Have a 529 plan for your child's college education? Here's how much you should be contributing every month

A 529 college savings plan is a great way to provide for your child's future. It's a state-sponsored investment account that earns compound interest and allows earnings to grow tax-free.

Opening a 529 plan is easy but deciding how much to contribute can be difficult, especially if you start years before your child needs the money.

To get some specifics, CNBC Select turned to student aid expert Mark Kantrowitz.

Designed to encourage families to save for college, 529 plans allow earnings to grow tax-free. Withdrawals are tax-free, too, as long as they're used for qualified educational expenses.

Plans are sponsored by individual states, which set an aggregate lifetime limit on total contributions (typically $235,000 to $600,000). And while you can enroll in any plan, some states offer tax incentives to residents.

Since 2024, you can roll over unused 529 funds into a Roth IRA without penalty, as long as the plan has been open for at least 15 years.

Kantrowitz uses the "one-third rule" when forecasting how much parents need to set aside for college. This assumes:

1. Your savings (or past income) will make up one-third of future college spending
2. Once enrollment begins, current income and financial aid make up another third
3. Student loans (or future income) will make up the final third.

Assuming you open a 529 when your child is born and make regular contributions through their college enrollment, Kantrowitz estimates you'll need:

• A minimum of $300 per month for in-state tuition at a four-year public institution.
• A minimum of $500 per month for out-of-state tuition at a four-year public institution.
• A minimum of $650 per month for a private four-year university

How to see if you're on track

To see if you're on track to save up one-third of your child's college costs, Kantrowitz offers the following formula:

• For in-state tuition, multiply your child's age by $3,000
• For out-of-state tuition, multiply your child's age by $6,000
• For a private university, multiply their age by $8,000

For a 13-year-old expected to attend an out-of-state public university, for example, you should have $78,000 in your 529 plan.

There are also 529 college savings calculators that can help.

Plans are sponsored by individual states and, while you can enroll in any plan, some states offer tax incentives to residents.

my529 (Utah)

My529 is a direct-sold college savings account sponsored by the state of Utah. Choose from age-based portfolios that automatically rebalance to maintain the right asset allocation, or opt for risk-based, customizable choices.

Resident benefit: Utah residents are eligible for additional tax benefits, including a 4.5% state income tax credit.
Aggregate contribution limit: $606,000 per beneficiary in 2026

BrightStart529 (Illinois)

The direct-sold BrightStart529 is sponsored by the state of Illinois and managed by the privately owned Union Bank & Trust. There are age-based investing options, as well as static and individual plans from firms like T. Rowe Price and Vanguard.

Resident tax benefit: Illinois residents can deduct contributions from their taxable state income up to $10,000 per year for individuals or $20,000 for married couples filing jointly.

Aggregate contribution limit: $550,000 per beneficiary in 2026

NY's 529

Managed by Ascensus College Savings, New York's 529 College Savings Program is a direct-sold account featuring Vanguard mutual funds.

Resident tax benefit: New York residents can deduct up to $5,000 in contributions from state taxable income (for individuals) or up to $10,000 (for married couples filing jointly).

Aggregate contribution limit: $520,000 per beneficiary in 2026

At CNBC Select, we work with experts with specialized knowledge and authority, backed by years of relevant training and experience. For this article, we interviewed student financial aid expert Mark Kantrowitz.

Mark is the author of bestselling books, including How to Appeal for More College Financial Aid and Secrets to Winning a Scholarship, and has written about student financial aid for the New York Times, Wall Street Journal, Washington Post, Time Magazine and other outlets.

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