529 vs Brokerage vs Student Loan Calculator
Where should this monthly money go — a 529 plan, a taxable brokerage, or paying down student loans? This engine projects the future value of each path by tax treatment, expected return, and the loan rate.
Your decision
Fund a 529 plan. Over 12 years, $400/mo grows to about $86,940 in a 529, $85,036 after-tax in a brokerage, or $86,908 of value by paying off 6.50% loans.
Recommended path
GoodFund a 529 plan
Highest value given tax treatment, returns, the loan rate, and your flexibility need.
529 future value
$86,940
tax-free for education
Growth plus the state tax benefit on contributions.
Brokerage (after tax)
$85,036
fully flexible
After capital-gains tax on the gains.
Loan payoff value
$86,908
6.50% guaranteed
Equivalent value of avoiding loan interest.
Ranked options
#1Fund a 529 plan
Tax-free growth for education + 5.00% state benefit on contributions.
Confidence: MediumEffort: LowRisk: Low#2Pay down student loans
Guaranteed 6.50% return by avoiding interest.
Confidence: MediumEffort: LowRisk: Low#3Taxable brokerage
Fully flexible, but gains are taxed.
Confidence: MediumEffort: LowRisk: Medium
Watch-outs
- • 529 funds used for non-qualified expenses owe income tax plus a 10% penalty on earnings. Recent rules allow rolling some unused 529 money into a Roth IRA, but limits apply.
- • Estimates only, not financial advice. Returns are assumptions; the 529 advantage depends on actually using the money for qualified education.
Assumptions used
- Monthly contribution
- $400
- Years until college
- 12
- 529 return
- 6.00%
- Brokerage return
- 7.00%
- Student loan APR
- 6.50%
- Flexibility preference
- medium
Estimates based on your assumptions above — roughly indicative, not financial, tax, or legal advice.
Why this matters
The right home for college money depends on three things: the tax benefit (529s grow tax-free for education and often carry a state deduction), your after-tax investment return, and the rate on any student debt. Paying off a 6%+ loan is a guaranteed return that a taxable brokerage often can't beat after tax.
Frequently asked questions
This tool produces estimates based on the assumptions you enter. It is not financial, tax, or legal advice. Actual rates, fees, and outcomes depend on your lender, account terms, and approval.