How the projection works
Example: for a 5-year-old, college that costs $25,000 a year today, rising 5% a year, will cost about $203,185 for four years starting in 13 years. $10,000 saved now plus $300 a month at 6% grows to about $91,155, covering 45%. Covering the whole cost takes about $781 a month.
The calculator treats savings as fully available when college starts, a simple and slightly conservative assumption, since money keeps growing during the college years.
Why a 529 plan
- Tax-free growth and tax-free withdrawals for qualified education costs: tuition, fees, books, room and board, and up to $10,000 a year of K–12 tuition.
- State tax deductions for contributions in many states.
- Leftover money can switch to a sibling or, within limits, roll into the beneficiary's Roth IRA (up to $35,000 over a lifetime, for accounts open at least 15 years).
Most families don't aim to save 100%: scholarships, aid, income during college and loans fill the rest. Compare with general investing using the investment calculator.
Frequently asked questions
How much should I save for college each month?
It depends on the cost and how many years you have. Starting at birth, about $250 to $400 a month covers a large share of a public in-state degree at typical returns.
What happens to 529 money if my child doesn't go to college?
You can change the beneficiary to another family member, use it for trade school or apprenticeships, roll some into a Roth IRA, or withdraw it with income tax and a 10% penalty on the earnings.
How fast do college costs rise?
Historically 3% to 6% a year, often faster than general inflation, though increases have slowed recently. 5% is a conservative planning figure.
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