Both plans are excellent. The Vanguard 529 (Nevada) charges 0.14% for its hands-off target enrollment portfolios. The Schwab 529 (Kansas) got cheaper in March 2026 when TIAA-CREF took over management, with enrollment year portfolios at 0.07% to 0.12% and no minimum. Check your own state's plan first, though: a state tax deduction can outweigh either.
Key takeaways
- The Schwab 529 Education Savings Plan is sponsored by Kansas and, since March 2, 2026, managed by TIAA-CREF Tuition Financing, which replaced American Century and cut fees sharply. Enrollment year portfolios now run 0.07% to 0.12%, and there is no minimum to open an account.
- The Vanguard 529 College Savings Plan is sponsored by Nevada and run by Ascensus using Vanguard funds. Target enrollment portfolios cost 0.14%, individual portfolios 0.11% to 0.37%, with a $1,000 minimum ($500 for Nevada residents).
- Neither plan gives out-of-state savers a tax deduction. More than 30 states plus D.C. offer a deduction or credit, and most require you to use your own state's plan, so run that math before picking either.
- For wealthy families, a 529 doubles as an estate planning tool: five-year superfunding lets you front-load $95,000 per beneficiary ($190,000 for a married couple) in 2026 without touching your lifetime exemption.
- Leftover money is no longer trapped. Up to $35,000 per beneficiary can roll into the beneficiary's Roth IRA if the account has been open at least 15 years.
Schwab 529 vs Vanguard 529 at a glance
| Schwab 529 | Vanguard 529 | |
|---|---|---|
| Sponsoring state | Kansas | Nevada |
| Manager | TIAA-CREF Tuition Financing (since March 2, 2026; American Century before that) | Ascensus, investing in Vanguard funds |
| Age-based/target fees | 0.07% to 0.12% | 0.14% |
| Static/individual fees | 0.00% to 0.56% | 0.11% to 0.37% |
| Minimum to open | None | $1,000 ($500 for Nevada residents; $50 via an employer automatic plan) |
| Investment menu | 10 enrollment year, 3 static, 13 individual fund portfolios | 12 target enrollment portfolios plus a Commencement Portfolio and 21 static options |
| Max account balance | $550,000 per beneficiary | $500,000 per beneficiary |
| Morningstar rating (Oct 2025) | Neutral, with the People pillar upgraded after the manager change | Bronze, down from Silver |
| State tax deduction for outsiders | No | No |
Fee figures come from each plan's current disclosure documents. They change, so confirm before funding.
The Schwab 529: cheaper than its reputation
For years the knock on the Schwab 529 was cost. Under American Century, all-in expenses on many portfolios sat well above what Vanguard charged, and Morningstar rated the plan Neutral while its cheapest rivals collected medals.
That changed on March 2, 2026, when Kansas moved the plan to TIAA-CREF Tuition Financing. The new lineup is built around 10 enrollment year portfolios that glide from aggressive to conservative as college approaches, at a total annual cost of 0.07% to 0.12%. Three static allocation portfolios run 0.06% to 0.14%, and 13 individual fund portfolios span 0.00% to 0.56% depending on what you pick. There is no minimum contribution, no account fee, and the plan integrates with an existing Schwab login, which matters if the rest of your portfolio already lives there.
Morningstar still rates the plan Neutral as of October 2025, but it upgraded the People pillar to Above Average in recognition of the manager change. Expect the rating conversation to look different once TIAA-CREF has a track record here.
The Vanguard 529: the default choice, now with an asterisk
The Vanguard 529 is the third largest direct-sold plan in the country at roughly $44 billion. It offers 12 target enrollment portfolios (0.14% all-in) that rebalance quarterly, plus 21 static options built on Vanguard index funds at 0.11% to 0.37%. The old $3,000 minimum is gone: it now takes $1,000 to open an account, $500 for Nevada residents, or $50 through an employer automatic investment plan.
The asterisk is Morningstar's October 2025 rating cycle, which cut the plan to Bronze from Silver. The criticism is not the funds, which remain excellent, but the aging glide path design: the moderate and conservative tracks shed equity exposure earlier than modern research supports. Bronze is still a recommendation, and for a hands-off investor the target enrollment portfolios remain a very good default. It is just no longer the automatic answer it was when the plan wore a Gold medal.
Check your own state's plan first
Here is the honest part most brokerage comparisons skip: for many readers, neither of these plans is the right first stop.
More than 30 states plus the District of Columbia offer a state income tax deduction or credit for 529 contributions, and most of them require you to contribute to your own state's plan to get it. If you live in New York, Illinois, or Massachusetts, your in-state plan pairs a deduction with fees competitive with anything on this page. A deduction worth several hundred dollars a year beats a few basis points of expense ratio every time.
