Plan for education costs with inflation-adjusted projections. Enter your child's age, target school costs, and current savings to see exactly how much you need to save each month.
College costs have risen roughly 5–8% annually — far outpacing general inflation. A year at a state school that costs $28,000 today will cost approximately $45,000 in 10 years at 5% inflation. A 529 plan is the most tax-efficient way to save for these rising costs, offering tax-free growth and withdrawals for education expenses.
The key advantages are tax-free growth and tax-free withdrawals for qualified expenses. Additionally, over 30 states offer income tax deductions on contributions. Starting a 529 when your child is born gives you 18 years of compounding, which dramatically reduces the monthly contribution needed compared to starting at age 10 or later.
Consider two families saving for the same $200,000 goal at 7% return: Family A starts at birth and needs $460/month. Family B starts at age 10 and needs $1,250/month. Starting 8 years earlier cuts the required contribution by 63%. Even small contributions ($100/month) at birth grow to over $40,000 by age 18 — try our compound interest calculator to model different scenarios.
Most 529 plans offer age-based portfolios that automatically shift from aggressive (stocks) to conservative (bonds/cash) as your child approaches college. This is the simplest approach. For hands-on investors, individual fund options let you customize your allocation. A common approach: 80–100% stocks when your child is under 10, gradually shifting to 40–60% bonds in the final years before college.
Understanding current costs helps you set a realistic savings target. Average annual costs for 2026–2027 (tuition, fees, room, and board):
With 5% annual inflation, a newborn's 4-year public university cost will be approximately $270,000 by the time they enroll. This is why starting early is critical — use our inflation calculator to project future costs for your specific timeline.
The longer you wait to start saving, the higher the required monthly contribution. Here is how much you need to save per month (at 7% annual return) to cover 50% of projected 4-year costs at each school type:
| Child's Age | Years to Save | In-State Public | Out-of-State | Private |
|---|---|---|---|---|
| Newborn | 18 | $250/mo | $420/mo | $560/mo |
| Age 5 | 13 | $380/mo | $640/mo | $860/mo |
| Age 10 | 8 | $680/mo | $1,140/mo | $1,530/mo |
| Age 14 | 4 | $1,500/mo | $2,500/mo | $3,350/mo |
Assumes 5% annual tuition inflation and 7% investment return. Targets 50% of projected costs — the rest from current income, financial aid, and scholarships.
Starting at birth vs. age 14 reduces the required monthly savings by 83% for the same goal. Even if you cannot save the full amount, every dollar contributed early has 18 years to compound.
529 plans are treated favorably in the FAFSA (Free Application for Federal Student Aid) formula. A parent-owned 529 is considered a parental asset with a maximum 5.64% assessment rate — meaning only ~5.6% of the balance counts against financial aid eligibility each year. By comparison, a UTMA account owned by the student is assessed at 20%.
Tip: Grandparent-owned 529 plans no longer affect FAFSA eligibility (since the FAFSA simplification). This makes grandparent 529s an excellent estate planning tool — contributions reduce the grandparent's estate while funding education tax-free.
Reviewed by Tahir Özcan · Founder, WealthCalc · Editorial policy
Projects college savings using compound growth against estimated future tuition costs. Accounts for tuition inflation (historically ~5-6% annually) and investment returns.
4 In-Depth Guides
Complete guide to 529 plans in 2026. Learn how to estimate college costs, choose the right plan, pick investments, and use new Roth IRA rollover rules.
Read Full GuideA comprehensive strategy combining 529 plans, scholarships, financial aid, work-study, and smart school choices to minimize or eliminate student loan debt.
Read Full GuideCompare every education savings vehicle side-by-side — 529 plans, Coverdell ESAs, UTMA/UGMA custodial accounts, and Roth IRAs. Find which accounts fit your family best.
Read Full GuideAge-by-age college savings benchmarks from birth to 18. See exactly how much you should have saved, what to invest in, and how to catch up if you are behind.
Read Full GuideA 529 plan is a tax-advantaged savings plan designed for education expenses. Contributions grow tax-free, and withdrawals for qualified education expenses (tuition, books, room and board, computers) are also tax-free. Most states offer additional state income tax deductions for 529 contributions. You can use 529 funds at any accredited college or university nationwide, and up to $10,000/year for K-12 tuition.
Average annual costs for 2026-2027 are approximately $24,000–$28,000 for in-state public universities (tuition + room and board), $44,000–$58,000 for out-of-state public, and $58,000–$62,000 for private universities. College costs have historically risen 5–8% annually, significantly faster than general inflation. Our calculator accounts for this education-specific inflation.
A common rule of thumb is to aim for one-third of projected costs from savings, one-third from current income during college years, and one-third from financial aid and scholarships. For a newborn targeting an in-state public university, saving $300–$500/month in a 529 plan with market-rate returns typically covers the savings portion. Starting earlier dramatically reduces the monthly requirement.
Starting in 2024, unused 529 funds (held 15+ years) can be rolled into a Roth IRA for the beneficiary, up to $35,000 lifetime limit — a provision now well-established as of 2026. You can also change the beneficiary to another family member (sibling, parent, cousin, etc.) for their education expenses. Non-qualified withdrawals are subject to income tax plus a 10% penalty on the earnings portion only — the contributions come out tax- and penalty-free.
Check if your state offers a tax deduction for 529 contributions — over 30 states do. If so, your state plan may be worth it even if fees are slightly higher. If not, choose the plan with the lowest fees and best investment options regardless of state. Top-rated plans include Utah's my529, Nevada's Vanguard 529, and New York's Direct Plan. You can use any state's plan for any school nationwide.
Parent-owned 529 plans are reported as parent assets on the FAFSA and assessed at a maximum rate of 5.64% — much lower than student assets (20%). Grandparent-owned 529 plans are no longer counted as income on the FAFSA (effective since the 2024-25 simplification), making them even more favorable. A 529 plan has minimal impact on financial aid compared to other savings vehicles.
Get a complete picture of your finances by combining this tool with our other free calculators and in-depth guides.
Last reviewed:
Projects college savings using compound growth against estimated future tuition costs. Accounts for tuition inflation (historically ~5-6% annually) and investment returns.
Figures are updated whenever the IRS, SSA, CMS, FHFA, HHS, or BLS publishes a new inflation adjustment or statutory change. This tool is for educational purposes only and does not constitute tax, legal, or investment advice. Consult a qualified professional for decisions affecting your personal finances.
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