Here's how much you need to put in a 529 savings plan every month to send your kid to Oxford debt-free (2024)

FAQs

How much should I put in 529 per month? ›

Ideally, you should save at least $250 per month if you anticipate your child attending an in-state college (four years, public), $450 per month for an out-of-state public four-year college, and $550 per month for a private non-profit four-year college, from birth to college enrollment.

This chart shows that a monthly contribution of $100 will compound more if you start saving earlier, giving the money more time to grow. If you save $100 a month for 18 years, your ending balance could be $35,400. If you save $100 a month for 9 years, your ending balance could be about $13,900.

Tax savings still count

Still, it's likely to be worthwhile, according to O'Leary. “If your kid has just started college and you haven't opened a 529, even getting two or three years of potentially tax-free growth in the account can be helpful,” she says.

By superfunding your 529 plan with a lump-sum contribution of $50,000, in 18 years when your child is ready to enter college, your account balance will have increased to $120,331.

These plans are attractive for wealthy families because they provide a way for a parent or grandparent to transfer much more money to a child than they would be able to without incurring gift taxes, Stokes says. Here's how he suggests maxing out a 529.

529 college savings accounts are not just for young children -- you can open one at any time, even if your child is already in high school. Four years of saving $300 per month for college could lead to over $16,000 of savings.

Your 529 can be used for student loan repayment up to a $10,000 lifetime limit per individual. Up to $10,000 annually can be used toward K-12 tuition (per student). You can transfer the funds to another eligible beneficiary, such as another child, a grandchild, yourself or a friend.

Leave the account intact.

If your child is simply not sure about college or perhaps wants to delay applying, you can keep your 529 plan intact until the child does use it for qualified education expenses.

How much can we contribute to a 529 plan? (And what about gift taxes?) If you're a single filer, you can contribute up to the annual gift exclusion, currently $16,000 per year as of 2022, without incurring gift taxes. And if you're a married couple filing jointly, the amount jumps to $32,000 per year.

If a 529 still has leftover funds after all of the above options, and there really is no chance that it will be used for educational expenses, it is possible to go ahead and take a distribution from the account. A 10 percent penalty will apply and taxes will be paid on any earnings.

What percentage of Americans have a 529? ›

There are many different approaches to saving for college, but 529 plans are used by more Americans than any other option — 30% of Americans use a 529 plan. It's easy to see why, since there are many benefits to 529 plans.

However, some families face another problem – they saved too much money in a 529 college savings plan. It can be shocking that it's actually possible to save more money than is needed to pay for college education expenses. But it's more common than you might think.

A good starting point when saving for your children is setting aside 3% to 5% of your net monthly income. Let's say your household income is $6,000 after taxes, this works out to $180 to $300 per month. It doesn't seem like a lot, but every little helps, and could sit neatly within your budget.

And when you pull the funds out, as long as they're used for qualified higher education expenses, there's no federal income tax on the distribution and often no state income tax. 529 accounts also receive some favorable treatment for financial aid purposes, so they're really a great way to save for college education.