Scholarship Blog navigate_next Latest Posts
navigate_beforeBACK TO TOPICS

What is a College 529 Plan?


If you have a child and college is in their plans, then a 529 college savings plan is one of the most powerful tools that you will have at your disposal. At one time, college was not such a significant expense. However, we now live in a different reality. Families who wish their children to go to college must start planning very early on if they are to provide the ideal college experience for their child.

If you are looking to start saving for your college education, then a 529 plan is a great place to start. A 529 savings plan is a tax-advantaged account that has been made available by the government to help parents and families save for and cover the costs of college, which are ever rising.

Though 529 plans are very powerful and useful, not everyone knows that much information about them. We are going to provide you with a complete overview of 529 savings plans and how you can use them to your advantage.

Can You Use a 529 For Any School?
 
The first question you might have is whether a 529 plan can be used for any school. The answer is that a 529 savings plan can be used for most any university or college, though they must be on the approved list by the government. Most people won't have any trouble using their 529 funds for the college of their choice.

Do All States Offer 529 Plans?
Though 529 plans were once scarce and not provided by every state, they are now commonplace as more people take proactive steps to save for college. You can find a 529 savings plan in almost every state in the country, making them one of the most accessible tools to use for those that want to save for college.

Tax Benefits of a 529 Plan
Apart from helping parents organize and bolster their efforts to save for college education, a 529 plan also offers other benefits, especially when it comes to taxes. A 529 plan offers 5-year gift tax averaging, tax-free qualified distributions, and for some states, deductions that make saving for college much easier and much more affordable for families. You should take advantage of these benefits if you are saving for college for your child.

What Can 529 Plans be Used On?
529 plans are flexible savings accounts that can be used for a variety of purposes. Basically, you can use the funds from a 529 account for anything that is related to the education of your child. This includes tuition, textbooks, and even rent for when they move away. This is one of the greatest things about a 529 plan. Over time, the money that is invested in a 529 plan will grow and outpace inflation. This means that the funds that are invested are relatively safe and sure to cover the expenses associated with college.