As I travel around my home state of South Carolina, I see families preparing to celebrate the 250^th anniversary of the signing of the Declaration of Independence. Their many patriotic displays show they understand that the ideals put forth and adopted on July 4, 1776, are foundational to the individual liberties we enjoy today. As Americans, we appreciate freedom in every aspect of our daily lives and value the control it gives us. 

Even families saving for their children’s future education want the freedom to choose how they use their money. That’s why many families save with a 529 plan. Today’s 529 plans offer account owners who are saving for education more flexibility than ever before. Below are some of the key freedoms that 529 account owners and their beneficiaries can enjoy. 

 

FREEdom in how it’s used

You probably know that 529 funds may be used for tuition, but they’re also available to be used for many more educational expenses. Whether your child will be living in an on-campus student dorm or in an off-campus apartment, you’re able to use 529 funds to pay for qualified housing as well as student meals. In addition, 529 money may be used to pay for books, software, computers, supplies, and any equipment required to complete coursework. 

 

Tax-FREE

Few investment vehicles allow you to invest money and grow it tax-free, but 529 plans do. Earnings from your contributions are tax-free and compounded. Through compounding, any gains your account earns have the opportunity to make more gains – all tax-free. 

And when your child is ready to use their 529 funds, you’re allowed to withdraw the money tax-free, as long as the funds are being used to pay for qualified education expenses.

 

FREEdom in where it’s used

You can’t predict what your child’s dreams and goals will be, so 529 plans provide the flexibility to use your funds at a variety of educational institutions. You may use funds at any accredited two-year or four-year public or private college, university, technical college, trade school, graduate school program, professional program, or apprenticeship across the United States and in many foreign countries. You may also use funds for professional licensing fees or certificates. You may even use 529 money to pay for up to $20,000 per year of qualified expenses at a public, private, or religious K-12 school.

 

529 FREEdom equals control

Your 529 funds are always your money, and you have options that keep you in control of any leftover funds in your account. 

 

Transfer the funds. If you have unused 529 funds, you can transfer them to another family member or use them yourself if you plan to continue your education. You may also transfer 529 funds to use for a grandchild’s education.

 

Pay student loans. You may use up to $10,000 of leftover 529 funds to pay off the student loan debt of the beneficiary, their sibling, or another family member. Perhaps one of your children attended a more affordable school, but your other child chose to pursue an advanced degree that required a student loan. This option could be the perfect solution.

 

Rollover the funds. You can use your 529 funds for the beneficiary’s retirement. If your 529 account has been open for at least 15 years and the funds have been invested in the account for at least five years, you may be able to roll over up to a maximum lifetime limit of $35,000 to a Roth IRA that is owned by the designated beneficiary. 

 

Withdraw the funds. You may withdraw your money at any time, even for non-qualified educational expenses.  Withdrawals for non-qualified expenses are subject to a 10% federal penalty as well as income tax, but only on the earnings portion of the withdrawal – not on the money you originally contributed. If your child receives a scholarship, you may withdraw up to the amount of the scholarship without penalty and pay taxes only on your earnings. We encourage you to consult a tax professional for more information about non-qualified withdrawals and any applicable penalty waivers.

 

FREEdom from student loan debtAs a State Treasurer, I know how important it is for families to understand that they have the power to help their children avoid significant student loan debt. 529 plans are designed to make saving for education as simple as possible so that you can help put your child on the path toward a successful, unburdened financial future. By opening a 529 account early and contributing as often as possible, you increase your account’s earning potential to fuel your child’s education journey.

 

About the author: Curtis Loftis is the State Treasurer of South Carolina. He also serves as the administrator of South Carolina’s Future Scholar 529 College Savings Plan. Visit treasurer.sc.gov or futurescholar.com for more information on ways to save through a 529 plan.

Just as there is no “typical” student with an Individualized Education Program (IEP), there is no one-size-fits-all path after high school. 

Some students may attend a traditional four-year university with plans for graduate school or beyond. Others may pursue a two-year degree or certificate program at a technical or community college. Registered apprenticeship programs have also expanded beyond the skilled trades to include fields such as healthcare and information technology. Some students may transition directly into adulthood after high school, focusing more on independent living and daily responsibilities.

Whatever path a student chooses, a 529 college savings plan can offer families flexible tools to support their child’s future, including unique benefits for students with disabilities.

What is a 529 College Savings Plan?

