Explain it like I’m 5
College costs a lot of money — and, like most things, it gets a bit more expensive every year. A 529 plan is a special savings jar just for school.
Here’s what makes the jar special: the money inside gets invested, so it can grow over the years. And when you take it out to pay for school, the government doesn’t take any tax from the growth. It’s like a piggy bank where the coins have babies, and nobody takes a cut of the babies — as long as they’re spent on school.
This calculator figures out three things: how much college might cost when your child gets there, how big your jar will be by then if you keep saving what you save now, and how much to put in each month to fill the gap. The earlier you start, the less you need each month — because the money has more years to grow.
Words you’ll see, in plain English
- 529 plan
- A special savings account for school. The money grows without yearly taxes, and comes out tax-free when used for education.
- Qualified education expenses
- The school costs a 529 plan is allowed to pay for tax-free, like tuition, books, and room and board.
- Beneficiary
- The person an account is meant for — for a 529 plan, the student.
- Inflation
- Prices slowly going up over time, so the same dollar buys a little less each year. A candy bar that cost $1 might cost $1.03 next year.
- Compound interest
- Interest that earns its own interest. Like a snowball rolling downhill: the bigger it gets, the faster it grows.
More money words explained simply in our glossary.
How to use the 529 calculator
- Your child’s age and when they’ll start college (usually 18), and how many years they’ll attend.
- Pick a type of school to start from the national average, or enter your own number. Check the “cost of attendance” on a college’s website for a specific school.
- College cost growth — how fast prices rise each year. 3% is a reasonable planning number.
- Share you’ll save for — 100% if you want savings to cover everything, less if you expect scholarships, aid or help from income.
- What you’ve saved, what you add each month, and your expected return.
Average cost of college (2025-26)
| Type of school | Tuition & fees | Total yearly budget* |
|---|---|---|
| Public 4-year, in-state | $11,950 | $30,990 |
| Public 4-year, out-of-state | $31,880 | $50,920 |
| Private nonprofit 4-year | $45,000 | $65,470 |
*Average budgets for full-time undergraduates, including tuition and fees, housing and food, books and supplies, transportation and other expenses. Source: College Board, Trends in College Pricing and Student Aid 2025. These are sticker prices before grants and scholarships.
The math, step by step
Example: a 5-year-old, average public in-state college ($30,990 a year today), $10,000 saved, $300 a month, 3% cost growth, 6% returns.
- Grow the cost: college starts in 13 years. At 3% a year, the first year will cost about $45,510, and all four years about $190,396.
- Find what’s needed on day one: you don’t need all four years in cash on the first day — money for later years keeps growing while you pay the early ones. That brings the target to about $174,456.
- Grow your savings: $10,000 plus $300 a month for 13 years at 6% grows to about $91,155.
- Compare: that’s about $83,301 short. To exactly hit the target, you’d save about $658 a month.
Why starting early matters so much
To fully cover four years at an average public in-state college with 3% cost growth and 6% returns, starting from $0:
- Starting at birth: about $531 a month for 18 years.
- Starting at age 12: about $1,650 a month for 6 years.
Starting earlier gives the money more years to grow, so each month’s deposit does more of the work.
529 plan basics
- Tax-free growth: no yearly tax on investment gains, and no tax on withdrawals for qualified education expenses.
- State perks: many states offer an income-tax deduction or credit for contributions to their plan.
- You stay in control: the account owner (usually the parent) decides when money comes out and can change the beneficiary.
- Financial aid: a parent-owned 529 is counted as a parent asset on the FAFSA, which typically has a modest effect on aid.
- Leftovers aren’t wasted: change the beneficiary, use it for grad school, or roll up to $35,000 into the beneficiary’s Roth IRA (if the account is 15+ years old and other rules are met).
Common mistakes
- Planning with today’s prices. College in 15 years will cost noticeably more; the calculator grows costs for you.
- Waiting until the “right time”. Small amounts started early often beat larger amounts started late.
- Assuming you need 100%. Grants, scholarships, work and current income often cover part of the bill.
- Staying aggressive right before college. Shift toward safer investments as college gets close, so a market drop doesn’t hit tuition money.
Frequently asked questions
How much should I save in a 529 plan per month?
It depends on your child’s age, the type of school and how much of the cost you want to cover. As an example, to fully cover 4 years at an average public in-state college (about $30,990 a year today) for a newborn, assuming 3% cost growth and 6% returns, you’d need to save roughly $531 a month. Many families aim to cover a share — say a third or half — and fill the rest with income, scholarships and aid.
What can a 529 plan pay for?
Qualified college expenses include tuition and fees, books, supplies, required equipment, computers, and room and board for students enrolled at least half-time. 529s can also pay for registered apprenticeships, up to $10,000 of student loan repayment (lifetime, per person), and K-12 tuition and certain other K-12 expenses — up to $20,000 per year per student starting in 2026 (federal rule; states may differ).
What happens if my child doesn’t go to college?
You have options: change the beneficiary to another family member, keep the money for future education (including graduate school or trade school), roll up to $35,000 (lifetime) into a Roth IRA for the beneficiary if the account has been open at least 15 years and other rules are met, or withdraw it. Non-qualified withdrawals pay income tax plus a 10% penalty on the earnings only — never on what you put in.
Are 529 contributions tax-deductible?
Not on your federal return. But many states give a state income-tax deduction or credit for contributing to their own plan (a few allow any state’s plan). The bigger benefit is federal: the money grows without yearly taxes and comes out tax-free for qualified expenses.
What return should I expect from a 529 plan?
It depends on the investments you choose. Many plans offer age-based portfolios that start mostly in stocks and shift to bonds and cash as college approaches. A long-term average of 5–7% a year for a stock-heavy mix is a common planning assumption, but returns are not guaranteed and are lower for conservative portfolios.
How much does college cost?
According to the College Board, average 2025-26 budgets for a full-time undergraduate — including tuition and fees, housing and food, books, transportation and other expenses — are about $30,990 a year at a public four-year college for in-state students, $50,920 for out-of-state students, and $65,470 at a private nonprofit four-year college. Many students pay less after grants and scholarships.
These results are estimates for education only, based on the assumptions you enter. They are not financial, investment or tax advice. Real returns, rates and taxes vary. See our methodology anddisclaimer.