Few things worry parents as much as their children’s future. And when it comes to college in the United States, that concern often comes with a question: how can we pay for it?
The average cost of attending college — including tuition, fees, housing, and meals — is expected to range from $14,440 per year at a two-year community college to around $25,000 at a four-year state university and nearly $59,000 at a four-year private college (these figures reflect the sticker prices published by colleges for the 2024–25 academic year, but many students pay significantly less after financial aid).
But there is a more strategic — and, for many, more manageable — alternative: the 529 college savings account. Still little known to some families but extremely powerful for those seeking to plan ahead, it can be the first step toward turning the dream of a college degree into reality — without financial despair along the way.
A Gift for the Future
For those unfamiliar, 529 plans are investment accounts specifically created to cover education or college expenses. The money deposited grows tax-free, and when used for qualified expenses like tuition, housing, books, and even meals, it can be withdrawn without any federal tax deduction.
The name “529” comes from a section of the U.S. tax code, and while the concept may sound technical, the truth is very simple: it’s a smart way to save money for your children’s or grandchildren’s educational future — especially since, according to a recent change in financial aid rules, grandparents can now save for a grandchild’s college education without affecting the child’s eligibility for financial aid.
By the end of 2024, there were about 17 million accounts holding $525 billion, averaging nearly $31,000 each.
In May, many students are transitioning from one educational stage to the next — whether graduating from kindergarten or middle school and entering college. That’s why 529 plans often promote special incentives this time of year to encourage contributions.
Pennsylvania’s College and Career Savings Program, for instance, is offering savers a chance to win $5,529 for their college accounts if they deposit at least $10 during May. Meanwhile, West Virginia is holding a drawing to select the winner of a $15,000 prize, which will be deposited into a Smart529 account.
Alabama’s CollegeCounts program is also offering the chance to win a $529 contribution for accounts opened for babies born between May 29, 2024, and May 29 of this year.
Starting Small Already Makes a Difference
You may be thinking you can’t possibly save thousands of dollars right now. And that’s perfectly okay. Recent stock market fluctuations may have left some parents hesitant to invest. But if savings start when children are young, there’s plenty of time to ride out market ups and downs.
A $25 monthly deposit from the early years of a child’s life already creates a meaningful base. And if your state offers any type of extra contribution, such as Utah (which offers up to $40 in bonuses for new beneficiaries), that becomes a powerful incentive.
Richard Polimeni, director at Merrill, said he opened a 529 account for his children right after they were born. “If your goal is to save for college, nothing comes close to a 529 plan,” he said.
Less Debt, More Freedom
Data shows that over 17 million 529 accounts are currently active in the U.S., with an average balance of $31,000. That money can make the difference between starting adult life with choices — or with debt. With the recent resumption of student loan collections after the pandemic pause, the federal student loan system has faced a crisis. About a quarter of students who currently need to make payments are considered delinquent, surpassing early 2020 levels before the pandemic, according to the Federal Reserve Bank of New York.
As financial aid expert Mark Kantrowitz puts it: students should not borrow more than what they expect to earn in their first year after graduation. The 529 account helps precisely with that: avoiding everything falling on loans.
What If My Child Decides Not to Go to College?
That’s a common concern — and the good news is that the 529 is more flexible than ever. Today, it can be used for vocational courses, apprenticeship programs, K-12 tuition, and even to pay part of student loans (up to $10,000). And, thanks to the federal SECURE 2.0 law, up to $35,000 from a 529 balance can now be transferred into a Roth IRA — meaning the money could become early retirement savings.
Do I Have to Live in the State to Open an Account?
No. You can open a 529 account in any state that offers one, even if you don’t live there. Still, it’s worth checking local benefits: some states offer state income tax deductions, which can help your money go even further.
Additionally, family members like grandparents can now contribute to a grandchild’s education without affecting the child’s eligibility for financial aid — another positive change making intergenerational support easier.
Conclusion: Start Today, Even If It’s Small
Saving for college may seem like a daunting challenge. But with a 529 plan, that journey becomes clearer, more practical, and even lighter. You don’t need to have the full amount up front — you just need to start. Whether it’s $10 or $100, what matters is taking that first step.
And if along the way there are incentives, bonuses, and prize drawings? Even better. Because when it comes to the future, every investment made today turns into freedom tomorrow.
