for these things? That is up to you.











		Gross Monthly Income From All Sources
		Monthly Mortgage Payment (PITI)
		Monthly Auto Payment(s) - All
		Other Monthly Payments
		College Loan Payment from Step 3 - Your Plan

		Current Debt to Income (DTI) Ratio
		Additionbal Borrowing Capacity %
		Additional Borrowing Capacity $ per month
		Additional Borrowing Capacity (Total $)

Finish & Get Report