The short answer
- Four years at an in-state public university cost about $103,400 at 2025–26 prices, including housing and food.
- With 4% yearly cost growth, a baby born now faces about $222,376 for the same four years.
- Saving $574 a month from birth, earning 6%, covers all of it. Covering half takes $287 a month.
- 529 growth is tax-free when spent on qualified education costs, and many states add a tax deduction.
What a 529 plan is
A 529 plan is a state-sponsored investment account for education, named after section 529 of the tax code. You put in money you have already paid tax on; it is invested, usually in mutual funds; and the growth is free of federal tax (and usually state tax) when you withdraw it for qualified education costs. There is no federal deduction for contributions, but many states give one.
You can join any state’s plan, not just your own, and the account owner (usually a parent) keeps control of the money, not the student. Anyone can contribute: parents, grandparents, friends.
What college costs today
| Type | Tuition and fees | With housing and food |
|---|---|---|
| Public two-year, in-district | $4,150 | $15,000 |
| Public four-year, in-state | $11,950 | $25,850 |
| Public four-year, out-of-state | $31,880 | $45,780 |
| Private nonprofit four-year | $45,000 | $60,920 |
These are sticker prices. Many students pay less after grants and scholarships, especially at private colleges. Books, transport and personal costs come on top. Choose a type in the calculator, or enter your own yearly figure under More options.
What it will cost when your child goes
The calculator raises today’s price by the inflation rate you choose (4% by default) for each year until each year of college. For a newborn starting an in-state public university at 18, the four years cost:
That adds up to $222,376, a little over twice today’s $103,400. The inflation calculator shows how prices compound over other periods.
Worked example: a three-year-old
- Four years of college at future prices$197,692
- Today’s $5,000 grown for 15 years$12,270
- Still to build$185,422
The target is cautious: it assumes the whole cost is saved by the first day of college. In practice money for the later years stays invested a little longer and earns a little more.
Monthly saving by type of college
| Type | Four years at future prices | Monthly from birth |
|---|---|---|
| Public two-year, in-district | $129,038 | $333 |
| Public four-year, in-state | $222,376 | $574 |
| Public four-year, out-of-state | $393,825 | $1,017 |
| Private nonprofit four-year | $524,068 | $1,353 |
Two years at a community college usually costs much less in total than this table shows, because most students live at home. Covering in-state tuition only (without housing) from birth takes $265 a month.
Why starting early matters
- Years of saving
- 18
- Monthly for in-state public
- $574
- Years of saving
- 10
- Monthly for in-state public
- $992
- Years of saving
- 5
- Monthly for in-state public
- $1,914
Later starts face a lower total (fewer years of cost growth), but far fewer months to save and less time for growth. $100 a month for 18 years at 6% grows to $38,735; the same over 10 years grows to $16,388. The compound interest calculator shows the effect in detail.
You don't have to save it all
Few families pay for college entirely from savings. Most combine savings with income during the college years, grants, scholarships, work and some borrowing. Saving for half of in-state costs from birth takes $287a month. The calculator’s “share to cover” field sets your own goal. If you already have a set amount in mind, enter it as your planned monthly saving: $250 a month from birth grows to about $96,838, 44% of four in-state years.
The student loan calculator shows what borrowing the rest would cost after graduation.
The return you assume
The calculator uses 6% a year by default, a middle figure for a mix of stocks and bonds over many years. The rate makes a large difference:
| Yearly return | Monthly saving |
|---|---|
| 4% | $705 |
| 6% | $574 |
| 8% | $463 |
Returns are not guaranteed, and plans move into safer, lower-returning investments as college gets close.
The inflation you assume
College prices rose much faster than general inflation for decades, though growth in published prices has slowed in recent years. The default 4% is cautious. At 3%, four in-state years for a newborn cost $184,113 instead of $222,376, and the monthly saving falls from $574 to $475.
What 529 money can pay for
- Tuition and required fees at eligible colleges, universities, community colleges and many trade schools, including some abroad.
- Books, supplies and required equipment, and computers, software and internet access used for school.
- Housing and food for students enrolled at least half-time, up to the college’s published cost of attendance (or actual cost for college housing).
- Registered apprenticeship costs.