Named for section 529 of the IRS tax code, 529 college savings plans are offered by states to help families save and pay for (the sometimes significant) cost of future education. Unlike a standard savings account, funds in a 529 account can be invested, and any earnings grow tax deferred. Withdrawals are free from state and federal taxes when used for qualified higher education expenses. Many states offer both direct-sold 529 plans, which can be opened by families directly online, and advisor-sold 529 plans, available through registered investment advisors. In some states, contributions to 529 plans qualify for state income tax deductions or credits, so be sure to review the 529 plans and laws from your state.

Flexible 529 Uses for All Types of Students

Despite the name, qualified higher education expenses extend beyond traditional college costs. On the federal level, recent expansions now allow qualified withdrawals from 529 plans for certain K-12 expenses, up to $20,000 per year per student. These include K–12 tuition, books and curricular materials, tutoring (with certain limits), and educational therapies for students with disabilities—such as occupational, behavioral, physical, and speech-language therapies—when provided by a licensed or accredited practitioner. Learn more about these federal K-12 expansions in H.R.1, Sections 70413 & 70414. Families should note that not all states treat K–12 withdrawals as state income tax-free, so it is important to check state-specific tax rules.

After high school, 529 funds can be used for a wide range of postsecondary education expenses, including tuition, housing and meal costs for students enrolled at least half time, books, computers, and more. Eligible post-secondary programs include degree-seeking programs at colleges, community colleges, trade or technical schools, and universities. Expanded uses include professional credentialing, certificate, and registered apprenticeship programs (check with your home state if a program is considered eligible for state income tax purposes). Students are not limited to attending school in their home state, as funds saved in a 529 plan can be used at an accredited institution anywhere in the United States, and at some eligible educational institutions abroad.

An Option for Students with Disabilities: Rollover to ABLE Accounts

An ABLE (Achieving a Better Life Experience) account is a savings and/or investment option for people with disabilities who qualify. If a family has funds saved in a 529 college savings plan, and they later find that an ABLE account would better serve their child’s needs, they can easily rollover funds from a 529 to an ABLE account. Upcoming and recorded webinars about ABLE accounts can be found at ABLE Today: https://www.abletoday.org/intro

529 Plans for Every Future

Families often benefit most from 529 college savings plans when they begin saving early and contribute consistently over time. By opening a 529 college savings plan for a child, you can create a hopeful vision of the future, with savings that could add up to a meaningful sum by the time the child reaches adulthood. Whatever future path a student eventually takes, funds saved in a 529 plan can help them pursue the opportunities that fit them best.

About the author: Chelsea Wunnicke is a College Savings Program Finance Officer with the State of Wisconsin, Department of Financial Institutions, which administers the advisor-sold Tomorrow’s Scholar and direct-sold Edvest 529plans. Edvest has been helping families save for education since 1997.

Saving for education has always been important, but today, it’s becoming essential.

With rising tuition costs, increasing student debt concerns, and a growing emphasis on financial wellness, families and employers alike are rethinking how they approach education savings. At the center of that conversation? The 529 plan.

At Vestwell, we’re seeing a clear shift: more states, employers, and financial institutions are prioritizing accessible, digital-first education savings solutions that meet people where they are. And 529 plans are evolving right alongside that demand.

Let’s break down why 529 accounts remain such a powerful tool and why their role is expanding.

The Big One: Tax-Free Growth

529 plans offer one of the most compelling advantages in long-term saving: tax-free growth.

Your contributions can grow and earnings are tax-free when used for qualified education expenses like tuition, books, fees, and even certain room and board withdrawals are completely tax-free at the federal level (and often at the state level, too).

Over time, that tax efficiency can make a meaningful difference, helping families keep more of what they’ve saved and invested working for them.

A Growing Patchwork of State Benefits

While federal tax advantages are consistent, state-level incentives add another layer of value.

Many states offer tax deductions or credits for 529 contributions, effectively rewarding families for investing in education. As more states modernize their programs and expand access, these benefits are becoming a key driver of adoption.

Programs like those powered by Vestwell, including partnerships such as Embark in Oregon, which offers a refundable state income tax credit, and VT529, which also offers a state income tax credit, are helping bring these benefits to more families through streamlined, user-friendly platforms.

A Powerful Gifting and Estate Planning Strategy

529 plans aren’t just savings vehicles: they’re also highly effective estate planning tools.

