Enter the same college bill covered two ways — saved ahead in a 529 plan, or financed with student loans when the time comes. We compare the real out-of-pocket cost of each, after growth, fees, and tax benefits.
⚠ Estimates only, not financial advice — see the note below the results for details. US federal programs; state 529 benefits vary.
Save ahead of time; withdrawals for qualified education expenses are tax-free.
Pay nothing now; borrow the full cost when college starts and repay with interest after.
Each line already includes every adjustment above it — this isn't a list to add up. Compare using the bottom line only.
Estimates only, not financial advice. Both strategies are assumed to cover the same total college bill. The 529 side assumes tax-free growth on contributions; the growth itself isn't shown as a separate line because it's already reflected in needing fewer dollars contributed to reach the target. The loan side grosses up each year's borrowing so the amount that actually reaches the school still covers the full bill after the origination fee is withheld, and capitalizes interest until graduation before standard amortized repayment. The federal student loan interest deduction (up to $2,500/year) phases out between $85,000-$100,000 of modified adjusted gross income for single filers — it isn't available to everyone.
Student Loan vs 529 Savings takes the same total college bill and covers it two different ways, then runs each through four stages to estimate the real out-of-pocket cost of each strategy.
The 529 side is your monthly contribution during the years before college starts. The loan side is the monthly repayment amount once the standard amortized repayment period begins after graduation — different time windows, but both are the recurring cash outlay each strategy asks for.
529 contributions summed over your savings horizon. Loan repayments (principal plus interest) summed over the repayment term — already higher than the sticker price of college, since interest and the origination fee inflate what you actually pay back.
Many states let you deduct 529 contributions from state taxable income. This doesn't apply to student loan payments, so only the savings side changes here.
Student loan interest is partially deductible on federal taxes (up to $2,500/year, income-limited), which reduces the real cost of borrowing somewhat. Nothing changes on the savings side here, since there's no interest to deduct.
No. Student Loan vs 529 Savings gives a directional estimate to help you think through a decision, not a substitute for a financial advisor. 529 plan rules, state tax benefits, and loan terms vary by state and lender.
$631/month is the amount needed to grow, at a 6%/year return over 10 years, to exactly cover a 4-year, $25,850/year college bill ($103,400 total) by the time college starts — it's calculated to fully fund the target, not an arbitrary example. Change the savings horizon or college cost and this relationship shifts substantially: less time to save means a meaningfully higher required monthly contribution.
6.52% is the official federal Direct Loan rate for undergraduates for loans first disbursed between July 1, 2026 and June 30, 2027. 1.057% is the current federal origination fee, withheld from every disbursement per federal law. The $2,500 student loan interest deduction (IRC Section 221) remains unchanged for 2026, phasing out between $85,000-$100,000 of modified adjusted gross income for single filers ($175,000-$205,000 married filing jointly) — the 22% marginal tax rate default is just a placeholder for illustration.
Borrowing for something you could have saved for means paying interest on top of the sticker price, often for well over a decade once you count both the years in school and the standard repayment term. Saving ahead flips that dynamic — investment growth does some of the work for you instead of interest working against you. The gap narrows with a shorter savings horizon (less time for growth) or a longer, lower-rate loan, but saving ahead of time is mathematically favored in nearly every realistic scenario.
This tool shows what your entered contribution actually accumulates to versus the full college bill — if there's a shortfall, a note above the results will say so. Most families use some mix of savings, financial aid, and loans in practice; you can model a partial 529 plus a smaller loan by adjusting the "annual college cost" fields to represent just your portion of each strategy.
Your inputs are only used in your browser to calculate a result. If you use the "Copy shareable link" button, your inputs are encoded directly into that URL — nothing is stored on a server.
Rate/tax data: 2026