Personal Finance Student Loans
Written by Rickie Houston and Ryan Wangman, CEPF; edited by Sarah Silbert
Updated
- What are 529 plans?
- Key factors to consider when choosing a 529 plan
- 529 plans by state
- FAQs
- Conclusion
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- A 529 plan is a tax-advantaged account that lets parents invest in their child's education expenses.
- While each state manages its own plans, most states also allow out-of-state residents to contribute.
- Each plan has varying fees, contribution limits, and tax perks.
What are 529 plans?
Tax-advantaged savings for education
You can invest in 529 plans to save toward educational expenses like tuition, books and supplies, and other education costs. These tax-advantaged accounts are like custodial investment accounts since they let parents or guardians invest on the behalf of children.
While they have contribution limits, your investment earnings grow tax-free, and you can make tax-free withdrawals whenever you need to.
State-sponsored plans
The difference between 529 plans and custodial accounts, however, is that 529 plans are reserved strictly for education. The account's earnings aren't just limited to college/university costs; you can also use them on elementary, middle, and high school expenses.
Plus, while 529 plan benefits vary by state (i.e., states have different, annual fees, maximum contribution limits and tax deduction limits), you can invest in another state's 529 plan as long as it doesn't require state residency.
However, there are generally two different types: direct-sold and broker-sold. You can purchase direct-sold 529 plans through investment platforms like Fidelity and other online brokerages. Broker-sold 529 plans are offered by advisors and typically cost more.
Key factors to consider when choosing a 529 plan
Investment Options
There's an array of investment options when choosing a 529 plan, including age-based and individual investment portfolios. These portfolios combine various types of ETFs and mutual funds, meant to diversify the saver's investment portfolio.
Fees
High fees can eat away at your investment gains, but fees associated with 529s tend to be on the lower side. They include program management fees, account maintenance fees, potential annual fees, and underlying investment fees.
Performance
A 529 portfolio's performance essentially means that the account value will fluctuate depending on market conditions.
529 plans by state
| STATE* | PLAN | MIN. CONTRIBUTION | FEES | MAX CONTRIBUTION |
| Alabama | CollegeCounts 529 Fund | $0 | 0.17% management fee | $475,000 |
| Alaska | Alaska 529 | $25 | 0.05% management fee | $475,000 |
| Arizona | AZ529 | $0 | Up to 0.17% management fee | $531,000 |
| Arkansas | Arkansas Brighter Future 529 | $25 | None for in-state residents; $20 for out-of-state residents, Up to 0.48% management fee | $500,000 |
| California | Scholarshare 529 | $0 | 0.06% management fee | $529,000 |
| Colorado | CollegeInvest Direct Portfolio College Savings Plan | $25 | $0 in-state residents; $20 out-of-state residents, up to 0.29% management fee | $500,000 |
| Connecticut | Connecticut Higher Education Trust | $0 | $20 per month, waived for automatic contributions of $50/month, 0.20% management fee | $550,000 |
| Delaware | DE529 | $0 | Up to 0.10% management fee | $350,000 |
| District of Columbia | DC College Savings Plan | $25 | $10 in-state residents; $15 out-of-state residents, 0.30% management fee | $500,000 |
| Florida* | Florida 529 Savings Plan | $0 | None | $418,000 |
| Georgia | Path2College 529 Plan | $25 | 0.04% management fee | $235,000 |
| Hawaii | Hawaii's College Savings Program | $15 | $0 in-state residents; $20 out-of-state residents, 0.55% management fee | $305,000 |
| Idaho | Idaho College Savings Program | $25 | $0 in-state residents; $20 out-of-state residents, up to 0.29% management fee | $500,000 |
| Illinois | Bright Start College Savings Program | $0 | 0.10% management fee | $500,000 |
| Indiana | CollegeChoice 529 Direct College Savings Plan | $10 | $0 in-state residents; $20 out-of-state residents, up to 0.24% management fee | $450,000 |
| Iowa | College Savings Iowa | $25 | 0.18% management fee | $420,000 |
| Kansas | Learning Quest 529 Education Savings Program | $0 | 0.20% management fee | $450,000 |
| Kentucky | KY Saves 529 | $0 | Up to 0.40% management fee | $450,000 |
| Louisiana* | START Saving program | $10 | None | $500,000 |
| Maine | NextGen 529 | $25 | Up to 0.20% management fee | $520,000 |
| Maryland | Maryland Senator Edward J. Kasemeyer College Investment Plan | $25 | Up to 0.08% management fee | $500,000 |
| Massachusetts | U.Fund College Investing Plan | $0 | Up to 0.45% management fee | $500,000 |
| Michigan | Michigan Education Savings Program | $25 | 0.045% management fee | $500,000 |
| Minnesota | Minnesota College Savings Plan | $25 | 0.10% management fee | $425,000 |