In 2026, individuals can contribute up to $19,000 per beneficiary annually without triggering gift taxes. For those looking to accelerate savings, “superfunding” allows contributors to front-load five years’ worth of gifts:

• $95,000 per beneficiary for individuals
• $190,000 for married couples

This strategy gives investments more time to grow while potentially reducing taxable estate exposure, all while maintaining control of the account.

More Flexibility Than Ever Before

One of the biggest misconceptions about 529 plans is that they’re rigid. In reality, they’ve become increasingly flexible, especially following recent policy updates.

Thanks to the SECURE 2.0 Act, unused funds can now serve another purpose. If certain conditions are met, up to $35,000 can be rolled into a beneficiary’s Roth IRA.

That means education savings can double as a launchpad for long-term financial security, even if plans change.

Expanding Access Through Employers

One of the most important shifts we’re seeing today is the growing role of employers in education savings.

Forward-thinking organizations are beginning to offer education savings benefits as part of their broader financial wellness strategy, recognizing that student debt and future education costs are top concerns for employees. Some states offer state tax incentives to businesses that contribute to employees’ 529 plans.  

This is a major step forward in making 529 plans more widely adopted.

Designed for Accessibility

Another reason 529 plans continue to gain traction: they’re built for broad accessibility.

• No income limits to contribute
• No age limits for beneficiaries
• Usable for children, grandchildren, or even yourself

As platforms modernize and onboarding becomes more digital and intuitive, barriers to entry are falling. That’s a critical part of expanding participation nationwide for families that need these saving opportunities the most.

The Bottom Line: Why This Matters Now

529 plans have always been a smart way to save, but today, they’re becoming part of a much bigger ecosystem.

As education costs rise and financial wellness takes center stage, the way people save is changing. Families want flexibility. Employers want to offer meaningful benefits. States want scalable, modern programs.

529 plans sit at the intersection of all three.

At Vestwell, we believe the future of education savings lies in accessible, technology-driven solutions that expand opportunity for everyone, from individuals opening their first account to families that have been saving for years.

If you’re thinking about how to plan for education, whether as a family, employer, or partner, now is the time to act.

Learn more about how modern 529 programs are evolving at Vestwell and nationwide at CSPN. 

About the author:

David Bell is Senior Vice President of Program Management at Vestwell, where he leads Education Savings. This includes 529 plans, Child Savings Accounts and Emergency Savings Accounts. Prior to joining Vestwell, David was the Deputy Director at the Oregon State Treasury where he helped lead the state’s savings programs. David’s work at Vestwell helps to make savings more accessible for individuals, families and historically underserved communities.  

The moment snuck up on me.

One minute, I was packing a tiny backpack and walking my firstborn into kindergarten. The next, I’m sitting in a high school auditorium listening to a counselor talk about college applications, extracurriculars, and financial aid.

My son starts high school this fall. And already, the message is clear: it’s time to think seriously about college.

As I watched him take it all in, I felt both deep pride in the young man he’s becoming and the unmistakable weight of reality.

Are we ready for this?

College is a big, expensive, beautiful milestone. In my experience, it often takes more than one approach to feel truly prepared. That’s where a core principle comes in: diversification.

We often think of diversification in terms of investing—spreading money across different strategies to manage risk and create flexibility. I’ve applied that same thinking to college savings.

What many people don’t realize is that there’s more than one type of 529 plan.

Most people are familiar with the traditional 529 savings plan. You contribute money, invest it in the market, and over time, it can grow. It’s a solid strategy, but like any investment, it comes with ups and downs. Market swings can feel especially stressful as tuition bills get closer.

Less talked about is another type of 529 plan: prepaid tuition plans.

Not every state offers them, but here in Washington, we do. A prepaid tuition plan lets you lock in today’s tuition rates (sometimes at a discount) by purchasing tuition units in advance. That means you can cover the cost of tuition and fees even if costs rise in the years ahead, which they historically have.

We chose to use both.

The prepaid plan gives us predictability. It locks in tuition costs and protects against poor timing, like needing to withdraw during a market downturn. It ensures a core portion of tuition is covered. 

Prepaid plans are typically limited to in-state residents, and their value is based on public in-state university costs. If your child chooses a private or out-of-state school, it may not fully cover the costs, but the value can usually still be applied up to the in-state equivalent. 

That’s where a traditional 529 comes in. Because it’s invested in the market, it offers the potential for higher growth. In states like Washington, both types of 529 plans can also be used for a broad range of qualified education expenses.

