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College cost reality check (2026 numbers)

According to the College Board's Trends in College Pricing 2025, published tuition and fees for 2025-26 average $11,950 at an in-state public four-year college, $31,880 for out-of-state students there, and $45,000 at a private nonprofit four-year college. Counting room, board, books and other costs, the Department of Education's NCES put the 2022-23 average total cost for a first-time student living on campus at $27,100 a year at a public four-year college and $58,600 at a private nonprofit one.

Over a four-year degree, that's roughly $108,000 at a public college and $234,000 at a private nonprofit one, in 2022-23 prices. Published tuition rose 2.9% (public in-state) and 4.0% (private nonprofit) from 2024-25 to 2025-26. Projecting forward 18 years at an assumed 4% a year, a $100K degree today would cost about $203K when a newborn today reaches college age.

Net price (after grants and scholarships) is significantly lower for most families. After grant aid, the College Board estimates first-time full-time students paid about $2,300 in net tuition and fees at public four-year colleges in 2025-26, and $16,910 at private nonprofits, before room and board. Aim to fund net price, not sticker, using the school's net price calculator (every college taking federal student aid must post one) gives a much more realistic target.

The state tax deduction game

529 plans get federal tax-free growth on any qualified withdrawal, but the state tax deduction is where the real boost lives. Around 35 states (as of 2026) offer some form of state income tax deduction or credit for 529 contributions. New York offers up to $10,000 deduction ($5,000 single) for residents using NY's plan. Oregon offers a tax credit (better than a deduction). Illinois offers $10,000/$20,000 deduction. Indiana offers a 20% tax credit on up to $7,500 contributed, effectively $1,500 in free state money each year.

A handful of states (Arizona, Arkansas, Kansas, Maine, Minnesota, Missouri, Montana, Pennsylvania) offer "tax parity", you can contribute to ANY state's 529 and still get the home-state deduction. Most states require using their in-state plan. Florida, Texas, Washington, and other no-income-tax states don't have a deduction either way, feel free to shop for the best plan based on fees and investment options.

The fee difference between the best and worst plans can be significant. Top plans (Utah, New York, Nevada Vanguard, Indiana) have all-in expense ratios under 0.20%. The worst can exceed 1.5% annually. Over 18 years, a 1% fee difference on $300/month contributions reduces the final balance by about $15,000-$20,000. Morningstar's 529 plan ratings are a good starting point for evaluating options.

Smart 529 strategies

• Start at birth (or sooner): An 18-year runway with $250/month at an assumed 7% return becomes about $105,000. Wait until 12 and you need about $1,200/month for the same target. Time is the most valuable input.
• Use age-based portfolios: Most 529 plans offer "target-date" tracks that automatically shift from aggressive (90% stocks at age 0) to conservative (20% stocks at age 18). Reduces sequence-of-returns risk near college start.
• Superfund early: 2026 annual gift exclusion is $19,000 ($38,000 for married couples). 529s allow "5-year forward gifting", contribute $95,000 in one year ($190,000 for a couple splitting gifts) without gift tax, by electing on Form 709 to spread it over five years. The earlier this lump sum compounds, the larger the result.
• SECURE 2.0 Roth rollover (after 15 years): Starting 2024, unused 529 funds can be rolled to a Roth IRA in the beneficiary's name (up to $35,000 lifetime, subject to annual contribution limits). This solves the "what if my kid doesn't go to college" risk for moderate balances.
• Don't overfund: A 529 balance exceeding likely college costs creates a non-qualified withdrawal problem (income tax + 10% penalty on growth). Aim to fund ~70-80% of expected costs; cash flow or financial aid can cover the rest.
• Watch financial aid impact: 529 owned by parents counts as parental asset (5.64% reduction in aid eligibility per the FAFSA Simplification Act formula). 529 owned by grandparents (since 2024 FAFSA changes) no longer counts as student income on distributions, making grandparent ownership newly attractive.

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