529 College Savings Plan Calculator 2026 – Fund Your Kid's Future

Introduction

Your kid's college is going to cost $300,000.

Let that sink in for a second.

College tuition has gone absolutely insane—up 180% in the past 20 years. That degree that cost $40k in 2000? Now it's $112k. And by the time your newborn hits 18, we're looking at $300k+.

So yeah, you need a plan. And not just any savings account—you need a 529 College Savings Plan.

Here's why 529 plans are basically a cheat code for college savings:

Tax-free growth. Your investments grow without Uncle Sam taking a cut.

Tax-free withdrawals for education. Not tax-deferred like a 401(k). Tax. Free.

State tax deductions in most states—up to $10k/year in some places. That's real money back.

You can save up to $300k-$500k over your kid's lifetime (way more than other education accounts).

And if your kid doesn't go to college? You can change the beneficiary to another kid. Or even yourself if you want to go back to school.

The 529 Calculator shows you exactly how much to save each month, factoring in investment returns, tax benefits, and the fact that tuition keeps going up every single year.

How 529 Plans Work

A 529 plan is a tax-advantaged investment account designed for education expenses. Think of it as a Roth IRA for college.

The mechanics:

You contribute after-tax money
Money grows tax-free in investments (stocks, bonds, target-date funds)
Withdrawals are tax-free for qualified education expenses
Many states offer tax deductions on contributions

Qualified expenses include:

Tuition and fees
Room and board (if enrolled at least half-time)
Books and supplies
Computers and software
Up to $10,000/year for K-12 tuition
Up to $10,000 lifetime for student loan repayment

2026 College Cost Projections

Current average costs (2026):

School Type	Annual Cost	4-Year Total
Public In-State	$28,000	$112,000
Public Out-of-State	$46,000	$184,000
Private University	$60,000	$240,000
Elite Private	$85,000	$340,000

Projected costs by child's birth year:

Birth Year	Public In-State	Private University
2026 (college 2044)	$185,000	$500,000
2024 (college 2042)	$170,000	$460,000
2022 (college 2040)	$155,000	$420,000
2020 (college 2038)	$142,000	$385,000

Assumes 5% annual tuition inflation

These numbers are terrifying. But they're also why 529 plans exist.

The Math: How Much to Save

Formula: Monthly contribution needed to reach goal

PMT = FV × (r / ((1 + r)^n - 1))

Where:

FV = Future college cost
r = Monthly return rate (annual return / 12)
n = Number of months until college

Example: Newborn in 2026, targeting $185,000 for public in-state

Assumptions:

18 years until college
7% annual investment return
5% tuition inflation

Monthly savings needed: $485

Total contributions: $104,760 Investment growth: $80,240 Final value: $185,000

Without 529 (taxable account):

Same contributions: $104,760
After-tax growth (24% bracket): $61,382
Final value: $166,142
Shortfall: $18,858

The 529 plan saves you nearly $19,000 in taxes.

529 vs Other Savings Options

529 vs Regular Savings Account

Look, I get it. Savings accounts feel safe. You can see your money, you can access it anytime, and there's no "education only" restriction.

But here's what you're giving up:

Tax-free growth. In a 529, your investments grow without taxes. In a savings account, you pay taxes on that measly interest every year.

Investment options. 529 lets you invest in stocks and bonds—real growth potential. Savings account? Just cash sitting there earning basically nothing.

State tax deductions. Most states give you a tax break for 529 contributions. Savings accounts? Nope.

Let's run the numbers. Say you save $500/month for 18 years:

529 plan (7% return): $227,000 Regular savings (4% return): $173,000

That's a $54,000 difference. Fifty-four thousand dollars. That's almost a full year of college you're leaving on the table by using a savings account.

(And yeah, 529s are "education only," but there are ways around that if your kid doesn't go to college. More on that later.)

529 vs Roth IRA

You can use a Roth IRA for college, but it's not ideal.

Feature	529 Plan	Roth IRA
Contribution limit	$300k-$500k lifetime	$7,000/year
State tax deduction	Yes	No
Financial aid impact	Minimal	None
Withdrawal penalty	10% + tax (non-education)	None after 59½
Purpose	Education-focused	Retirement-focused

Verdict: Use 529 for college, Roth IRA for retirement. Don't mix them.

529 vs Coverdell ESA

Coverdell Education Savings Accounts are like 529s but worse.

Feature	529 Plan	Coverdell ESA
Contribution limit	$300k-$500k	$2,000/year
Income limits	None	$110k-$220k
Age limit	None	Must use by 30
Investment options	Plan-specific	Any investment

Verdict: 529 plans are better for 99% of families.

