College has gotten expensive. The average cost of tuition for a public college was $9,834 in the 2022-2023 school year and $40,713 for a private nonprofit college, according to the Department of Education.
As the cost of college has increased, so has the usage of 529 plans — tax-advantaged investment accounts used to pay for education expenses. In 2008, the value of all 529 plans was $105 billion. By the end of 2024, that amount roughly quintupled to $525 billion, according to the Investment Company Institute and the College Savings Plan Network.
The Motley Fool has compiled key 529 plan statistics to see just how popular these accounts have become and how much parents are relying on them to fund their children’s higher education.
529 plan basics
Here are the basics of a 529 plan:
- They are funded with after-tax dollars, but gains are tax-free, and withdrawals for qualified educational purposes are not taxed.
- Initially designed solely for paying for higher education, they can now be used for a variety of education expenses.
- 529 plans are state-sponsored, although investing in a plan run by one's state of residence is not required. Investors are free to choose any state's plan, although some states offer incentives for residents.
- There are two types of 529 plans for those who intend to use the account to pay for college: prepaid tuition plans and savings plans.
- Prepaid tuition plans allow the funder to pay tuition at a specific college or university system in advance, which can be beneficial if tuition costs are expected to increase by the time the beneficiary attends the school.
- Savings plans allow the funder to invest in various funds and offer greater flexibility in how those funds are ultimately used.
For a deeper dive into how 529 plans work, check out The Motley Fool’s explainer.
Average 529 college savings plan contribution
The average tuition paid by a 529 plan is $3,225, about 10% of the overall cost of attendance, according to Sallie Mae.
That’s slightly less than the value of borrowed contributions from both parents and students, which includes loans, and about a quarter of the value that parents contribute via other non-borrowed means, like savings or other investments.
Average 529 college savings plan contribution by income
529 plan contributions vary significantly by income, with higher-income households contributing much more to their children’s education through them than lower-income households.
Among households that make less than $50,000, the average 529 plan contribution is $1,551, or 6% of the total cost of attendance. That jumps to $4,823 for families that make between $100,000 and $150,000 and makes an even larger leap to $7,726, 21% of the total cost of attendance, among families that make over $150,000.
Average 529 college savings plan contribution by race and ethnicity
The average 529 plan contribution by race and ethnicity tracks somewhat with how stock ownership is distributed.
White households contribute $3,907, 12% of the cost of attendance, and above the overall average 529 contribution.
Black and Hispanic households both make below-average contributions. Black households contribute $2,604, about 10% of the cost of attendance, while Hispanic households contribute $1,847, or 7% of the cost of attendance. That’s despite parents in Hispanic households contributing more than white households via nonborrowed sources (which includes 529 plans) overall, and Black households being mostly on par with white households in that category.
Average 529 college savings plan contribution by college type
The largest 529 contributions are made to four-year private institutions, which are also the most expensive to attend. The average 529 contribution for students attending that type of school is $3,678, which is 8% of the total cost of attendance. The average 529 contribution for a four-year public college is $ 3,493, which is 12% of the total cost of attendance for that type of school.
529 college savings plans: total assets, accounts, and average balance by year
Total assets invested in 529 plans have skyrocketed from $105 billion in 2008 to $525 billion in 2024. The average account value has grown as well, from $9,500 to $30,900. That’s occurred despite total accounts increasing from 9.6 million in 2009 to nearly 17 million in 2024.
The growth in assets and accounts shows that not only is the popularity of 529 plans growing, but families are opting to increase their contributions as well. That could be driven by a number of factors: the rising cost of education, confidence in the performance of 529 plans, or more disposable income to invest in 529 plans among the families that opt to do so.
529 college savings plan statistics: prepaid versus savings plan assets, accounts, and average assets
Ninety-five percent of all 529 accounts are savings plan accounts. 529 savings accounts are invested in portfolios of mutual funds, bond funds, and exchange-traded funds. They can be used for a variety of educational expenses.
The remaining 5% of assets and accounts are in prepaid tuition plans, which are used to pay for tuition prior to the beneficiary attending college. Those accounts come with more limitations on how the funds can be spent.
529 savings plans have become more popular over time. In 2008, 85% of 529 accounts were savings plans and 15% were prepaid tuition accounts. That year, 79% of 529 assets were invested in savings accounts, while the remaining 21% were in prepaid tuition accounts.
529 college savings plans by state: assets, accounts, and average balance
Virginia’s 529 plans are the most popular in the nation, with about 3.2 million active accounts. They also lead the country in assets under management (AUM), with around $117 billion invested.
Virginia manages three 529 accounts: Virginia CollegeAmerica, Virginia Prepaid, and Virginia Invest. The Virginia CollegeAmerica plan is the most popular 529 plan in the country, with 2.6 million open accounts, and has the largest AUM, with roughly $104 million invested.
New York, Nevada, New Hampshire, and Utah round out the top five states by AUM in 529 plans. In terms of 529 accounts, plans managed by Virginia along with New York, New Hampshire, Nevada, and Ohio make up the top five.
Getting started with a 529 plan
Picking a 529 plan can be overwhelming. Over 100 are offered, and most states have more than one plan to pick from.
Thankfully, The Motley Fool has put together a list of the best 529 plans for different situations, including for those looking to make relatively small contributions, those looking for the largest returns, or those looking for the most diversified fund.
Opening a 529 plan is a great way to begin preparing to financially support your child’s educational future, and with careful consideration, you can find the plan that best fits your needs.
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