What Does College Actually Cost in 2026?
Four years at a public in-state university averages $92,000 in tuition and fees alone, according to the College Board's 2025 Trends in College Pricing report. Add room and board and you're looking at $112,000. Out-of-state public schools run $144,000. Private universities: $228,000. These numbers are already outdated by the time you read them—tuition rises every year.
The real killer is tuition inflation. College costs have grown at roughly 5% annually over the past two decades, roughly double the general inflation rate. A degree that costs $23,000/year today will cost $37,500/year in 10 years and $61,000/year in 20 years at that pace. Planning with today's prices guarantees a shortfall.
Average Annual College Costs (2025–2026)
| School Type | Tuition & Fees | Room & Board | Total / Year |
|---|---|---|---|
| Public In-State | $11,300 | $12,000 | $23,300 |
| Public Out-of-State | $23,600 | $12,400 | $36,000 |
| Private Non-Profit | $43,400 | $13,600 | $57,000 |
Source: College Board, Trends in College Pricing 2025. These figures include tuition, mandatory fees, room, and board but exclude books, supplies, transportation, and personal expenses—add another $3,000–$5,000/year for those.
How 529 Plans Work
A 529 plan is a tax-advantaged investment account designed specifically for education expenses. Contributions grow tax-free, and withdrawals are tax-free when used for qualified education costs including tuition, room and board, books, computers, and even K–12 tuition up to $10,000/year. Every state offers at least one 529 plan, and you can use any state's plan regardless of where you live or where your child attends school.
Many states offer a state income tax deduction for 529 contributions. In New York, married couples can deduct up to $10,000/year. In Illinois, it's $20,000. There's no federal income tax deduction, but the tax-free growth is the real benefit. At a 7% average return, $400/month over 18 years grows to roughly $173,000—of which $86,400 is your money and $86,600 is tax-free investment growth.
The 2025 contribution limit is technically set by each state but generally ranges from $235,000 to $550,000 in total lifetime contributions per beneficiary. Annual contributions above $18,000 ($36,000 for married couples) may trigger gift tax reporting, but a special 529 rule lets you front-load up to five years of gifts—$90,000 at once—without gift tax consequences.
New: 529-to-Roth IRA Rollover Rules (SECURE 2.0)
Starting in 2024, the SECURE 2.0 Act allows unused 529 funds to be rolled into a Roth IRA for the beneficiary. The rules: the 529 account must be open for at least 15 years, the rollover is limited to $35,000 lifetime, and annual rollovers are subject to Roth IRA contribution limits ($7,000 in 2025). Contributions made in the prior 5 years and their earnings are ineligible.
This eliminates the biggest concern parents had about 529 plans: “what if my kid doesn't go to college?” Now excess funds become retirement savings. Even if your child earns a full scholarship, the money isn't trapped. Use this as a reason to save aggressively—overfunding a 529 is no longer a mistake.
Monthly Savings Targets by Child's Age
| Child's Age | Public In-State | Public Out-of-State | Private |
|---|---|---|---|
| Newborn | $280/mo | $430/mo | $680/mo |
| Age 5 | $400/mo | $620/mo | $980/mo |
| Age 10 | $680/mo | $1,050/mo | $1,650/mo |
| Age 14 | $1,500/mo | $2,300/mo | $3,650/mo |
Assumes 7% annual return, 5% tuition inflation, 4 years of college, starting from $0 savings. Every year you delay roughly doubles the monthly amount needed. Starting when your child is born gives you 18 years of compounding—the single biggest advantage in college savings.
To model how your 529 contributions compound over time, use the compound interest calculator. For setting up a broader savings plan that includes college alongside other goals, try the savings goal calculator.