According to a Fidelity article, for the ‘25-’26 school year, the average published all-in cost at a 4-year public school for out-of-state students is $45,780, and the average private school costs $60,920.
So, because today is 529 Day (it’s 5/29, get it? 😂), it’s a good time to revisit one of the most flexible tools for tackling those numbers.
What 529 plans actually do:
📚 Tax-free growth and tax-free withdrawals for qualified education expenses. State tax treatment will vary, and so will fees and expenses.
📚 Use them for college, trade school, K-12 tuition, and apprenticeships. A 529 can even repay up to $10,000 in student loans.
📚 Whether a 529 qualifies for a state tax deduction will depend on your state of residence, as state tax laws and treatment may vary from federal tax laws.
📚 Superfund up to $95,000 in a single year by using five years of gift tax exclusions at once. But remember if you make nonqualified distributions, earnings will be subject to income tax and a 10 percent federal penalty tax.
📚 Minimal impact on financial aid—parent-owned 529s are assessed at a maximum rate of 5.6 percent.
Grandparents, parents, aunts, or uncles can contribute.
And starting in 2026, the K-12 annual withdrawal limit doubles to $20,000.
The best time to start was years ago. The second-best time is now.