State Tax Benefits

States with tax deductions (2026):

State	Max Deduction	Benefit (6% tax rate)
New York	$10,000	$600/year
Illinois	$10,000	$495/year
Colorado	Full contribution	Varies
Indiana	$5,000	$250/year
Virginia	$4,000	$240/year

States with no income tax (no deduction):

Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming

States with no 529 deduction:

California, Delaware, Hawaii, Kentucky, Maine, New Jersey, North Carolina

Pro tip: Some states let you deduct contributions to any state's 529 plan. Others require you to use the in-state plan.

How to Choose a 529 Plan

Factors to consider:

1. Your State's Tax Benefit

If your state offers a deduction, start there. A $500/year tax break adds up to $9,000 over 18 years.

2. Investment Options

Look for:

Low-cost index funds (expense ratios < 0.20%)
Age-based portfolios (auto-adjust as child ages)
Variety of risk levels

3. Fees

Avoid plans with:

Enrollment fees
Annual account fees
High expense ratios (> 0.50%)

Best low-cost plans:

Utah my529 (0.05-0.20% expense ratios)
Nevada Vanguard 529 (0.14% average)
New York 529 Direct (0.13% average)

4. Performance

Past performance doesn't guarantee future returns, but check 5-year and 10-year returns compared to benchmarks.

5. Flexibility

Can you change investment options? How often? Are there penalties?

Investment Strategy by Age

Age 0-5 (Aggressive Growth):

90-100% stocks
Focus on growth
Time to recover from downturns

Age 6-10 (Growth):

70-80% stocks, 20-30% bonds
Still prioritizing growth
Starting to reduce risk

Age 11-14 (Balanced):

50-60% stocks, 40-50% bonds
Balancing growth and preservation
College is getting close

Age 15-17 (Conservative):

30-40% stocks, 60-70% bonds/cash
Protecting gains
Need money soon

Age 18+ (In College):

10-20% stocks, 80-90% bonds/cash
Withdrawing for expenses
Minimal risk

Pro tip: Most 529 plans offer "age-based portfolios" that automatically adjust this mix. Set it and forget it.

Common 529 Mistakes to Avoid

1. Starting Too Late

This is the biggest one. People wait until their kid is 10 or 12 to start saving because "we'll have more money later."

Wrong.

You just threw away 10 years of compound growth. And compound growth is literally free money.

Check this out:

Start at birth, save $300/month → $136,000 at 18
Start at age 10, save $300/month → $38,000 at 18

That's a $98,000 difference. Ninety-eight thousand dollars. Just from starting earlier.

Start the month your kid is born. Can't afford $300? Start with $50. Start with $25. Just start.

2. Being Too Conservative

When your kid is 2 years old, you don't need bonds. You need growth.

But I see people keeping their 529 in cash or conservative bond funds "to be safe." Safe from what? You've got 16 years before you need this money.

Here's what being "safe" costs you:

$10,000 invested for 15 years:

100% stocks (7% return): $27,590
100% bonds (3% return): $15,580

You just lost $12,010 by being conservative. That's not safe—that's expensive.

Use age-based portfolios (they automatically shift from stocks to bonds as your kid gets older). Or just stay aggressive when they're young and gradually dial it back after age 10.

3. Overfunding

Mistake: Saving $500,000 when your kid will only need $200,000.

Impact: 10% penalty + taxes on non-education withdrawals.

Fix:

Estimate realistic costs
Can change beneficiary to another child
Can use $10,000 for student loans
Can roll $35,000 to beneficiary's Roth IRA (new 2024 rule)

4. Ignoring Financial Aid Impact

Mistake: Not understanding how 529s affect financial aid.

Impact: Minimal—529s owned by parents reduce aid by max 5.64% of account value.

Example: $50,000 in 529 = $2,820 reduction in aid

Fix: This is still better than not saving. Plus, grandparent-owned 529s don't count at all (as of 2024 FAFSA changes).

5. Using for Non-Qualified Expenses

Mistake: Withdrawing for non-education expenses.

Impact: 10% penalty + income tax on earnings.

Fix: Keep receipts, only withdraw for qualified expenses.

Real-World Scenarios

Scenario 1: Single Child, Public University

Profile: Newborn in 2026, targeting in-state public university

Goal: $185,000 by 2044 Monthly savings: $485 Total contributions: $104,760 Investment growth: $80,240

With state tax deduction ($500/year):

Tax savings over 18 years: $9,000
Net cost: $95,760

Result: Fully funded college education for less than $100k.

Scenario 2: Two Kids, Private University

Profile: Kids ages 2 and 5, targeting private universities

Goal: $460,000 (kid 1) + $420,000 (kid 2) = $880,000 Monthly savings: $2,200 total Timeline: 16 years (kid 1) and 13 years (kid 2)

Strategy:

Contribute $1,200/month to kid 1's 529
Contribute $1,000/month to kid 2's 529
Use age-based portfolios
Take state tax deduction

Result: Both kids graduate debt-free.

