Options for 529 College Savings Plans in Maryland

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Student loan debt in the U.S. is on track to exceed $1.8 trillion. As multiple generations of young Americans struggle against the burden of this debt, state governments are being forced to search for better ways to support families who want to save money for their children's higher education.

Section 529 plans are accounts that offer tax advantages for educational savings and allow families to begin contributing to a child's college fund as soon as a baby is born. Such accounts can receive contributions from parents, family members, and friends (to a certain dollar amount each year), and grows free of taxation. All withdrawals used for qualified educational expenses are also exempt from federal income tax.

For some families, that can mean less stress about applying for financial aid or searching for scholarships.

529 Plans for Those Living in Maryland

Maryland has 97 colleges and universities, with annual tuition, books, and housing costs averaging approximately $6,592 (in-state), $13,994 (out-of-state), or $30,650 (private) depending on the type of institution in which a student is enrolled.

Maryland529 (formerly College Savings Plans of Maryland) is a fund offered directly by the state rather than by third-party financial institutions. The plan offers two options:

Maryland Prepaid College Trust

This plan allows families to lock in future tuition costs at today’s prices. Payments are pooled with those of other state account holders and invested to fund future benefit payments. Highlights include:

  • The savings can be used at nearly any college nationwide (not eligible for K-12 tuition expenses)
  • Investments can be made until a child turns 18 (although accounts must be open for at least three years before tuition benefits can begin being paid)
  • Plans are backed by a Maryland Legislative Guarantee
  • Donors are eligible for state and federal tax benefits

Maryland College Investment Plan:

This plan allows families to decide exactly how they want to save. You can choose from a variety of investment portfolios managed by T. Rowe Price, based on what is best for your family budget and education goals.

  • An account can be established with as little as $25.
  • Investments are payable for the educational costs of children or adults of any age.
  • Accounts are eligible for state and federal tax benefits, including tax-deferred growth and tax-free withdrawals when the account is used for qualified education expenses.
  • Benefits can be used at most colleges, trade/technical schools, or K-12 schools in the U.S. (as well as some international schools).

Tax Benefits

Maryland offers a tax deduction to residents for contributing to a 529 savings plan. Each account holder or contributor may deduct up to $2,500 in 529 contributions annually per savings plan. That means $5,000 for two accounts, $7,500 for three, for example. Payments in excess of $2,500 per account can be deducted in future years. The maximum you can have in a 529 savings plan in Maryland is $500,000.


Anyone who is a U.S. citizen or legal resident can contribute to the savings plan on behalf of a student so long as they are over age 18. For the College Investment Plan, there are no state residency requirements. For the Prepaid College Trust, either the account holder or the beneficiary must be a resident of Maryland or Washington, D.C., when the account is opened.

Other Considerations

There are no age restrictions on the savings plan, so if the student chooses to delay school, the savings plan would remain in place. This is a great option for students who want to travel, take a gap year, or start their careers before going to college. If the student decides not to pursue higher education, the family can change the beneficiary of the account to someone else, like a sibling or cousin.


Students are not limited to schools only in Maryland. A 529 savings plan can fund education at any two- or four-year school, as long as it's accredited and eligible for financial support from the U.S. Department of Education.

The 529 savings plan is designed only to be used to pay for school expenses like tuition, room, and board. If a student decides against college and wants to withdraw money from the account, the funds will be subject to taxes and additional penalties.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Federal Reserve Bank of St. Louis. "Student Loans Owned and Securitized, Outstanding."

  2. Internal Revenue Service (IRS). "Topic No. 313 Qualified Tuition Programs (QTPs)."

  3. College Tuition Compare. "2022 Tuition and Living Costs Summary By State."

  4. The National Association of State Treasurers. "529 College Savings Plan, Find My State's 529 Plan."

  5. Maryland 529. "Compare the Maryland 529 Plans."

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