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These states offer free money when you open a 529 college savings plan for your child

Parents can receive thousands of dollars when opening and contributing to a 529 account.

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For families planning to help their child pay for college, saving early is essential to ensuring they have enough money to cover some of the cost of college. Now, some states are incentivizing parents to start saving early by giving them free money to invest for their child's college education.

Most states require that parents open a 529 Savings Plan — which is a state-sponsored investment account used for education-related expenses such as tuition, room and board, supplies and books — in order to receive the free money. Some states provide students with a grant if parents open a 529 savings plan. Other states offer matching contributions. For example, if a parent invests $100, the state will provide another $100. 

A 529 Savings Plan is the preferred investment account for college because of its tax benefits: Investments grow tax-free and withdrawals are not taxed if they're used for higher education. These 529 Savings Plans typically allow you to invest in stocks or bonds, and contrary to popular belief they have little impact on how much financial aid your family qualifies for, as they only reduce your aid eligibility by only 5.64%.

State initiatives that give parents grants or matching contributions for college savings accounts (CSAs) are intended to help low-to-moderate income children and first-generation college students start saving for college early.

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CSAs help parents and children by providing them with actual money towards college, plus they send a message to children that the city and state believe in their potential to attend college, says Shira Markoff, a policy fellow at Prosperity Now.

While most states provide a small amount of money to parents in these CSAs, research has shown that even a small investment can have a big impact on low-to-medium income children. Children with a CSA that had less than $500 were three times more likely to enroll in college and more than four and half times more likely to graduate from high school than those with no CSA at all.

Other emerging research on CSAs is promising too. One ongoing study found that parents who received $1,000 in a CSA had higher expectations for their child to attend college and had been more proactive about preparing for their child's college education by saving more for college or seeking out resources to understand financial aid, says Markoff.

Many of the state programs have income and age requirements for eligibility and most states require that parents open an account before they can receive grant money. However, some programs, like NYC Kids Rise or Pennsylvania Keystone Scholars will automatically deposit money into an account for your child.

There are only a few states and cities that offer these CSAs, but parents might be surprised to discover they're eligible to receive anywhere from $50 to thousands of dollars. Below, Select looks at the different states offering grants and matching contributions for CSAs and their eligibility criteria.

States and cities providing free money for college


Program: ScholarShare529

How much you'll earn: New beneficiaries will receive up to $200 in matching contributions. If you set up  automatic contributions of at least $25 each month, you'll receive an additional $25. 

Age limit: Child must be 14 years or younger on 12/31/2021

Income restriction: $75,000 annual adjusted gross income


Program: CollegeInvest Direct Portfolio, CollegeInvest Stable Value Plus, CollegeInvest Smart Choice, CollegeInvest Scholars Choice

How much you'll earn: Through the CollegeInvest Matching Grant Program, account owners will receive up to $1,000 in matching funds each year for up to 5 years for a total of $5,000.

Age limit: Must be 8 years old or younger at the time of application

Income restriction: The program has annual adjusted gross income limitations depending on the household size. For example, a household of four people must have an AGI of less than $159,000.


Program: Connecticut Higher Education Trust (CHET) and CHET Advisor 529 Plan

How much you'll earn: By opening a CHET account, you'll automatically receive $100 through the CHET Baby Scholars program.

Age limit: Babies must be less than one year old. For adopted children, they must have not reached their one year adoption anniversary.

Income restriction: None


Program: Learning Quest, Learning Quest Advisor

How much you'll earn: The K.I.D.S. Matching Grant Program will match up to the first $600 of your contribution with a minimum contribution of $100. The program is limited to 1,200 participants or 300 people each from the four congressional districts in Kansas.

Age limit: None

Income restriction: For low-income residents making below 200% of the federal poverty level.


Program: START Saving Program

How much you'll earn: State will match up to 14% of your deposits every year with Earning Enhancements.

Age limit: None

Income restriction: Your Earning Enhancement Rate depends on your income level.


Program: U.FUND College Investing Plan

How much you'll earn: Through the BabySteps Savings Plan, beneficiaries will get $50 when they open an account.

Age limit: The child must be born or adopted after January 1, 2020.

Income restriction: None


Program: Maryland College Investment Plan

How much you'll earn: Depending on your annual income, you're eligible for either $250 or $500 if you make a minimum contribution (which also varies by income level) of either $25, $100 or $250. Beneficiaries are eligible for two state contributions a year, but they are not guaranteed.

Age limit: None

Income restriction: The minimum contribution and state contribution depends on your annual income. For joint filers, your annual income must be less than $175,000 and for individual filers, your annual income must be less than $112,500.