For us, it’s about balance—combining the certainty of locked-in tuition with the growth potential of market-based savings. 

Together, they give us confidence we’ll be ready when the time comes.

That night in the auditorium reminded me: planning isn’t just about numbers. It’s about starting early, staying engaged, and making thoughtful decisions over time.

If you’re looking to take some uncertainty off the table, prepaid tuition 529 plans are worth a closer look. And if you have a tax refund this month, consider putting a portion toward your child’s future. It’s a small step today that can make a meaningful difference tomorrow.

About the author:

Lynda Ridgeway serves as Director of Washington’s Education Savings Plans (WA529), where she leads both WA529 Invest and the GET Prepaid Tuition Plan. With more than 20 years of experience in education finance, she is dedicated to helping Washington families access and maximize college savings opportunities. Since joining WA529 in 2022, she also brings a personal perspective to her role as a mother of two sons who benefit from 529 plans, giving her a firsthand understanding of the importance of these programs for families.

As pink blossoms appear in our neighborhoods and parks, it’s a clear sign that March has arrived and brighter days are ahead. For families with young children, March often brings playful traditions—like helping kids design elaborate traps to “catch a leprechaun” in hopes of finding a legendary pot of gold at the end of a rainbow.   

Parents and teachers often encourage imagination–helping children find a little magic in their lives. As a mom and former educator, I believe imagination is powerful. It supports cognitive development, inspires creative thinking, and fuels children’s dreams. 

Dreams vs. Fairy Tales

Dreams and fairy tales serve different purposes. Fairy tales inspire imagination. Dreams shape our ambitions. Fairy tales are magical stories filled with impossible scenarios meant to entertain and teach lessons. Dreams are personal hopes that we imagine for our future; they steer us toward goals that, with planning and effort, become reality. Both have value. 

Dreams start at a young age. Encouraging kids to dream about their future shows them the world is full of opportunity. Introducing them to the many ways to pursue higher education shows them that there is more than one path they can take to achieve their dreams. When we take the step to save for our child’s education, we send an even more powerful message: “I believe in your dreams, and I’m helping you prepare for them.”

Create Your Own Pot of Gold

When it comes to funding a child’s education, families don’t rely on mythical treasure; they create their own “pot of gold”. One of the best tools for families to create a “pot of gold” is a 529 college savings plan, a tax-advantaged account designed specifically to help families save for future education expenses. 

Like fairy tales, myths are widely known, untrue tales. But they are not always magical. Despite the benefits, 529 plans are surrounded by common myths that discourage many families from using them. So, let’s clear up a few things about 529 plans. 

Common 529 Myths 

Myth: 529 funds can only be used for college.

Reality: 529 funds can be used at a wide range of accredited post-secondary programs, including community colleges, vocational or trade schools, registered apprenticeships, public and private colleges, graduate programs, and study-abroad. 529 plans can also be used for K-12 tuition and toward existing student loans.

Myth: You must use your home state’s 529 plan. 

Reality: You can participate in most 529 plans regardless of where you live. However, some states offer tax benefits to residents who use their home state’s plan.

Myth: If you enroll in a state-sponsored 529 plan, you can only use it in that state. 

Reality: 529 funds can be used worldwide for qualified education expenses, including tuition, fees, room and board, books, supplies, computers, and equipment for a student’s program of study. If a school accepts federal financial aid, it will also accept 529 funds.

Myth: If your child doesn’t go to college, the money is lost. 

Reality: You have options. If the student beneficiary doesn’t pursue higher education, you can:

• Change the beneficiary to another eligible family member
• Keep the account open in case they pursue higher education later
• Roll funds into a Roth IRA for the beneficiary (following IRS limits)

Myth: 529 plans significantly reduce financial aid eligibility. 

Reality: The impact is typically minimal. A maximum of 5.64% of a parent-owned account value may be considered when determining financial aid eligibility.

Myth: Only parents can open or contribute to a 529 account. 

Reality: Anyone can contribute—parents, grandparents, relatives, and friends.  

Myth: You must save the full cost of college. 

Reality: Most plans only require a small deposit to get started. Then, you can contribute whatever fits your budget. Every dollar saved reduces the total amount your child may borrow later.

Myth: Managing investments in a 529 account is complicated. 

Reality: Most 529 plans offer simple investment options, including age-based portfolios that automatically adjust risk as your child grows up.