- Up to $10,000 in a lifetime toward the beneficiary’s student loans (and $10,000 for each sibling).
- K-12 tuition and, from 2026, other K-12 costs (see the next section).
Withdrawals for anything else are “non-qualified”: the earnings part is taxed as income and usually adds a 10% penalty. The contributions part comes back tax-free.
K-12 tuition and the new $20,000 limit
From 2026, up to $20,000 a year per student (up from $10,000) can come out of a 529 for elementary and secondary school, and the list of K-12 costs widened beyond tuition to include things such as books, tutoring and standardized test fees. Some states don’t follow the federal K-12 rules for state tax, so check your plan before using it this way.
State tax deductions
Many states let residents deduct 529 contributions, or claim a credit, usually only for their own state’s plan and often up to a yearly cap. Enter your state’s cap and rate under More options to see the yearly saving. A deduction is worth your state tax rate times the amount deducted: $5,000 deducted at a 5% rate saves $250. The state income tax calculator shows your state’s marginal rate.
Check the recapture rules
Some states take back the deduction if you roll the money to another state’s plan or make a non-qualified withdrawal.
Grandparents and superfunding
A 529 contribution is a gift to the beneficiary. In 2026 each person can give $19,000 to each child without using any lifetime gift and estate exemption. A 529 has a special rule: you can treat one large gift as spread over five years. That lets one giver put in $95,000 at once, or a married couple $190,000, by filing a gift tax return (Form 709) to make the election.
Left to grow for 18 years at 6%, $95,000 becomes about $278,993: more than four years at an in-state public university, even at future prices.
529s and financial aid
A 529 owned by a parent (or by a dependent student) counts as a parental asset on the FAFSA, which reduces aid by at most about 5.64% of its value. Since the simplified FAFSA, money from a grandparent-owned 529 is no longer counted as the student’s income, which used to cut aid sharply. Private colleges that use the CSS Profile may count these accounts differently.
If your child doesn't use it
- Change the beneficiary to another family member, including siblings, cousins, a parent or yourself, with no tax.
- If your child gets a tax-free scholarship, you can withdraw up to the scholarship amount without the 10% penalty (the earnings are still taxed).
- The penalty also doesn’t apply on death or disability, or for attendance at a US military academy.
- Keep it for graduate school or a future grandchild: 529s have no age limit or deadline.
Rolling leftovers into a Roth IRA
Since 2024, unused 529 money can move to a Roth IRA for the beneficiary, up to $35,000in a lifetime. The account must have been open at least 15 years, contributions from the last five years (and their earnings) can’t be moved, and each year’s rollover counts toward the yearly IRA limit, so it takes several years. The beneficiary needs earned income at least equal to the amount rolled over. The Roth IRA calculator shows what a head start like that can grow to.
Coordinating with education credits
You can’t use the same expenses for a tax-free 529 withdrawal and for the American Opportunity Tax Credit (worth up to $2,500 a year) or the Lifetime Learning Credit. Many families pay the first $4,000 of tuition each year from other money to claim the full American Opportunity credit, and use the 529 for the rest.
Choosing investments
Most plans offer age-based (target enrollment) portfolios that start mostly in stocks and move toward bonds and cash as college nears, plus single funds. Compare fees: direct-sold plans are usually cheaper than adviser-sold ones. You can change investments twice a year, or when you change the beneficiary. Each state also sets a lifetime account limit, often several hundred thousand dollars.
Other ways to save for college
- Coverdell education savings account: tax-free growth for education like a 529, but only $2,000 a year per child in total, with income limits for those who contribute.
- Custodial account (UTMA or UGMA): can be spent on anything for the child, but the money becomes the child’s at 18 or 21, counts heavily against financial aid, and its earnings can be taxed at the parents’ rate.
- Roth IRA: contributions can be withdrawn at any time, and earnings can be taken for college without the 10% penalty (though they may be taxed). Using it for college means less for retirement.
- Taxable brokerage or savings account: fully flexible, with no tax break. Good for money that might be needed for something else.
For most families saving mainly for college, the 529’s tax-free growth and state deduction make it the first choice, with other accounts for money that needs to stay flexible. The savings goal calculator works for any of them.