Maryland - Saving For College Report

We discuss the tax benefits, trends, do's and don'ts and various plan options of setting up a 529 college savings plan in Maryland

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As parents, grandparents and students we know college is coming and that we're somehow going to have to pay for it someday. Fortunately we have many options available to us including savings bonds, the stock market and 529 plans. Starting a 529 account now is always the best option, no matter how old you (or your child) is. While playing the stock market may yield higher returns on your investment, placing your money into a 529 plan allows it to grow in a tax free environment. One study even found that when the federal tax benefits were taken into consideration, 529 plans outperformed their benchmarks in every category.

Maryland has it's own state-operated 529 plan called Maryland529. It is important to note that your child does not have to go to a MD college or university in order to use this savings account. 529 plan funds can be used at any accredited college or university across the nation, including some K-12 private schools!

Maryland College Costs & Trends

Colleges and universities across the United States experienced increased operating costs of 2.5% in 2019. This most recent inflation figure was down slightly from the 2.9 percent increase in 2018 and 3.4 percent increase in 2017. These costs are forwarded directly to students in the form of higher tuition and living expenses. As these costs steadily rise every year, parents are looking for ways to help offset these future higher education costs.

These rising costs are hitting closer to home in Maryland as well. Maryland's' higher education costs rose by 12.8% in just the last 10 years, ranking as the 47th highest state.

The table below shows the average one-year costs in 2020 for different types of MD colleges and universities.

OwnershipDegreeSchoolsPublic Out-of-State TuitionPublic In-State TuitionMedian DebtTotal Annual In-State Cost
Public 4 year 14 $21,119 $9,339 $21,876 $17,152
Public 2 year 16 $8,632 $3,824 $10,318 $8,401
Private 4 year 22 $34,929 $34,929 $25,287 $25,210
Private 2 year 33 $0 $0 $9,980 $18,099

These costs rise every year. Rising tuition is a major driver in these increased higher education costs. Tuition at a 4-year university in MD rose 16% (ranked 26th worst in the US), while a 2-year or trade school increased their tuition by 16 percent.

529 Tax Benefits for Maryland Residents

Maryland offers tax benefits and deductions when savings are put into your child's 529 savings plan.

For single filers:$2,500/yr per beneficiary
For joint filers:$5,000/yr per beneficiary

Best 529 Plans in Maryland

Maryland offers one direct-sold 529 college savings plan and a prepaid tuition program. The savings program is managed by T. Rowe Price and offers age-based and static options using T. Rowe Price mutual funds. Enrollment in the prepaid tuition program is open to account holders or beneficiaries who are residents of Maryland or the District of Columbia at the time of enrollment.

State Plan Name:Maryland529
Minimum Contribution:$250
Maximum Contribution:up to $350,000 per beneficiary, across accounts
Fees:No enrollment or account maintenance fees; 0.26% to 0.74% in asset-based fees, depending on your portfolio; 0.05% Trust Fee

Maryland 529 Plan Statistics

There are 296,341 registered in Maryland with a total value of $7,433,973,523. That is an average of $25,086 per account. Unfortunately 529 plans are not widely used... a 2018 study by Edward Jones found that only 29 percent of Americans were even aware that 529 savings plans exist!

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