Let’s bring education within reach.
Saving for education
Explore the price of education today, the ways you can pay and the power of the 529 plan.
Education costs
Education opens doors. We’re here to help you navigate costs.
Planning for education—whether for yourself or someone else—can feel overwhelming. Many people feel discouraged by the costs and may even wonder if it’s worth it.
While we can’t know what’s right for you, we do know that having a college education really can make a financial difference for the future.
People who attend college generally earn more1 and are less likely to be unemployed.2
College-goers also age more slowly and live longer.3
79%
People with a college degree earn 79% more, on average, than those without a degree.1
59%
In 2024, high school graduates had a 59% higher unemployment rate than college graduates.2
Paying for higher education can feel daunting, especially when you look at tuition prices.
Private k-12 education
$13,3024
Community college in-state
$4,9505
4-year public college in-state
$11,6106
4-year public college out-of-state
$28,3867
4-year private college
$43,3508
Master’s degree
But while the costs may seem high, most students don’t pay the full tuition price.
83%
In the 2023-2024 school year, 83% of students received discounts on tuition.10
42%
Students who received assistance paid only 42% of the full tuition price, on average.10
Ways to pay
How American families pay for college.11
Families use a combination of sources to pay for college. And despite the popular notion that grants and scholarships are rare, many families receive some kind of aid they don’t need to repay.
There’s no single method of paying for higher education. You have options.
529 plans and savings accounts can help you build funds.
Starting early to save for college can reduce your reliance on loans and potentially save you money later on. We’ll touch on 529s again in the next section.
Loans help cover what your savings can’t.
Money you borrow will be paid back with interest. Federal loans—which you qualify for through the Free Application for Federal Student Aid (FAFSA)— tend to have lower interest rates than private loans. Both are long-term commitments, so compare your options.
Grants, like scholarships and tuition assistance, can provide a valuable boost.
These types of financial aid can be game changers, but you likely won’t know what you can apply for until you’re closer to enrollment—which can make it harder to factor them into your plan.
Gifts can help close any remaining gaps.
Some students receive gifts from family and friends—it’s the least common way to pay for education, but if you have access, a gift of tuition can be a wonderful thing.
Meet the 529
Whether it’s for kindergarten or college, a 529 plan can help you save.
A 529 plan is an investment account designed specifically for education-related expenses. By providing unique tax benefits, they can make big aspirations—and savings goals—easier to achieve.
529 plans stand out because of their unique tax advantages.
Unlike other investment accounts or student loans, 529 plans provide state and federal tax benefits.
Saving in a 529 can net you a state income tax deduction.
Your contributions to a 529 may be state tax-deductible, which can reduce how much you owe in taxes. Your savings will depend on the state your 529 plan is based in.
Then, the funds in your plan grow tax-deferred.
Your contributions are invested, and you won't pay taxes as your earnings increase.
Finally, you can withdraw earnings tax-free.
The earnings accrued in your 529 account can be withdrawn tax-free at the state and federal level, as long as they are put toward qualified education expenses.
The benefits go beyond tax breaks.
It works for more than just college.
You can use 529 plans to save for qualified K-12 expenses, college, graduate school, certified apprenticeship programs and even some schools abroad.12
And you can use it for more than just tuition
Pay for tuition, computers, textbooks, room and board or off-campus rent, and other required expenses. You can even repay up to $10,000 in student loans.12
Plans are available across the country.
Most states sponsor their own 529 plan, and most allow you to invest in theirs even if you’re not a resident. Each state plan has different features (tax benefits, fees, etc.) so it’s worth shopping around.
Here’s how a 529 plan works.
The first step is opening an account.
Almost anyone can open one—friends, grandparents, relatives. When you open your account, you’ll name a beneficiary—the person receiving the money. It can be anyone, even yourself.
Some state tax benefits carry.
Some states offer “tax-parity,” meaning you can receive a tax deduction for contributions to any state's 529 program.
Next, you’ll fund the account.
Anyone can contribute to a 529 account, so, for example, you can open an account for a child, and their grandparents, other relatives and friends can contribute to that account.