Turn Dreams Into Plans

Discovering a pot of gold at the end of a rainbow is unlikely, but creating one for your child’s future is entirely possible. Saving for education doesn’t need magic; it needs a plan. Many families build their savings gradually using simple strategies:

• Open a 529 account. Compare 529 plans or find your state’s plan here.
• Make regular contributions or set up automatic contributions (“set it and forget it”)
• Encourage gift contributions from family and friends for birthdays, holidays, and milestones 
• Boost savings with tax refunds, work bonuses, daycare funds that are freed up when your child starts school, etc.
• Involve the kids—Teach them to earn money and make their own contributions.

Fairy tales have an important role in childhood. Stories of catching leprechauns and finding a pot of gold do sound magical. But, when it comes to preparing for our children’s future, the real magic is simple: plan ahead, start saving in a 529 account, make regular contributions, and watch that ‘pot of gold’ grow!   

Jenn Dyck, a Marketing & Communication Specialist for Washington Education Savings Plans (WA529). WA529 offers two 529 savings plan options: the GET 529 Prepaid Tuition Plan and WA529  Invest. Jenn lives in the beautiful Pacific Northwest and enjoys kayaking, traveling, and time with family. She is passionate about education and encourages students (and adults) to pursue higher education. Recently, she completed her bachelor’s degree while her two young adult children earned theirs. It’s never too late to pursue your dreams!

Dear College Savings Plans Network Blogger – 

My newborn grandson is already showing signs of being a mechanical genius. His grip has torque and his interest in bright lights is advanced. This child is clearly going into the trades as a pipefitter or electrician. I understand that with trades, you earn while you learn, and don’t have to pay all the same costs associated with traditional college, which can mean little or no student loan debt. If the costs are so minimal, is it worth it to open a 529 education savings plan? Any insight, not financial advice, is appreciated.

Signed,

Proud Pops

Dear Pops –

Sounds like this kiddo has BIG potential, and a 529 plan could be a great tool for his toolbelt! 529 investment accounts grow tax-deferred, and boast tax-free withdrawals for qualified expenses, including: Registered Apprenticeships, credentialing expenses, college and beyond. 

It sounds like your hesitation to open and fund an account is because your little mechanical genius may not need it. May is the key word here. First, think about why you would save (see more on Why). Whether it’s to keep him out of debt, get him a head start towards qualified expenses he may have, or to simply give him a gift he won’t outgrow, a 529 plan can help tick those boxes. Simply put, opening an account is a way to ensure you have some funds ready for him when the time comes. 

You sound like a common-sense kind of guy, so I’ll leave you with this: it’s better to save than to borrow. That’s right – exactly what your own Nana would have already told you. Enjoy the new grandbaby and make plans now, while time is on your side. 

Next stop? Compare 529 plans to find one that works for you! 

About the Author: Marissa Rowe is executive director of the Indiana Education Savings Authority, which administers the Indiana529 savings program with more than $9 billion in assets under management in three plans. A proud first-generation college student, Marissa received her B.A. in Mass Communication from the University of North Carolina Asheville and her M.A. in Philanthropic Studies from the Indiana University Lilly Family School of Philanthropy. She paid off her student loans in 2020 and has 529 plans for her nieces and grandchildren.

This Fortune magazine headline caught my eye: “Meet a 23-year-old electrician who was a ‘good student’ but skipped college to join Gen Z’s blue-collar revolution. He makes 6 figures.” He may have ‘skipped’ college, but he didn’t skip the training. He earned his training as an apprentice and then became a certified electrician.

The ‘blue-collar’ trend toward workforce training after high school illustrates the many paths to careers in addition to what we traditionally think of as college, including apprenticeships, trade school, vocational training, and professional credentialling. Career training programs can have minimal, and relatively accessible costs. As you think about how to save for the possibility of career and technical education, consider the following:

Make a Plan. Setting an education savings goal can help you stay on target and on track. To make a plan, start with an online savings calculator. Many 529 plans have state-specific calculators that give you an estimate of what future education expenses will be as you set your desired savings goal.

Save Systematically. Whether you set up recurring contributions from a bank or payroll direct deposit, saving systematically is an automated way to build your savings quickly. Consider directly depositing $150 per pay period into your 529 account. After 26 pay periods in a calendar year, you would have nearly $4,000 in contributions to your 529 account.

