My analysis assumes nothing about which mutual funds are used in either account. The 529 fees are essentially the ones from the NE plan since I am enrolled in it. Besides, if you use the same Net returns, then it is a no brainer that the 529 comes out on top. I assumed no income tax deduction since most states, including the one I live in, don't offer one. As TJ says, these are assumptions and are not applicable to everyone. Fortunately or unfortunately, my family has done well the last few years and our effective tax bracket (state and Federal) has approaced 30%.
Whether it makes sense or not, many 529s have different fee structures. What you get in return is the tax deferall and tax free withdrawal. Also, I never said it takes 14 years to come out on top. My daughter was 4 when I started the analysis and that is why the 14 year time frame. The 529 is ahead from day 1.
There is no break even. The 529 is ahead from day 1 since one assumption is that the taxes due in the brokerage account are paid from the account. If funds are withdrawn in a non-qualified manner, then the brokerage account comes out on top by about 10%. If a scholarship allows you to avoid the penalty, but still pay tax, then they are about the same. Using 0.8% for the mutual fund fees was an attempt at estimating the fees of the same type of combined index/active account as many 529s use.