No annual contribution limits.
Unlike other tax-advantaged savings plans, a 529 has no annual contribution limits. (Most states have a maximum account contribution limit.)
Then, you’ll choose investments.
Each 529 plan offers various investment choices. You may be able to select enrollment-year or age-based portfolios that automatically adjust as your student approaches college age, or choose your own investments.
State investment menus vary.
Before opening an account review your choices to make sure the available investments work for your goals and the amount of risk you’re comfortable taking.
When you’re ready, you’ll withdraw.
When you’re ready, you can make tax-free withdrawals to pay for qualified costs like tuition, books, room and board, and computer equipment. You can request the money online or by phone, and the funds can be sent to you, the student or the school.
No withdrawal limits.
There’s no limit to how much you can take out of a 529 each year.
Put anything extra to good use.
If you still have money in your 529 account after you’ve paid for education, you have options. You can change the beneficiary to an eligible family member, convert it to a Roth IRA (with certain restrictions), or even keep it for future generations. Your investment continues to grow tax-free until you need it.
No withdrawal deadline.
You can always leave your money in your 529 account to use later.
Questions? We’ve got answers.
Which state has the best 529 plan?
Each state’s 529 plan is different. There isn’t a single “best,” but there may be plans that are more likely to help you reach your education saving goals. Here are some things to consider.
- State tax benefits. Many states offer tax benefits for contributing to their own 529 plans, like state income tax deductions or credits. Before going out-of-state look at your own state's plan first and see what benefits it might offer. Keep in mind that if you live in a state with no income tax, there's no benefit to a state tax deduction.
- Fees and expenses. Compare the fees and expenses associated with different 529 plans, as these can have a significant impact on your account balance. For example, an out-of-state plan with lower fees may be better than an in-state plan with high fees, even if you get a state tax deduction from the in-state plan.
- Investment options. If choosing your own investments is important to you, look at the options different plans offer. Some plans offer age-based or enrollment-year portfolios that automatically adjust as your child approaches college age, while others allow you to choose from a variety of individual investment options. In general, look for investment menus that have a lot of variety. You can also compare the historical performance of various investment options.
- Contribution limits and restrictions. Most plans have lifetime contribution limits and others require a minimum investment to open the account.
What if we’re not sure about college?
We can’t always predict where the journey will lead. Thankfully, 529s can be used for a range of other educational expenses beyond just college, like a trade school or apprenticeships that are certified with the Secretary of Labor under the National Apprenticeship Act.
Plus, with a 529, you’re never locked in. You can update the beneficiary to another eligible beneficiary, roll those funds into a Roth IRA, or simply withdraw the funds at any time (though you will pay a 10% penalty if you use the money for non-eligible expenses.)
Can I use a 529 for multiple children?
You can, but there’s no cost associated with opening more than one account so it’s easy to open a different account for each child. And each individual child could have multiple accounts owned by different account owners (e.g., Grandma opened an account for Anthony, and Dad opened an account for Anthony, so there can be two accounts with Anthony as the beneficiary.)
You might do this to align investment strategies with the time frame each child will begin using the funds. For example, an older child’s account could be more conservatively invested to help protect your contributions as they near college, whereas a younger child’s account might be invested to balance growth and income strategies during a longer time frame.
Multiple accounts can also aid in estate planning by ensuring that college funds are allocated appropriately to each beneficiary upon the death of the account owner. But if you’d like to stick to one account, you can shift the account to another eligible (a sibling is generally eligible) at any time.
Dive deeper: Learn more about 529 benefits.
Finding balance
It can be tempting to reduce your retirement savings to cover education costs.
Education can be expensive.
But tapping into your retirement savings or cutting back on contributions may create bigger challenges later. Remember, you can borrow for school—but not for retirement.
But your future matters.
If you don’t have a plan for yourself, it will fall to your children and relatives to support you down the line. Their opportunities matter—but your security matters most.
We’re here to help.
Striking a balance is essential. We can help you make it happen.
