In the three months ending June 30, 2025, 529 college savings and prepaid plans saw one of their strongest periods of growth in years. The latest data from ISS Market Intelligence shows 17.3 million accounts holding $568 billion in assets, up from 16.8 million accounts and $508 billion a year earlier. That’s a 7.9% increase in accounts and an 11.8% jump in total assets over the same period.

What makes this surge noteworthy is that it occurred before the full impact of the One Big Beautiful Bill Act (OBBBA). The new law, signed in July 2025, significantly broadens what families can pay for with 529 funds. While historically focused on higher education, 529 plans will soon be able to cover certain workforce training programs, licensing exam fees, and professional credentialing costs. The law also increased what’s allowed for elementary education as well.

This expansion has the potential to accelerate account openings and contributions in the second half of the year and beyond, particularly among families who see 529s as a tax-advantaged way to invest in both traditional education and career-focused training.

Inflows To 529 Plans Near Record

Net inflows (contributions minus withdrawals) into 529 savings plans totaled $4 billion in Q2 2025, up from $3.6 billion during the same quarter last year and $3.8 billion in 2023. The increase reflects both higher contributions and steady withdrawals by families using funds for qualified expenses.

The resilience of money flowing into 529 plans is notable, especially given the volatility in financial markets in 2024 and early 2025. Families appear to be maintaining their commitment to long-term education savings, even amid shifting interest rates and market performance.

Industry analysts say part of this strength comes from a growing awareness of 529 plan flexibility. In recent years, lawmakers have added new qualified expenses, such as K–12 tuition, apprenticeships, and limited rollovers to Roth IRAs. The OBBBA’s workforce training provisions are the latest in this series of changes.

How OBBBA Expands Qualified Expenses

Starting with withdrawals made after July 4, 2025, 529 funds can be used to pay for vocational and technical training programs, licensing exam preparation, and continuing education required to maintain professional credentials. Examples include CDL training, HVAC certification, CPA exam fees, bar exam preparation, and continuing education for teachers, nurses, or financial advisors.

Furthermore, 529 plan withdrawals for K-12 education can now include more than tuition! This includes course materials, tutoring, and more. And starting in 2026, the limit for K-12 expenses rises to $20,000 per year.

It’s important to note that state tax treatment may not align with these new federal rules. States like California and Colorado have historically declined to follow certain federal 529 expansions, meaning residents could face state tax on some withdrawals even if they are penalty-free at the federal level.

529 Plans Will Likely Continue To Grow

By adding workforce training to the list of qualified expenses, policymakers are opening the door to more families to use 529 accounts. This includes adult learners changing careers, professionals seeking advanced credentials, and students who plan to attend trade schools rather than four-year universities.

Even existing professionals like financial advisors and CPAs can use the plan to pay for their continuing education requirements (and maybe get a tax deduction for doing so).

It also creates new planning opportunities for families. Parents could start funding a 529 account knowing it might one day pay for their child’s college degree, a vocational certification, or even a future career change in adulthood.

From an industry perspective, the latest quarterly data reinforces a multi-year trend: 529 savings plans are attracting more families, growing in both account numbers and total assets. As of Q2 2025, savings plans account for $543 billion of the total $568 billion in assets, with prepaid plans holding the remaining $25 billion.

The policy shifts from OBBBA could encourage states and plans to market 529s to new demographics, including employers who may want to use them as part of workplace benefits packages.

With broader eligible expenses and potential for retirement account rollovers, the appeal of 529s is expanding well beyond parents of college-bound children.

Don’t Miss These Other Stories: