Estimate how much to save for your child's college education. Compare 529 plans, Coverdell ESA, and UGMA accounts. Understand how your savings affect financial aid on the FAFSA.
Average 4-year total costs including tuition, room, board, and fees
Enter your child's age, target college type, and expected return to see exactly how much you need to save monthly.
Open Savings Calculator →College costs have grown at approximately 5% per year — significantly faster than general inflation — for the past three decades. The average 4-year public university today costs about $26,000 per year including tuition, fees, room and board, and books ($104,000 total). Private colleges average $60,000 per year or more ($240,000 total). By the time an infant born today starts college in 18 years, these costs will be substantially higher assuming continued inflation: approximately $63,000/year for public and $150,000/year for private.
These numbers can feel overwhelming, but the good news is that compound growth through tax-advantaged vehicles like 529 plans makes the goal achievable with consistent, early saving. The key is starting early — even small amounts invested from birth grow dramatically over 18 years.
529 plans (named after Section 529 of the IRS code) are the most powerful and flexible college savings vehicle available to American families. Here's what makes them so valuable:
Money invested in a 529 grows tax-free — you don't pay taxes on dividends, interest, or capital gains while the money is invested. When you withdraw for qualified education expenses (tuition, fees, books, room and board, computers and technology), those withdrawals are also tax-free. This tax-free compounding over 18 years is enormously powerful. A $200/month investment growing at 7% over 18 years produces approximately $91,000 in a taxable account (after capital gains taxes) but $99,000+ in a 529 — an 8%+ advantage from tax savings alone.
More than 30 states offer a state income tax deduction or credit for 529 contributions. Some states (like Illinois, Virginia, and New York) allow deductions up to $10,000–$20,000 per year for married couples filing jointly. This makes the effective return on 529 contributions even higher in states with income taxes. Some states offer "above the line" deductions, meaning you don't need to itemize to claim them.
You're not locked into your state's 529 plan — you can use any state's plan (compare fees and investment options at savingforcollege.com). The beneficiary can be changed to another family member (sibling, cousin, even yourself) without penalty. Starting in 2024, up to $35,000 of unused 529 funds can be rolled to a Roth IRA for the beneficiary (after the account has been open 15 years), significantly reducing the risk of "overfunding" your 529.
The answer depends on three variables: your child's current age, what type of school you're targeting, and your expected investment return. Here are illustrative examples targeting the 2025 average 4-year public college cost ($104K in today's dollars, or approximately $173K in 18 years at 5% inflation):
Starting at birth (18 years): ~$500/month at 6% return. Starting at age 5 (13 years): ~$750/month. Starting at age 10 (8 years): ~$1,400/month. Starting at age 14 (4 years): ~$3,500/month. The message is clear: every year of delay approximately doubles the required monthly contribution. Starting early, even with small amounts, is dramatically more efficient than catching up later.
A common goal-setting framework: aim to save for about 50% of projected college costs in a 529 plan, with the remaining 50% to come from a combination of scholarships, part-time work, student loans (if necessary), and income at the time. This framework prevents both under-saving and the anxiety of trying to fully fund what may be a moving target.
The Coverdell Education Savings Account works similarly to a 529 but with key differences: $2,000/year maximum contribution, income limits (phase-out at $95,000 single/$190,000 married), and the funds must be used by age 30. Coverdell accounts can be used for K-12 expenses including private school tuition, supplies, and tutoring — more broadly than 529 plans historically. Given the low contribution limit, most families use Coverdell as a supplement, not a primary savings vehicle.
Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) accounts are custodial accounts that let parents invest money in the child's name. There are no contribution limits, no restrictions on use, and no required withdrawal timeline. However, the funds legally become the child's at age 18 or 21 (depending on the state), and they count as student assets on the FAFSA at a much higher rate (20%) than parental assets (5.64%). UGMA/UTMA accounts are taxed annually on gains and don't offer the tax-free growth of 529 plans.
A 529 plan is a tax-advantaged education savings account. Contributions grow tax-free and withdrawals for qualified expenses (tuition, room & board, books) are tax-free. Many states offer state tax deductions. Since 2024, up to $35,000 of unused 529 funds can be rolled to a Roth IRA, reducing the risk of over-saving.
Starting from birth at 6% return: ~$500/month reaches ~$104K for a 4-year public college. Starting at age 5: ~$750/month. Starting at 10: ~$1,400/month. Every 5-year delay roughly doubles the monthly savings needed. A reasonable goal: fund 50% of projected costs with a 529, the rest from scholarships and income.
A parent-owned 529 counts as a parental asset on FAFSA at a maximum 5.64% assessment rate (much less than student assets at 20%). Since the 2024 Simplified FAFSA, grandparent-owned 529 distributions no longer count as student income — a major improvement that benefits families using grandparent-funded education savings.
529 plans: no contribution limit, available at all income levels, can be used for K-12 (up to $10K/year) and college. Coverdell ESA: $2,000/year max, income limits ($95K single/$190K married phase-out), usable for broader K-12 expenses. Most families use 529 as primary and Coverdell as supplement if they qualify.