Nine tax parity states (Arizona, Arkansas, Kansas, Maine, Minnesota, Missouri, Montana, Ohio, and Pennsylvania) give the break for contributions to any state's plan. Kansas is one of them, which means even Kansans do not need the Schwab plan to claim their deduction of up to $3,000 per beneficiary ($6,000 married filing jointly). Nevada has no income tax at all. And if you live in a no-deduction or no-income-tax state such as California, Florida, Texas, or Washington, the deduction question disappears and you should simply pick the best plan nationally, which is where Schwab and Vanguard belong on the shortlist alongside Utah's my529 and Illinois' Bright Start.
Where a 529 fits in your broader allocation is a separate question; our guide to building a savings and investment plan covers how education savings should sit next to retirement and taxable accounts, and the rest of our investing hub goes deeper on the underlying fund choices.
Superfunding: the HNW move
For high-net-worth families, the 529 is as much an estate planning vehicle as a college account. The annual gift tax exclusion for 2026 is $19,000 per recipient, unchanged from 2025. A 529 is the one place you can compress five years of those gifts into a single contribution: five-year 529 superfunding allows $95,000 per beneficiary (single) or $190,000 (married couple) in 2026.
Two grandparents superfunding accounts for three grandchildren can move $570,000 out of their taxable estate in one afternoon, with all future growth compounding outside the estate and tax-free for education. You file a gift tax return to elect the five-year spread, and if you die within the five years a prorated portion comes back into your estate. Both plans have room to absorb this: Schwab caps account balances at $550,000 per beneficiary and Vanguard at $500,000. For how this interacts with the rest of your gifting strategy, see our estate planning hub.
The 529-to-Roth escape hatch
The classic objection to overfunding a 529, that the money gets trapped, is weaker than it used to be. Under SECURE 2.0, unused 529 assets can be rolled into a Roth IRA in the beneficiary's name, federal tax and penalty free, subject to real limits:
- $35,000 lifetime maximum per beneficiary
- The 529 account must have been open at least 15 years
- Contributions made in the last five years, and their earnings, are not eligible
- Each year's rollover counts against the annual IRA contribution limit ($7,500 in 2026), so the $35,000 moves over several years, and the beneficiary needs earned income at least equal to the amount rolled
This is not a reason to deliberately overfund a 529, but it turns the worst-case scenario for a scholarship kid or a non-college path into a head start on retirement instead of a 10% penalty. More moves like this live in our tax strategy hub.
The bottom line
If your state gives you a deduction for its own plan, start there. If you are deduction-agnostic, both of these are strong: pick the Vanguard 529 if you want the biggest menu of Vanguard index portfolios and a set-and-forget target enrollment glide path, and pick the Schwab 529 if you want the lowest age-based fees of the two, no minimum, and one login next to your existing Schwab accounts. Either way, the expense ratio difference between them is now measured in single basis points. Contribution consistency, superfunding if you can afford it, and starting early will each matter far more than the logo on the account.
Frequently asked questions
Why did the Schwab 529 get cheaper in 2026?
The Schwab 529 got cheaper on March 2, 2026, when Kansas moved the plan from American Century to TIAA-CREF Tuition Financing. The new lineup has 10 enrollment year portfolios at 0.07% to 0.12%, three static portfolios at 0.06% to 0.14%, and no minimum to open. Morningstar upgraded the plan's People pillar to Above Average after the change.
Why should I check my own state's 529 plan before Schwab or Vanguard?
More than 30 states plus D.C. offer a state income tax deduction or credit for 529 contributions, and most require you to use your own state's plan to get it. A deduction worth several hundred dollars a year beats a few basis points of expense ratio. Nine tax parity states give the break for contributions to any state's plan.
What is 529 superfunding and how much can you contribute?
Superfunding lets you compress five years of gift tax exclusions into one 529 contribution: $95,000 per beneficiary for a single filer or $190,000 for a married couple in 2026, without touching your lifetime exemption. You file a gift tax return to elect the five-year spread. If you die within the five years, a prorated portion returns to your estate.
Can unused 529 money be moved to a Roth IRA?
Yes, under SECURE 2.0 unused 529 assets can roll into a Roth IRA in the beneficiary's name, federal tax and penalty free, up to a $35,000 lifetime maximum. The 529 must have been open at least 15 years, recent contributions are not eligible, and each year's rollover counts against the annual IRA limit, which is $7,500 in 2026.
Why did Morningstar downgrade the Vanguard 529 to Bronze?
Morningstar cut the Vanguard 529 to Bronze from Silver in its October 2025 rating cycle, citing the aging glide path design rather than the funds. The moderate and conservative tracks shed equity exposure earlier than modern research supports. Bronze is still a recommendation, and the target enrollment portfolios remain a very good default for a hands-off investor.