College Planning
College Savings Calculator
Find out if your 529 plan is on track to cover college costs — and exactly how much you need to save each month to close any gap.
How the college savings calculator works
The calculator models two things simultaneously: how your savings grow (investment returns) and how college costs grow (education inflation). Because college tuition has historically risen at 4–6% per year — roughly double general inflation — you need to earn returns that at least keep pace with that rate just to stay even. The gap between the two lines on the chart tells you whether you're winning or losing the race against tuition inflation.
Your savings balance compounds annually at your chosen investment return. The projected college cost compounds annually at the college inflation rate. The "monthly needed to fully fund" figure is calculated using the future-value-of-annuity formula — working backwards from the projected total cost to find the monthly contribution required.
Current college costs (2023–24)
- Public in-state (4-year): ~$28,840/year all-in (tuition + room/board + fees)
- Public out-of-state (4-year): ~$45,740/year
- Private nonprofit (4-year): ~$60,420/year
- Community college (2-year): ~$14,990/year
These are average sticker prices. After scholarships and grants, many students pay significantly less — especially at private schools where merit aid is generous for strong academic profiles.
Why college inflation matters so much
At 5% annual college inflation, today's $30,000/year public university costs $48,900/year in 10 years and $63,300/year in 15 years. A child born today who attends a public university at 18 will face a 4-year sticker price of approximately $260,000 in future dollars — up from today's $115,000. The earlier you start saving and the more aggressively you invest, the less this math works against you.
529 plan tax advantages
529 plans offer three layers of tax benefit:
- State income tax deduction: Most states offer a deduction or credit on 529 contributions. Some states have no income tax (no benefit); others offer deductions only on in-state plans. A few offer deductions for contributions to any state's plan.
- Tax-free growth: All investment returns inside a 529 compound without annual tax drag — you don't pay taxes on dividends, interest, or capital gains each year.
- Tax-free withdrawals: Qualified distributions (tuition, fees, room and board, books, computers for school) are entirely federal tax-free.
How much to save by child's age
A rough rule of thumb: save approximately 1/3 of projected college costs. The remaining 2/3 can typically be covered through financial aid, scholarships, work-study, and modest student loans. For a public in-state school, that suggests targeting ~$30,000–$40,000 in today's dollars (roughly $50,000–$65,000 future dollars for a child born today).
Common savings targets by child's age (assumes starting from $0 with 6% return and 5% college inflation):
- Newborn: ~$290/month to fully fund a public in-state degree
- Age 5: ~$450/month
- Age 10: ~$800/month
- Age 15: ~$2,200/month (almost impossible to fully fund from savings alone)
Frequently asked questions
What is a 529 plan?
A 529 plan is a state-sponsored, tax-advantaged savings account for education expenses. Two types: prepaid tuition plans (lock in today's rates) and education savings plans (invest in mutual fund-like options). The savings plan is far more common. You can open a 529 in any state — you don't have to use your home state's plan, though you may lose a state tax deduction if you go out of state.
Can 529 funds be used for K–12 or vocational schools?
Yes. Since 2018, up to $10,000/year per beneficiary can be used for K–12 tuition at private, public, or religious schools. Vocational and apprenticeship programs registered with the Department of Labor also qualify. The SECURE Act 2.0 expanded eligibility further, including student loan repayment (up to $10,000 lifetime per beneficiary).
What if my child doesn't go to college?
You have several options: (1) Change the beneficiary to a sibling or other family member. (2) Roll up to $35,000 into the beneficiary's Roth IRA (requires the 529 to be 15+ years old; subject to annual Roth IRA contribution limits). (3) Withdraw the funds — contributions come back tax-free; earnings are subject to income tax + 10% penalty. Most families find the Roth rollover or beneficiary change to be the cleanest option.
Does a 529 hurt financial aid eligibility?
A parent-owned 529 counts as a parental asset on the FAFSA, reducing aid eligibility by a maximum of 5.64% of the asset value. So a $50,000 529 reduces aid by at most $2,820. This is a much lower impact than a student-owned asset (20% reduction). Grandparent-owned 529s have no FAFSA impact starting with the 2024–25 FAFSA (simplified rules removed the reporting requirement).
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Disclaimer: This calculator provides educational projections based on your inputs. Actual college costs, investment returns, and financial aid awards will differ. 529 plan rules, tax benefits, and contribution limits vary by state and are subject to change. Consult a financial advisor or tax professional before making college savings decisions.