| Mississippi | Mississippi Affordable College Savings Program (MACS) | $25 | $20, 0.60% management fee | $235,000 |
| Missouri | MOST — Missouri's 529 Education Plan | $0 | 0.15% management fee | $550,000 |
| Montana | Achieve Montana | $25 | $0 in-state residents; $25 out-of-state residents, 0.54% management fee | $396,000 |
| Nebraska | NEST Direct College Savings Plan | $0 | 0.10% management fee | $500,000 |
| Nevada | SSGA Upromise 529 Plan | $15 | $0 in-state residents; $20 out-of-state residents, up to 0.36% management fee | $500,000 |
| New Hampshire | Unique College Investing Plan | $0 | Up to 0.17% | $569,123 |
| New Jersey* | NJBEST 529 College Savings Plan | $25 | $0 in-state residents; $25 out-of-state residents, 0.10% management fee | $305,000 |
| New Mexico | The Education Plan | $0 | 0.10% management fee | $500,000 |
| New York | New York's 529 College Savings Program | $0 | 0.12% management fee | $520,000 |
| North Carolina | NC529 Program | $25 | 0.25% management fee | $540,000 |
| North Dakota | College SAVE | $25 | $0 in-state residents; $20 out-of-state residents, up to .46% management fee | $269,000 |
| Ohio | Ohio's 529 CollegeAdvantage | $25 | 0.125% management fee | $523,000 |
| Oklahoma | Oklahoma College Savings Plan | $25 | 0.20% management fee | $450,000 |
| Oregon | Oregon College Savings Plan | $25 | 0.20% management fee | $400,000 |
| Pennsylvania | Pennsylvania 529 Investment Plan | $0 | $10, 0.19% management fee | $511,758 |
| Rhode Island | CollegeBound Saver | $0 | 0.10% management fee | $520,000 |
| South Carolina* | Future Scholar | $0 | None | $540,000 |
| South Dakota* | CollegeAccess 529 | $250 | None | $350,000 |
| Tennessee | TNStars College Savings 529 Program | $25 | 0.20% management fee | $350,000 |
| Texas | Texas College Savings Plan | $25 | 0.31% management fee | $500,000 |
| Utah | my529 | $0 | Up to 0.14% management fee | $540,000 |
| Vermont | VT529 | $25 | $25, up to 0.35% management fee | $550,000 |
| Virginia | Invest529 | $10 | 0.049% management fee | $550,000 |
| Washington | DreamAhead College Investment Plan | $25 | $30, 0.22% management fee | $500,000 |
| West Virginia* | Smart529 Direct College Savings Plan | $0 | 0.08% management fee | $400,000 |
| Wisconsin | Edvest | $25 | 0.06% management fee | $545,500 |
| Wyoming | No plan available | - | - | - |
*Florida only accepts state residents for its 529 plan. The plan beneficiary must have been a Florida resident for 12 months prior to enrollment.
*You can only open a Louisiana 529 plan if you're a state resident.
*You can only open a New Jersey 529 plan if you're a state resident.
*You can only open a South Carolina or South Dakota 529 if you're a state resident.
*West Virginia requires that the account owner or beneficiary have a West Virginia mailing address or be a state resident on active duty in the US armed forces.
FAQs
What is the maximum I can contribute to a 529 plan?
The amount that you can contribute vary by state, but the contribution limits are typically high enough to cover most college expenses.
Can I use a 529 plan for expenses other than college?
Yes, you can use 529 plans for various educational expenses. 529 plans can be used for K-12 tuition expenses up to $10,000 per year.
What if my child doesn't go to college?
If your child doesn't go to college, you can change the beneficiary to another family member or withdraw the funds, but you may incur taxes and a penalty on the earnings.
529 plans: Conclusion
Choosing the best 529 plan is a crucial decision for your child's future. By carefully evaluating the available options and prioritizing plans with low fees, solid performance, and flexible investment choices, you can pave the way for a more affordable college education.
Senior Wealth-Building Reporter
Rickie Houston was a senior wealth-building reporter for Business Insider, tasked with covering brokerage products, investment apps, online advisor services, cryptocurrency exchanges, and other wealth-building financial products. Before Insider, Rickie worked as a personal finance writer at SmartAsset, focusing on retirement, investing, taxes, and banking topics. He's contributed to stories published in the Boston Globe, and his work has also been featured in Yahoo News. He graduated from Boston University, where he contributed as a staff writer and sports editor for Boston University News Service.
Loans Reporter
Ryan Wangman was a reporter at Personal Finance Insider reporting on personal loans, student loans, student loan refinancing, debt consolidation, auto loans, RV loans, and boat loans. He is also a Certified Educator in Personal Finance (CEPF).In his past experience writing about personal finance, he has written about credit scores, financial literacy, and homeownership. He graduated from Northwestern University and has previously written for The Boston Globe.
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