Parents are saving more for college, and the data shows it. Total assets in 529 college savings plans jumped from $388 billion in 2022 to over $525 billion by early 2025, according to CSPN and ISS Market Intelligence.

What’s behind this sharp rise? Experts point to a change made under the SECURE 2.0 Act: families can now move up to $35,000 in unused 529 funds into a Roth IRA for the beneficiary. Plus, the market overall has had great performance over the last few years.

This change solved one of the biggest fears families had when contributing to a 529: how to avoid the 529 plan penalty if the money goes unused? Now, instead of pulling funds and facing taxes or penalties, families can repurpose leftover money to help a child start retirement savings early.

It’s a powerful incentive that’s changing how families approach long-term financial planning.

From College To Retirement

Under the SECURE 2.0 Act, if a 529 account has been open for at least 15 years, families can transfer up to $35,000 in unused funds into a Roth IRA for the same beneficiary. The rollover is tax- and penalty-free, but annual contribution limits still apply. This allows families to spread the conversion over several years, using what would have been idle college funds to build early retirement wealth.

The rule change builds on the existing flexibility of 529 plans, which already allow use for tuition, room and board, books, and even K–12 education expenses. Now, with Roth 529 plan rollovers in the mix, 529s offer a bridge between two of the most expensive life stages: college and retirement.

While the Roth benefit is capped, the policy is sparking interest among families who want their money to do more than just sit until college bills come due.

Long Term Savings

The SECURE 2.0 Roth rollover rule isn’t the only reason for the surge. Other factors include:

• Growing account sizes: As of the end of 2024, the average 529 account held over $30,900, up from just $13,188 in 2009 .
• Automatic contributions: 38% of 529 accounts now receive automatic deposits, reinforcing long-term savings habits.
• Expanded use cases: Families can now use 529s to fund vocational programs, registered apprenticeships, and certain workforce credentials.

There’s also been a steady increase in public awareness. On platforms like TikTok and Instagram, influencers and financial educators have been sharing how 529 plans work, how they fit into a broader savings strategy, and how the new Roth rules give them more utility.

The increased attention is particularly helping middle-income families, who may have avoided 529s in the past due to misunderstandings around financial aid eligibility. Updated FAFSA rules have also removed certain penalties for grandparent-owned 529 accounts, further improving the appeal for other family members to contribute.

More Growth Ahead

With net inflows reaching $2.2 billion in Q1 2025, up from $1.6 billion in Q1 2023, the trend shows no signs of slowing. Federal lawmakers and state administrators are discussing ways to build on the program’s momentum, including proposals that would further expand 529 plan qualified expenses in the Big Beautiful Bill.

Some proposals under consideration would also simplify the financial aid treatment of student-owned 529s, aiming to remove one of the last remaining policy barriers that discourages some families from opening an account.

If momentum continues, 529s could become a common tool not just for college savings but for launching early retirement plans. That dual purpose could lead to more automated saving, more state-level promotions, and more widespread use.

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