Scenario 3: Late Start

Profile: Child is 10, need $155,000 in 8 years

Monthly savings needed: $1,250 Total contributions: $120,000 Investment growth: $35,000

Challenge: Less time for compound growth means higher monthly contributions.

Alternative strategy:

Save $800/month in 529
Plan for child to contribute $20,000 from summer jobs
Apply for $30,000 in scholarships
Take $25,000 in federal student loans (low interest)

Result: Manageable debt load instead of $155,000 in loans.

529 and Financial Aid

How 529s affect FAFSA:

Parent-owned 529:

Counted as parent asset
Reduces aid by max 5.64% of value
Example: $50,000 = $2,820 less aid

Grandparent-owned 529:

Not counted as asset (as of 2024 FAFSA changes)
Withdrawals don't count as student income
Best option for financial aid

Student-owned 529:

Counted as student asset
Reduces aid by 20% of value
Worst option—avoid this

Strategy: Have grandparents open 529, or transfer parent-owned 529 to grandparent before filing FAFSA.

What If Your Kid Doesn't Go to College?

Options:

1. Change Beneficiary

Transfer to another child, grandchild, niece, nephew, or even yourself.

No penalty, no taxes.

2. Use for K-12 Tuition

Up to $10,000/year for private elementary or high school.

3. Use for Student Loans

Up to $10,000 lifetime for beneficiary's student loans.

4. Roll to Roth IRA (New 2024 Rule)

529 must be open 15+ years
Can roll up to $35,000 to beneficiary's Roth IRA
Subject to annual Roth contribution limits
Game changer for overfunded 529s

5. Withdraw and Pay Penalty

10% penalty on earnings
Income tax on earnings
Principal is always tax-free (you already paid tax on it)

Example: $100,000 in 529 ($60k contributions, $40k growth)

Withdraw $100,000
Penalty: $4,000 (10% of $40k)
Tax (24% bracket): $9,600
Net: $86,400

Not ideal, but not catastrophic.

529 Contribution Strategies

Strategy 1: Max Out State Tax Deduction

If your state offers a $10,000 deduction, contribute at least that much annually.

Benefit: Immediate 5-7% return from tax savings.

Strategy 2: Front-Load with Gifts

You can contribute 5 years of gifts at once ($90,000 in 2026) without gift tax.

Use case: Grandparents with estate planning needs.

Strategy 3: Dollar-Cost Average

Contribute the same amount monthly, regardless of market conditions.

Benefit: Reduces timing risk, builds discipline.

Strategy 4: Bonus Contributions

Put tax refunds, bonuses, and windfalls into 529.

Benefit: Painless way to boost savings.

Strategy 5: Gift Instead of Toys

Ask family to contribute to 529 instead of buying toys for birthdays.

Benefit: $500 in 529 at age 5 = $1,400 at age 18 (7% return).

FAQ

Can I use a 529 for graduate school?

Yes. 529 funds can be used for any post-secondary education, including master's degrees, PhDs, medical school, and law school.

What if my child gets a scholarship?

You can withdraw up to the scholarship amount without the 10% penalty (but you'll still owe income tax on earnings). Or leave it for grad school.

Can I have multiple 529 accounts for one child?

Yes. You can have accounts in different states, or multiple accounts in the same state. Total contributions across all accounts are subject to the state's lifetime limit ($300k-$500k).

Do 529 contributions count toward the gift tax limit?

Yes, but you get a special exemption. You can contribute up to $18,000/year ($36,000 for married couples) without gift tax. Or front-load 5 years at once ($90,000/$180,000).

Can I change the investment options?

Yes, but only twice per calendar year. Or anytime you change the beneficiary.

What happens if I move to another state?

Nothing. You can keep your current 529 or roll it to your new state's plan (if they offer better tax benefits).

Can I use 529 funds for room and board?

Yes, if the student is enrolled at least half-time. The amount is limited to the school's official cost of attendance.

Are 529 plans protected from creditors?

Depends on state law. In most states, yes. Check your state's rules.

Conclusion

College is expensive and getting more expensive every year. But with a 529 plan, you can turn that terrifying number into a manageable monthly savings goal.

Action plan:

Use this calculator to determine your target amount
Calculate monthly savings needed
Research your state's 529 plan (or a top-rated out-of-state plan)
Open an account (takes 15 minutes online)
Set up automatic monthly contributions
Choose an age-based portfolio
Forget about it for 18 years

Your child will thank you when they graduate debt-free while their friends are drowning in $50,000+ of student loans.

Start today. Even $100/month makes a difference.

529 College Savings Plan Calculator 2026 – Tax-Free Education Investing