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529 vs. savings account: which is better for college?
Spoiler: it's not close. Over 18 years, the difference between a 529 and a regular savings account can be the difference between covering tuition and not.
Lots of well-meaning parents start a 'college savings account' at their local bank, deposit $100 a month, and assume they're doing the right thing. They're doing a thing — just not the most powerful one.
The math
A high-yield savings account today earns somewhere between 0.5% and 4% APY. A diversified 529, historically, has averaged 6-7% per year. That gap, compounded over 18 years, is enormous.
Add the federal tax-free growth treatment, plus state tax deductions (in most states), and the 529 wins by a wide margin for any goal more than a few years out.