College Savings Calculator
Calculate how much to save monthly for college using a 529 plan.
The Formula
FV = future college cost (adjusted for tuition inflation)
r = monthly investment return · n = months until enrollment
r = 0.005 · n = 180
PMT = 120,000 × 0.005 / [(1.005)¹⁸⁰ − 1]
= $402 / month
How Much Does College Actually Cost?
College costs vary widely by school type. Average annual costs for the 2023–2024 academic year: in-state public four-year university, about $27,000 including tuition, fees, room, and board; out-of-state public, about $44,000; private four-year, about $58,000. College costs have risen at roughly 5–6% annually — faster than general inflation. A child born today who attends an average in-state school 18 years from now could face costs of $60,000–$75,000 per year. Starting early is the only realistic way to get ahead of that math.
Why a 529 Plan Is Usually the Best Choice
A 529 savings plan is a state-sponsored investment account built specifically for education expenses. Contributions grow tax-free, and withdrawals are tax-free when used for qualified education costs — tuition, fees, room and board, books, computers, and now K-12 expenses up to $10,000 per year. Many states also offer a state income tax deduction for contributions. The combination of tax-free growth and tax-free withdrawals makes 529s the most tax-efficient vehicle for college savings in most situations.
How Much to Save Each Month
The right monthly amount depends on the child's current age, your savings goal, and expected investment return. Starting at birth gives you 18 years of compound growth. Starting at age 10 gives you only 8 years, requiring much higher monthly contributions for the same result. A rough target: $300–$500 per month from birth in a growth-oriented 529 portfolio gets most families to a meaningful portion of an in-state public university cost. For private school goals, the target is higher. Use this calculator to find the exact monthly figure for your situation.
Frequently Asked Questions
What happens to 529 money if my child does not go to college?
You have several good options: change the beneficiary to another family member, use the funds for vocational school or apprenticeship programs, use up to $10,000 per year for K-12 tuition, or roll over up to $35,000 lifetime to a Roth IRA in the beneficiary's name under SECURE 2.0 rules. A non-qualified withdrawal is subject to income tax plus a 10% penalty on earnings only — contributions are never penalized.
When should I start saving for college?
As early as possible — ideally at birth. Starting 18 years before college versus 10 years before with the same monthly contribution results in 2–3 times more savings thanks to compounding. If you are starting late, do not be discouraged — anything you save reduces the amount your child needs to borrow, and student loan interest is expensive.
Should grandparents open a separate 529 or contribute to the parent's?
A 2024 FAFSA rule change removed the previous disadvantage of grandparent-owned 529s — distributions from grandparent accounts no longer count as student income on the FAFSA. Both approaches are now equally favorable for financial aid purposes. Contributing to an existing parent-owned plan may be simpler for coordination.
How does a 529 affect financial aid eligibility?
Parent-owned 529 accounts are counted as parental assets on the FAFSA and assessed at a maximum rate of 5.64% — much less than student assets, which are assessed at 20%. Student-owned 529s are also treated as parental assets, not student assets. The impact of a 529 on financial aid eligibility is generally modest and usually outweighed by the tax savings.
What investment options should I pick in a 529?
Most families choose age-based portfolios that automatically shift from growth-oriented (mostly stocks) when the child is young to conservative (more bonds) as college approaches. For a child under 10, an 80–100% stock allocation is generally appropriate. Within five years of college, shifting toward 50–60% stocks reduces the risk of a market downturn wiping out savings right before tuition bills arrive.