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529 Savings plan: tips for Mom and Dad

There are eight good reasons the 529 savings plan is the best college saving plan. Generally these 529 perks are valid only if used for legitimate college expenses, including books tuition, room, and board.

1) The 529 savings have a minimal effect on financial aid. Only 5.64% of 529 funds count toward your expected family contribution whereas a full 20% of a standard student saving account counts towards your EFC. Thus, stockpiling money in the student’s account can have an adverse effect on your eligibility for scholarships.
2) Unlike some other federal saving plans, a 529 saving plan is tax free when withdrawn to pay for college expenses.
3) The 529 is taxed less heavily than other savings plans.
4) Students can contribute to the savings plans tax free.
5) Fund growth is not taxed like most savings plans.
6) Family members can donate to the fund amount subject to the gift tax.
7) Fund management is simple.
8) Credit card rewards programs can be applied to the 529 to help you save money for college with every purchase.


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