Summary of using 529 plans for college expenses
- Federal tax-free treatment of 529 plans apply to any funds withdrawn to cover qualified higher education expenses (QHEE) or K-12 tuition.
- The earnings portion of non-qualified withdrawals are subject to federal income tax, as well as an additional 10% penalty.
How much do you need to save for college expenses?
This calculator is designed to help you create the most effective funding strategy to cover your expected college costs using a 529 plan. Note that attendance costs and scholarship availability can vary considerably from school to school. The World’s Simplest College Cost Calculator allows you to estimate costs based on school types (ie. In-state public university).
Using this calculator
- Adjust your child's age, your household income, type of school you are saving for, and either monthly contribution or the percent of cost covered slider. For example, if you would like to cover half of your child’s expected cost of attendance, set the slider to 50%.
- If you want to change the yearly school cost, expected scholarships and grants, inflation rate, expected rate of return, or current college savings balance click on the 'Edit your answers' link.
- If the total cost of college is greater than your expected 529 plan balance, you will see a figure labeled 'College savings gap' which will have to be paid using loans or other funding sources.
Potential 529 state tax benefits
Some states offer a tax deduction for contributions to a 529 plan, which could further increase projected college savings if tax benefits are invested. Read more about state tax benefits for 529 plans, and estimate your state tax savings with our Tax 529 Calculator.