Published tuition and fees at an in-state public university average $11,950 a year in 2025-26, and $45,000 at a private nonprofit college, before housing and food. A 529 plan is the usual way to save for that: growth is tax-free when it’s spent on qualified education costs. The decisions that matter are which plan, how much, and in whose name. Most families can make them alone; a fee-only planner who charges a median $300 an hour can check the plan when college competes with other goals.
Our glossary entry on the 529 plan covers what a 529 pays for, the K-12 limit and the rollover to a Roth IRA. This guide is about the decisions.
Which plan
You can use any state’s 529, wherever you or your child live. Three things decide which one:
- Your state’s tax break. Many states give a deduction or credit only for contributions to their own plan. If yours does, it often outweighs a small fee difference elsewhere. If your state offers nothing, or gives the break for any state’s plan, shop on cost.
- Direct-sold or advisor-sold. Most states sell a plan directly. Some also sell one through brokers, which can carry sales charges and higher fees. FINRA notes you can often save money with a direct-sold plan if you’re comfortable choosing on your own.
- Investment options. Most plans offer age-based portfolios that get more conservative as college nears. Check the total yearly cost of the one you’d use.
How much to save
Start from the goal, not the account. Pick the kind of school you’d like to be able to cover, decide what share you want to pay (all of it, half, four years at a public university), and work back to a monthly amount. A planner can run this against inflation and your other goals in an hour or two.
Two rules of order hold for most families:
- Retirement first. The FAFSA doesn’t count 401(k)s, IRAs or pensions as assets. Your children can borrow for college; you can’t borrow for retirement.
- Don’t overfill one child’s account. Leftover money can be switched to a sibling or another family member, rolled into the beneficiary’s Roth IRA within limits, or moved to an ABLE account. Anything else taken out for non-education spending has its earnings taxed, generally plus 10%.
Grandparents and large gifts
A contribution to a 529 is a gift to the child. In 2026 each giver can put in $19,000 per child without using any lifetime exemption. A special election lets a giver count one large contribution as if it were spread over five years: up to $95,000 per child at once from one person, or $190,000 from a couple, based on the 2026 exclusion of $19,000. If the giver dies within the five years, part of the gift counts back in their estate.
Who owns the account matters for aid. On the 2026-27 FAFSA, a 529 owned by a parent for the student is a parent asset. A 529 owned by a grandparent isn’t reported at all. Some private colleges ask for more on their own aid forms, so check with the schools your child is considering.
This is where college saving overlaps with family wealth transfer: a grandparent’s 529 can move money out of a taxable estate while keeping control of it.
What changed recently
- More K-12 costs qualify. Beyond tuition, 529 money can now pay for curriculum and books, outside tutoring, standardized test fees, dual enrollment and educational therapies for students with disabilities, under the $20,000 yearly K-12 limit.
- Credentials count. Certain postsecondary credential programs now qualify, alongside registered apprenticeships.
- The 529 to ABLE rollover is permanent. It was set to end after 2025. A 2025 law removed the end date, so a 529 can still be rolled into an ABLE account for the beneficiary or a family member with a disability, within the ABLE yearly limit.
Common mistakes
- Buying an advisor-sold plan with a sales charge when a direct-sold plan from the same state costs less.
- Ignoring your own state’s tax break to chase a plan with slightly lower fees.
- Saving for college while under-saving for retirement.
- Putting college money in the child’s name in a custodial account. The FAFSA counts it as the student’s own asset, which usually reduces aid more than a parent-owned 529, and the money becomes theirs outright when they come of age.
- Claiming the same expenses twice. You can take a tax-free 529 withdrawal and claim the American opportunity credit, worth up to $2,500 a student, in the same year, but not on the same dollars of tuition. Plan which money pays which bill.
When a fee-only advisor is worth it
You don’t need an advisor to open a 529. A planner earns their fee when college is one of several goals pulling on the same income: two or three children, a house, catching up on retirement, or grandparents who want to help. They can set the monthly amount, choose the plan, decide who owns each account and plan withdrawals around aid and credits.
Choose someone paid only by you. An advisor paid by commission may be paid more for an advisor-sold plan. A fee-only planner has no reason to prefer one plan over another.
What it costs
| How you pay | Typical cost (US median) | Suits |
|---|---|---|
| Hourly | $300 an hour | Choosing a plan and a monthly amount |
| One-time plan | $2,000 | College saving inside a full family plan |
| Ongoing planning fee | $4,500 a year | Several children, aid planning and withdrawals over years |
These are prices fee-only firms publish on their own websites, from the Wellspent fee report. See what an hourly planner costs and what a one-time plan costs.
Questions to ask a planner
- Which 529 would you use for us, and is it direct-sold?
- What does our state give us for using its plan?
- How much should we save a month, and what does that assume?
- Who should own each account, given financial aid?
- Do you or your firm earn anything when we open or fund a 529?
Where to look
In the public graph, start with HENRYs or multi-generational families, the tax planning specialty, or the lists of flat-fee advisors, advisors for HENRYs and advisors for multi-generational families. Parents of a newborn should start with our guide to financial planning for a new baby.