Adjust as Needed. At least once a year, take a moment to review your contributions, your investment growth, and the needs of your family, and adjust your automatic contributions. Increasing automatically is an option for many 529 plans, but it’s never a bad idea to take the opportunity on 529 Day or during college savings month to boost your contributions. It’s often said that when your child reaches their next milestone (out of diapers, out of daycare, etc.), it’s a good time to increase the contribution amount. Whatever works best for your family, be sure to assess and adjust.

Why this Matters: Making a plan and sticking to it can accelerate your education savings and relieve the financial burden of costs associated with your chosen path when the time comes, especially when you are saving for more than one beneficiary.

About the author: Lael M. Oldmixon, M.Ed. is the Executive Director of the Education Trust of Alaska, which offers Alaska’s three 529 plans, Alaska 529, the T. Rowe Price College Savings Plan, and the John Hancock Freedom 529. She lives in Alaska with her spouse, two children, and two dogs.

September is College Savings Month.  May 29 is 529 Day.

It’s not an oversight that Congress, which LOVES commemorative days, has not heralded College Borrowing Month or Student Loan Day. This simple example of two students shows why saving for college is always better than borrowing: 

● Amy: Beneficiary of college savings and no student loans. Over 18 years, Amy’s family was able to save $100 per month ($21,600 in total contributions) and had an average return of 6% giving her approximately $38,800 to pay her college bills. 

● John: No savings, in need of student loans.  With no college savings, John had to borrow approximately $38,800 (at 6% interest rate) to pay his college bills. He started paying $430 monthly for 10 years after graduation and will make approximately $51,700 in total principal and interest payments.

● The result: John paid $51,700 more for his degree than Amy. He also used $430 each month for 10 years to make a loan payment rather than investing in a home, retirement, and/or his children’s education.

● The benefit of savings: Families who can save a smaller amount ($100) each month over a longer period (18 years) enable their students to avoid borrowing a larger amount ($38,800) that needs to be paid over a shorter period (10 years).

The numbers and calculations are less important than the point: saving for college will reduce the total cost of education, better position graduates for future financial success, and maybe even help jump-start their retirement accounts.

How to save

Assuming agreement that “Saving a Dollar Today is Better than Borrowing One Tomorrow”^®, the question turns to how best to save for college. Since the first programs were launched 29 years ago, 529 Savings and Prepaid Plans have become the go-to vehicles for college savings, and they continue to grow. 529 data guru Paul Curley at ISS Market Research tells us that on June 30, 2025, 17.3 million 529 accounts were valued at $568 billion, up from 16.8 million accounts with $508 billion in assets under management just one year earlier. An excellent reason to celebrate 529 Day each year!

Before we look at 529 programs, it is worth noting that Coverdell Education Savings Accounts may also be a viable alternative for some families saving for college. Both enjoy tax advantages. Coverdell Accounts have not been widely used because they have income restrictions on who can open them, a relatively low maximum annual contribution of $2,000 per beneficiary, and a requirement to use the savings before the beneficiary reaches age 30. 

529 accounts have been structured to provide many incentives for families: 

1. No income restrictions:  Anyone, no matter their income, may own and contribute to a 529. 

2. Significant tax benefits:  Unlike brokerage or other taxable accounts, neither the interest and gains on the 529 investments nor the withdrawals for Qualified Education Expenses (QEEs) are taxed. QEEs include just about all college expenses, such as tuition, housing, food, books, supplies, computers, etc. In addition to federal tax advantages, many states also offer state tax credits or deductions.

3. Not state specific.  Savers may pick any of the more than one hundred 529 Savings Plans for use at schools in any state. Check 529 Prepaid Plans for restrictions, if any, on where those investments may be used and for options if the student decides not to attend a school for which a prepaid investment has been made. Find and compare 529 programs here.

4. Many uses for 529s. In addition to using 529s for college expenses, approved apprenticeship and certificate programs, savers may withdraw up to $10,000 for K-12 tuition and expenses, and/or payments on student loans.

6. Financial aid friendly: 529 savings have a minimal impact on financial aid eligibility. Money saved in a 529 Plan reduces financial aid eligibility by 5.64% of the amount saved. For example, $10,000 saved in a 529 could reduce financial aid eligibility by $564.

7. Beneficial for estate planning: Account owners, typically parents and grandparents, prefer 529s because they maintain control over how monies are invested but do not include the 529 accounts in their taxable estates.