Make a plan that’s right for you.
According to Sallie Mae, about 21% of families dipped into their retirement funds during the 2021-2022 school year to help pay for their child’s tuition or school supplies.11 Making a plan that includes both education and retirement can help you avoid this trade-off.
Your plan will depend, in part, on how long you have to save.
If you’re just starting out, for example with a newborn or toddler...
This a great time to start saving early so you get all the benefits of compounding over time. Research costs, set a goal for saving, choose a vehicle for saving like a 529 plan and make regular contributions.
If you have a few years, for example a high school student...
Research the real costs of school so you (and the student) have realistic expectations about what you can afford and what the student can do to help. Ideally, you want a school that’s a good fit academically as well as financially.
If your student is already applying to schools...
Use a net price calculator to determine how much you might actually pay at a certain school. You may find that you qualify for more financial aid than you expected. Be sure to complete the FAFSA early and apply for scholarships and grants.
A word about loans.
Even with saving and other sources of aid, you may still need to take out loans. There's a lot of news about students saddled with education debt, but as long as it's not financially overwhelming, a loan may be the right decision for you.
Here are some things to think about.
Monthly loan repayments
How much will the monthly payment be, and how long will you need to pay it? A common rule of thumb is to keep monthly payments below 10% of your income the first year out of school.
Federal vs private loans
Different types of loans can come with very different terms, so be sure to read the fine print. Private loans tend to be more expensive than federal loans. And federal loans may have programs like income-driven repayment and loan forgiveness, which private lenders don’t have.
Your credit score
Student loan repayments do impact your credit score, which can have affect your financial footing for years to come. Before taking out a loan make sure to understand what will happen if you miss a payment or need to pause payments.
Start saving
Get guidance and resources for savers.
Whether you're planning ahead for education expenses or getting ready to enroll next year, we've got tools and tips to help you stay on track.
Explore 529 plans
Discover the benefits of a 529 plan, calculate potential savings, and get step-by-step guidance to help you make informed decisions.
Speak with a TIAA 529 consultant
If you would like help or have additional questions, schedule a free consultation to discuss your college savings goals.
Tune in to a webinar
Want to learn more about saving for school? Join a live or on-demand TIAA webinar designed to help you make confident financial choices: www.tiaa.org/webinars
1Source: TIAA Institute,
2Source: U.S. Bureau of Labor Statistics,
3Source: TIAA Institute,
4Source: College Transitions,
5Source: Community College Review,
6Source: Association of Public and Land Grant Universities,
7Source: Education Data Initiative,
8Source: College Board,
9Source: Best Colleges,
10Source: National Association of College and University Business Officers,
11Source: Sallie Mae,
12Some states do not fully conform with the federal laws regarding distributions for K-12, apprenticeship programs and student loan repayment. These distributions may be considered non-qualified and the earnings portion of the withdrawal subject to state income tax. In addition, non-conforming states offering a state income tax deduction for 529 plan contributions may impose a recapture. Limitations also apply. You should talk to a qualified professional about how tax provisions affect your circumstances.
The 529 college savings plans listed above are offered and administered by the issuing state. Please refer to the Plan Description prior to investing for its investment objectives, risks, charges and expenses and whether your home state offers tax or other benefits such as financial aid, scholarship funds, or protection from creditors for investing in its own 529 plan. Carefully read the Plan Description on each state's site or call the college savings plan for assistance. Investments in the TFI-managed 529 college savings plans are neither insured nor guaranteed and there is the risk of investment loss. Consult your legal or tax professional for tax advice. If funds aren't used for qualified education expenses, a 10% penalty tax on earnings (as well as federal and state income taxes) may apply.
TIAA-CREF Tuition Financing, Inc. (TFI) is the Plan Manager for several state 529 plans, and TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, is the distributor and underwriter for those plans.
This material is for informational or educational purposes only and is not fiduciary investment advice, or a securities, investment strategy, or insurance product recommendation. This material does not consider an individual’s own objectives or circumstances which should be the basis of any investment decision.