This summer, some parents are writing their final college tuition check. Others are watching their children or grandchildren run through the backyard and wondering how they will one day pay for college.
The tool that has helped millions of families bridge that gap is reaching a milestone of its own: the 529 plan turns 30 this year. A 529 plan is a tax-advantaged savings account designed specifically for education expenses — one of several vehicles families have used over the years, and widely considered the most efficient.
Over the past three decades, 529 plan costs have fallen, investment options have improved, and the definition of qualified expenses has expanded well beyond traditional college tuition. You can now use 529 funds to pay for apprenticeships and vocational schools, and to study abroad. Recent legislative changes extended eligibility to workforce credential and training programs.
But the biggest advantage remains unchanged: the potential for tax-free growth.
For families in states that offer a tax deduction or credit for 529 contributions — including Oregon, Colorado, Arizona, and many others — the benefits are even more compelling. Contributing to your state’s plan may reduce your tax bill today while allowing for tax-free investment growth.
Consider this example: a parent contributes $3,000 per year from birth through age 18, for total contributions of $57,000. Using actual market returns from 2007 through 2025 and a typical age-based 529 investment approach, those contributions could have grown to over $120,000 — enough to cover the national average cost of four years at an in-state public university.
And if the account is not fully used for college, funds may be used for graduate school, transferred to another eligible family member, or, in certain cases, rolled into a Roth IRA.
A 529 plan won’t make college cheaper. But by sheltering growth from taxes, unlike a taxable brokerage account, it ensures more of what’s earned stays available for education. Thirty years in, a 529 plan remains one of the most effective moves a family can make for the next generation.