Saving for college is an important way to minimize college debt, reduce the overall cost of obtaining a degree, and allow recent graduates to save for their future rather than pay for their past.

® – Invite Education LLC
 
About the author:
John Hupalo is the Founder & CEO of Invite Education

Devon Copeland, Senior Communications Associate, Invest529

September 3, 2025 (reprinted from September 3, 2024)

Do you ever find yourself having a chat… with yourself? Well, I do! Especially when it comes to big life decisions—like saving for college. A couple of years ago, I had one of these “talks,” and you know what? It actually helped! So, I thought I’d share that inner dialogue in case you’re also wondering, “Is saving for education really that easy?” Spoiler alert: Yes, it is. And with College Savings Month here, there’s no better time to start!

Me #1: Okay, self, we need to talk about saving for the kids’ education. We’ve been putting it off for a while now.

Me #2: Ugh, I know… But doesn’t it sound a bit… complicated? And expensive?

Me #1: That’s precisely why we need to get a handle on it now. And guess what—I’ve done some research. Turns out, a 529 account could make it a lot simpler.

Me #2: Oh, I’ve heard of those! But what makes a 529 account so special?

Me #1: Well, for one, it’s super flexible. You can use it for a wide range of educational expenses—like tuition, books, room and board, and even some K-12 expenses. Plus, it’s not just for traditional four-year colleges. Trade schools, apprenticeships, and even online courses are covered!

Me #2: Hold on. So, I can save now, and the kids can decide later whether they want to be doctors or auto technicians?

Me #1: Exactly. And here’s another cool thing: the money grows tax-free. So, every dollar we put in has a chance to grow more quickly over time without Uncle Sam taking a cut. When it’s time to use the money, we won’t pay taxes on the withdrawals if they’re for qualified expenses.

Me #2: I do like the sound of that! But how much do we need to start?

Me #1: That’s another great thing. You don’t need a ton of money to get started. Most 529 accounts let you open one with a small initial deposit, and then you can contribute as little or as much as you want, whenever you want. It’s totally up to us.

Me #2: Wait, so I could start with, like, $25?

Me #1: Absolutely, or even less! And we can set up automatic contributions to keep it going without even thinking about it. It’s like a “set it and forget it” situation, which is perfect because… well, let’s be honest, we always have a lot going on.

Me #2: That sounds manageable. But what if we don’t end up needing all the money?

Me #1: Great question. We can always change the beneficiary to another child or even to ourselves. Maybe I’ll finally take that pastry course in Paris!

Me #2: Ooh la la, now you’re talking!

Me #1: See? It’s really a win-win. Saving for education doesn’t have to be hard or scary. It’s all about getting started and doing what works best for our family.

Me #2: Okay, I’m convinced. This actually sounds easier than I thought. Let’s do it!

There you have it—my inner dialogue that led to some real savings! If you’ve been on the fence, maybe it’s time for you to have a little chat with yourself, too. Because with a 529 account, saving for education can be simple and rewarding. This College Savings Month, take the plunge. Your future self—and your kids—will thank you for it!

About the Author

Devon Copeland is the senior communications associate with Commonwealth Savers (formerly Virginia 529). Commonwealth Savers makes education more accessible and affordable for families and individuals. For more information on Commonwealth Savers education savings options, visit Commonwealth Savers.com or call 1-855-4SaveVA (1-855-472-8382) to obtain program materials.

August 20, 2025, marks the date 29 years ago that the Small Business Job Protection Act of 1996 was signed into law – the bill that included language for the original IRC Section 529.  So, this week we celebrate “529 Plans at 29” – programs which have positively impacted millions of lives and are also maturing just as the students and families we serve age and mature. 

The Early Years

State action providing tax-advantaged programs to help families plan and pay for postsecondary education started in Michigan and Florida in the 1980’s.  From that beginning, states across the country developed similar programs.  My journey with education savings began in 1994 when Virginia passed legislation creating the Virginia Higher Education Tuition Trust Fund (now Commonwealth Savers) and prepaid tuition contracts.  I helped develop the program as a Senior Assistant Attorney General for Finance and Tax when this new entity with only a statute and a fiduciary board became my client.  With a lot of assistance from our colleagues in Florida, Michigan, Alaska, Pennsylvania, and Texas, who by that time had already begun their journey, we launched a prepaid program in 1996 – just in time for 529s to be recognized at the federal level. 

