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College savings plans, also called 529s, are accounts specifically designed to help you save for education expenses in a tax-advantaged way. Here’s how it works:
That means you can use your full balance for expenses like tuition and fees, room and board, and books and supplies at any eligible public or private college, university, or vocational school anywhere in the U.S.
A 529 plan can also be used tax-free to cover certain tuition expenses at K–12 public, private, and religious schools.¹
Using a 529 can make it easier to save for the future with benefits designed to help you reach your unique savings goals.
1While distributions from 529 college savings plans for elementary or secondary education tuition expenses are federally tax-free, state tax treatment will vary and could include state income taxes assessed, the recapture of previously deducted amounts from state taxes, and/or state-level penalties. You should consult with a tax or legal advisor for additional information.
2Unlike a traditional bank account that offers Federal Deposit Insurance Corporation (FDIC) protection, investments in 529 plans are generally not guaranteed, and you could lose money, including your principal, by investing in them. There may be other material differences between savings accounts and 529 college savings plan accounts that should be considered prior to investing.
3This representation demonstrates the difference between hypothetical rate of returns in a bank account and a 529 college savings plan account, compounded monthly, but not between any two specific products. This example doesn't represent the return on any particular investment and these rates are not guaranteed.
4List of tax-parity states as of March 2021. If you have questions about your specific situation, please speak with a state tax professional.
5Any earnings are federally taxed when a nonqualified distribution is taken, and a 10% federal penalty may be applied. State taxes vary.
The T. Rowe Price College Savings Plan has been helping families save for college since 2001. This plan offers numerous advantages.
Any U.S. citizen or resident alien can open an account, as can trusts, corporations, and other organizations...
You can open an account with recurring contributions of $50 per month, or a minimum initial contribution of $250...
In just a few minutes, you can start saving for the future, giving your child the gift of opportunity.
Find a wide variety of T. Rowe Price investment products and services that were designed to help you reach your financial goals.
GoTuition is a trademark of T. Rowe Price Group, Inc.
6Morningstar analysts reviewed 62 plans for its 2021 ratings (10/267/21), of which 11 plans received a "Silver" rating. To determine a plan's rating, Morningstar's analysts organized their research around four key pillars: Process, People, Parent, and Price. Plans were then assigned forward-looking ratings of "Gold," "Silver," "Bronze," "Neutral," and "Negative." Each year, certain of the industry's smallest plans are not rated. Click here for additional information about Morningstar's methodology.
Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar analysts' current expectations about future events and, therefore, involve unknown risks and uncertainties that may cause Morningstar's expectations not to occur or to differ significantly from what was expected. Morningstar does not represent its Analyst Ratings to be guarantees.
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