529 College Savings Calculator
Plan for your child's education with the powerful 529 plan. Calculate how much you need to save and project your account growth.
529 College Savings Plans: The Complete Guide
What is a 529 Plan?
Tax-advantaged education savings: A 529 plan is a state-sponsored investment account specifically designed for education expenses with significant tax benefits.
Key Benefit: Earnings grow tax-free, and withdrawals for qualified education expenses are completely tax-free at the federal level (and often state level too).
The Cost of College (2024)
Public In-State
$23,250/year
Tuition + Room & Board
4 years = $93,000
Public Out-of-State
$41,000/year
Tuition + Room & Board
4 years = $164,000
Private University
$56,000/year
Tuition + Room & Board
4 years = $224,000
Elite/Ivy League
$82,000/year
Tuition + Room & Board
4 years = $328,000
The Inflation Factor: College costs have risen ~5% annually for decades. A newborn today could face $50,000+/year for public school by age 18!
529 Tax Advantages
1
Tax-Free Growth
No taxes on investment gains
2
Tax-Free Withdrawals
For qualified education expenses
3
State Tax Deduction
34 states offer deductions
Example Tax Savings
$10,000 invested for 18 years at 6% return:
- Taxable account: $25,500 (after 15% cap gains tax)
- 529 account: $28,500 (no tax on gains)
- Tax savings: $3,000+
Qualified Education Expenses
Covered (Tax-Free)
- Tuition and fees
- Room and board (if enrolled half-time+)
- Books and supplies
- Computer and internet (if required)
- K-12 tuition (up to $10,000/year)
- Student loan repayment (up to $10,000 lifetime)
- Apprenticeship programs
Not Covered
- Transportation and travel
- Insurance
- Sports and club fees
- Cell phone bills
- Non-required supplies
- Application fees
529 vs Other Savings Options
| Feature | 529 Plan | Coverdell ESA | UTMA/UGMA | Roth IRA |
|---|---|---|---|---|
| Contribution Limit | $300K+ | $2,000/yr | Unlimited | $7,000/yr |
| Tax-Free Growth | Yes | Yes | No | Yes |
| State Tax Deduction | 34 states | No | No | No |
| Financial Aid Impact | Low (parent asset) | Low | High (child asset) | Low |
| Non-Education Use | 10% penalty + tax | 10% penalty + tax | No penalty | Contributions only |
529 Mistakes to Avoid
- Starting too late (time is your biggest advantage)
- Choosing your home state plan without comparing options
- Over-funding (could face penalties if child doesn't use all)
- Being too conservative with investments early on
- Forgetting about grandparent contribution options
- Not understanding the financial aid implications
529 Action Plan
- Compare your state's 529 plan with other top plans (NY, Utah, Nevada)
- Open account as soon as child is born (or even before!)
- Set up automatic monthly contributions
- Choose age-based portfolio (automatically becomes conservative)
- Consider "superfunding" - 5 years of gifts upfront ($90,000/child)
- Review annually and adjust contributions as needed
Frequently Asked Questions
CURRENT COLLEGE COSTS (2024):
• Community College: $12,500/year ($50,000 total for 4 years)
• Public In-State: $23,250/year ($93,000 total)
• Public Out-of-State: $41,000/year ($164,000 total)
• Private University: $56,000/year ($224,000 total)
• Elite/Ivy League: $82,000/year ($328,000 total)
WITH COLLEGE INFLATION (5%/year):
For a child born today (18 years until college):
• Public In-State: ~$56,000/year = $224,000 total
• Private University: ~$135,000/year = $540,000 total
THE 1/3 RULE IN ACTION:
Target: Public In-State ($224,000 projected)
• 1/3 from 529 savings: $75,000
• 1/3 from income during college: $75,000
• 1/3 from aid/scholarships/loans: $75,000
MONTHLY SAVINGS NEEDED (Starting at birth, 6% return):
• $75,000 goal: ~$200/month
• $150,000 goal: ~$400/month
• $225,000 goal: ~$600/month
KEY INSIGHT: Starting early makes a huge difference. The same goal requires 3x the monthly contribution if you start at age 10 instead of birth.