You do not have to fund all of it
Funding 100% of a private university from a 529 is out of reach for most families, and treating that as the standard produces paralysis. A common and workable split is roughly a third from savings, a third from current income during the college years, and a third from scholarships, work and modest loans.
State tax deductions are the underrated part
Over thirty states offer a state income tax deduction or credit for 529 contributions, some only for the in-state plan. That is an immediate return before any investment growth. Check your own state's rules before defaulting to the plan with the lowest fees — the deduction often outweighs a small fee difference.
Age-based portfolios and the glide path
Most 529s offer age-based options that shift from equities to bonds as college approaches. That protects against a market drop in the year the first bill arrives — a real risk, since you cannot wait out a downturn on a fixed date. If you are self-selecting funds, de-risk deliberately in the final five years.
What if they don't go to college
Options have widened: change the beneficiary to a sibling or other relative, use up to $10,000 for K-12 tuition or student loan repayment, apply it to apprenticeships, or roll a limited lifetime amount into the beneficiary's Roth IRA subject to conditions. Non-qualified withdrawals pay tax plus a 10% penalty on earnings only — never on your contributions.
FAQ
How much should I save in a 529 each month?
For a 5-year-old with $12,000 saved, covering four years of in-state public costs needs roughly $500–$600 a month at a 6% return. The calculator gives the exact figure for your assumptions.
Is a 529 worth it?
For most families, yes. Growth is tax-free for qualified expenses, most states add a deduction, and the effect on financial aid is small — a parent-owned 529 is assessed at a maximum of about 5.64% of value.
What if my child gets a scholarship?
You can withdraw an amount equal to the scholarship without the 10% penalty, though earnings are still taxed. You can also redirect the money to a sibling or leave it for graduate school.
529 or a brokerage account?
A 529 wins when the money is genuinely for education, because of the tax-free growth and state deduction. A brokerage account wins on flexibility. Many families use both, weighting the 529 toward the amount they are confident will be spent on school.
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