Unusual Ways to Pay for College Tactic #4 . . . Set Up a 529 Plan
With this post, the StraighterLine Blog continues its series of posts that offer straightforward tactics for reducing college costs.
Today’s tactics is . . . Set up a 529 plan and get the most from it
529 Plans (named for Section 529 of the Internal Revenue Code, which established them) are savings/investment vehicles that work a lot like IRAs or SEPs. There are differences, however. The money you contribute to them is not tax deductible; however, you don’t pay tax on any interest that accumulates on funds that are held in the account.
Plus, there are very high limits for how much can be contributed. If you have $300,000 that you would like to use to cover your college costs, that is okay in most states. Also, a grandparent can deposit up to $13,000 without being charged gift tax. (Check your state’s laws PLEASE.)
Plus there are other nifty features. If you have a brother or sister who will attend college after you, your family can change the name on the plan and use its funds to pay for his or her education too.
To learn the ins and outs of this plan, we’d advise you to review an excellent tutorial about them on SavingForCollege.com.
Unusual Ways to Pay for College Tactic #3 . . . File a FAFSA, No Matter What!
Unusual Ways to Pay for College Tactic #2 . . . Don’t Save Assets in a Student’s Name
Unusual Ways to Pay for College Tactic #1 . . . Pay off Debts
Three Compelling Reasons to Avoid College Debt
Shocker: College Will Cost $400,000 in 2026
Seven Things Every Parent Needs to Know about Paying for College