I have been privileged to be front and center over the last 29 years as these programs evolved – becoming more flexible and affordable pathways to better futures for families.  The 1996 bill authorized not just the defined benefit prepaid tuition programs which states like Virginia had already opened, but savings programs more like a defined contribution IRA or 401(k) plan in the retirement arena. This expansion made all the difference and helped both kinds of 529 programs expand rapidly.

Cooperation and Collegiality Succeed

With Congress recognizing the importance of planning and saving for future education needs by providing favorable tax treatment to these mostly state-run programs the rapid growth of 529 programs was almost ensured. The states charged with administering 529 programs and their private sector partners picked up the mantle and took off, providing cost effective, professionally managed new solutions for families struggling with the ever-rising cost of education. 

The last 29 years have brought many changes to 529 plans – but what is consistent is the collegiality and cooperation among the states in building and strengthening 529 plans.  The College Savings Plans Network, established in 1991 in advance of federal action, has been an integral and crucial part of the 529 growth story.  CSPN, which I am honored to chair this year, provides a space and forum for state program administrators and their partners and other interested stakeholders to come together and share ideas on about strengthening our plans and broadening their reach.  That activity happens through legislative and regulatory advocacy, development of transparent disclosure principles, and through sharing ideas for outreach, marketing, governance, and investment management to make every plan better and stronger.    

Legislative Wins

And oh, have we advocated – successfully and steadily and to excellent effect!  In 2001 – a short five years from original adoption – federal action made qualified distributions from a 529 account completely tax free. Previously, gains were taxed on distribution to the beneficiary at a usually lower tax bracket than the account owner.  This change made a popular program even better. When the EGTRRA provisions were made permanent in 2006 (in the Pension Protection Act) after tireless work by CSPN members and the individual states, growth in 529s really soared – stopped only briefly by the recession of 2008 and 2009. 

More recently, 529 plan advocates have helped effect even more federal changes – including expanding the potential uses of a 529 account to computers and related peripherals to certain transfers to Roth IRA accounts.  Most recently, just a month ago the tax reconciliation bill allowed 529 funds to be used for an expanded list of credential and certificate programs, apprenticeships, and continuing education and for an expanded list of K-12 expenses. The cooperation and advocacy of 529 plans across the country, with their partners and the assistance of CSPN, made all these changes possible.     

By The Numbers

In 1996 when § 529 was adopted, state prepaid plans had modest amounts of assets – likely under $2 billion.  By 1999, three years after 529 enactment, assets in 529 plans had grown to almost $14 billion.  Fast forward to 2010, several years after the recession, and assets had climbed to more than $150 billion.  Currently, based on data collected and maintained by ISS Market Intelligence, which provides valuable 529 insights and data, 529 plans across the country hold almost $570 billion in assets under management.  Quite a success story.  A stated goal over the years has been to flip the script on student loans – currently estimated at $1.64 trillion.  Work remains to be done, but we are making progress in overtaking that student loan figure so that in future, more money is invested in 529 plans than is held in debt by our students. 

What the Future Holds

As we approach three decades of 529 plans, the future looks good with recent federal expansions, but challenges remain.  For all that 529 plans have grown and evolved, we still do not reach everyone with the message about what 529 plans can do for them.  The structure and fabric of education is evolving, with many pathways to meet the education needs of the technology driven 21^st century and there are headwinds to face.  Higher education writ large faces uncertainty, with more people questioning the value of a four-year university education, or any postsecondary education, than in previous generations. Even with moderating tuition increases in recent years, the cost of education continues to climb and feel out of reach for many American families.  The economics of many institutions of higher education are under severe strain – from falling enrollments to federal funding cuts to an aging population with fewer high school graduates. 

529 plans and the passionate and deeply committed people who work for them will continue to do what we have done for 29 years – plan, execute and advocate on behalf of our customers and all the citizens of our states.  We will provide gateways to the future for millions of students who otherwise might never reach for something new and different.  We will provide inexpensive, quality investment options and professionally manage them.  We will continue to advocate for positive legislative change to strengthen our programs.  We will leverage our voices in the media and across social platforms, through webinars and in community activities to reach people with a message for the future and how education and a 529 account can help reach dreams!  We will advocate educational access and affordability for everyone and provide resources in the form of financial education, scholarships, and mentoring to reach students where they are and help them find the right education pathway for them. 

About the author:

Mary Morris is the CEO of Commonwealth Savers (formerly Virginia529) and the chair of the College Savings Plans Network.