Calculate how your 529 college savings will grow, compare it to projected college costs, and find the monthly contribution needed to close any shortfall.
529 College Savings Formula
The calculator works in two directions. It can project what your 529 balance will grow to and compare that to future college costs, or it can solve for the monthly contribution you need to reach a funding goal. Both modes use the same two building blocks: the future value of your savings and the inflated cost of college.
Your projected balance is the future value of the money already in the account plus the future value of your monthly contributions:
FV = B * (1 + i)^n + M * ((1 + i)^n - 1) / i
College cost is projected forward with an annual cost inflation rate. The cost of one year of college that begins t years from now, and the total across all years of enrollment, are:
Cost_y = C0 * (1 + g)^(t + y) | TotalCost = sum of Cost_y for y = 0 to Y - 1
To find the monthly contribution required to hit a savings goal, the future value formula is rearranged to solve for M:
M = (Goal - B * (1 + i)^n) / (((1 + i)^n - 1) / i)
Variables:
- FV is the projected 529 balance at the start of college
- B is the current balance already in the 529 plan
- M is the monthly contribution
- i is the monthly rate of return, equal to the annual return divided by 12
- n is the number of months until college begins
- C0 is the current annual cost of college in today’s dollars
- g is the annual college cost inflation rate
- t is the number of years until college begins
- Y is the number of years the student is enrolled
- Goal is the total projected cost multiplied by the share of cost you plan to cover
The first term of the future value formula grows your existing balance, and the second term is the future value of a stream of equal monthly deposits. The cost formula compounds today’s price forward at the inflation rate, so a college that costs C0 now will cost much more by the time a young child enrolls. Your goal is the total projected cost scaled by the share you want to fund, so covering 50% of cost halves the target. Anything the balance falls short of the goal is your funding gap, and the rearranged formula converts that gap into the level monthly deposit needed to close it.
College Costs and the 529 Tax Advantage
The first table shows average published costs for the 2024 to 2025 school year, including tuition, fees, room and board. The last column projects the full four-year bill for a child born today, assuming costs rise 5% per year until enrollment at age 18.
| College type | Average yearly cost (2024-25) | Four-year cost (today’s dollars) | Projected four-year cost for a child born today |
|---|---|---|---|
| In-state public, 4-year | $24,920 | $99,680 | $258,491 |
| Out-of-state public, 4-year | $44,090 | $176,360 | $457,338 |
| Private nonprofit, 4-year | $58,600 | $234,400 | $607,848 |
The second table puts a dollar figure on the reason to use a 529 in the first place. Money in a 529 grows without being taxed each year, and withdrawals for qualified education expenses are federally tax-free. The estimated tax saved is the tax you would otherwise owe on the same investment gains in a regular taxable account, using a 15% long-term capital gains rate. This table assumes a $300 monthly contribution earning a 6% annual return.
| Years invested | Total contributions | Tax-free earnings | Estimated tax saved (15% rate) |
|---|---|---|---|
| 5 years | $18,000 | $2,931 | $440 |
| 10 years | $36,000 | $13,164 | $1,975 |
| 15 years | $54,000 | $33,246 | $4,987 |
| 18 years | $64,800 | $51,406 | $7,711 |
The longer money stays invested, the larger the earnings portion becomes relative to what you put in, which is why the tax saved grows so quickly in the later years. Starting early is what turns the 529 tax break into real money.
Example Problems
Example 1: Will your savings be enough?
Your child is 5 years old and college begins at 18, so you have 13 years. You have $10,000 saved and add $250 per month. Using a 6% annual return, your balance grows to about $80,634 by the first day of college. An in-state public education costing $24,920 today, inflated at 5% per year, adds up to about $202,534 across the four years. Your savings cover roughly 40% of that, leaving a shortfall near $121,900. To fully fund the goal instead, you would need to raise your deposit to about $768 per month.
Example 2: How much should you save?
Take the same 5 year old and $10,000 starting balance, but now solve for the contribution that fully funds an in-state education. The $202,534 goal, minus the future value of your current balance, divided by the future value factor for 13 years of monthly deposits, works out to about $768 per month. Over the 13 years that adds up to roughly $119,800 of contributions and about $72,800 of tax-free earnings.
Frequently Asked Questions
What return and inflation rate should you assume?
A diversified 529 portfolio is often modeled at about a 6% average annual return, with more aggressive age-based tracks assuming 6% to 7% early on and less as college approaches. College costs have historically risen around 5% per year, faster than general inflation. These are the calculator’s defaults, but you can change both in the advanced settings to run a more conservative or more optimistic scenario.
Does the calculator include the 529 tax break?
Yes, in two ways. The projected balance grows without any yearly tax drag, which is how a 529 actually works, and the results report the tax-free investment earnings along with an estimate of the capital gains tax you would have paid on that same growth in a taxable account. It does not model state income tax deductions for contributions, because those vary widely by state, so any state benefit you receive is on top of the figures shown.
What happens if your child gets a scholarship or skips college?
You have several options and can plan for them by lowering the share of cost you aim to cover. If the student receives a scholarship, you can withdraw up to the scholarship amount without the usual 10% penalty on earnings, though income tax on those earnings still applies. You can also change the beneficiary to another family member, use the funds for qualified expenses at trade schools or apprenticeships, or roll a limited amount into the beneficiary’s Roth IRA once the account has been open long enough. Only the earnings on non-qualified withdrawals are taxed and penalized, never your original contributions.