Program: NextGen 529 Direct Series and NextGen 529 Select Series

How much you'll earn: You'll get matching contributions when you open the account, set up automatic contributions and make them every year. When you open the account and add $25, you'll get a $100 grant. After you've set up and made six consecutive automatic contributions (must be made at least quarterly), you'll get another $100. And lastly, if you make contributions each year, you'll get a 30% matching grant of up to $300. For example, if you contribute $600 a year, you'll get $180 and if you contribute $1,000, you'll get $300. 

For children born after January 1, 2013, they can receive the Alfond Grant — a $500 grant for college.

Age limit: None

Income restriction: None


Program: SSGA Upromise 529 Plan

How much you'll earn: Through the Silver State Matching Grant, you'll earn up to $300 in matching grants per year for up to five years for a total of $1,500.

Age limit: The beneficiary is 13 or younger as of December 31 of that year

Income restriction: Household income is less than $74,999

New York City

Program: NY'S 529 College Savings Direct Plan, Amalgamated Save for College Bank Account

How much you'll earn: NYC Kids Rise will automatically give you $100 for opening a NY Scholarship account. If you activate the account, you'll get $25. Afterwards, if you open a college savings account, you'll receive another $25, and after making a $5 deposit in your account, you'll receive an additional $25. Lastly, the program will match contributions, made between first and fifth grade, up to $100. In total, you're eligible for $300 from the program.

Age limit and restrictions: Available to kindergartners enrolled in an NYC public school (and participating charter schools)

*Note: this not available to all New York State residents

North Dakota

Program: College SAVE

How much you'll earn: With the baby match, you'll get a $200 match. For the Kindergarten Kickoff Match, you'll get a $100 match. The BND match is $300.

Age limit: For the baby match, your child needs to be less than one year old. For the Kindergarten Kickoff Match, your child must be less than 7 years old. For the BND match, the child must be less than 15 years old.

Income restriction: For the BND match for joint-filers, your annual adjusted gross income must be below $120,000 and for single-filers, less than $80,000. There are no income requirements for the Kindergarten Kickoff Match or the Baby Match.


Program: Oregon College Savings Plan

How much you'll earn: Through the Baby Grad Program, you'll receive a one-time contribution of $25. For the Kinder Grad Program, you'll also receive a one-time contribution of $25. Through the Oregon Scholars program, beneficiaries will receive matching funds if they attend partner schools such as Willamette University or Linfield University.

Age limit: For the Baby Grad Program, your baby must be under one year old. For the Kinder Grad Program, the child must be five or six years old.

Income restriction: None


Program: PA 529 Guaranteed Savings Plan (GSP), PA 529 Investment Plan (IP)

How much you'll earn: Through Keystone Scholars, beneficiaries will receive a starter deposit of $100.

Age limit: Babies must be born after December 31, 2018.

Income restriction: None

Rhode Island

Program: College Bound Saver

How much you'll earn: CollegeBoundbaby offers a $100 grant to babies born or adopted in Rhode Island between January 1, 2015 and June 30, 2021.

Age limit: Available to children born to or adopted by Rhode Island families between January 1, 2015 and June 30, 2021. However, in order to receive the grant, the child must be younger than one year old.

Income restriction: None


Program: TNStars College Savings

How much you'll earn: Through the Tennessee Investments Preparing Scholars (TIPS) program, you can receive $100 for every $25 you can contribute each year. Beneficiaries can receive a match of up to $500 per year so in order to max it out, you'll have to contribute $125 per year. The lifetime maximum match is $1,500.

Age limit: Children must be 14 years old or younger.

Income restriction: For low-income families so it depends on your annual adjusted gross income.

West Virginia

Program: SMART529 WV Direct, SMART529 Select

How much you'll earn: Through the Bright Babies Program, babies will receive a $100 contribution.

Age limit: Any baby younger than one year old.

Income restriction: None

Other ways to invest for college

If you don't live in one of the above states, there are still other options to open up a 529 account for your child. In fact, you're not limited to your own state's plan, meaning you can shop around for a 529 account that offers the lowest fees and best investment choices. That said, you must be a resident of the state to qualify for the above grants or matching contributions.

And remember, robo-advisors like Wealthfront also offers the option to open a 529 savings plan for your kid(s). Robo-advisors will create a custom portfolio based on your investment timeline and risk level and will automatically adjust your investments as the market changes.

Catch up on Select's in-depth coverage of personal financetech and toolswellness and more, and follow us on FacebookInstagram and Twitter to stay up to date.

Correction: The article has been updated to reflect that Wealthfront offers a 529 savings plan. A previous version of the article incorrectly stated that Betterment has a 529 savings plan.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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