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Why 529 college savings plans are perfect for technical and vocational pathways

By Jackie Ferrado, Associate Director for Community Engagement, Washington 529 College and Education Savings Plans (WA529)

February 6, 2024

The landscape of higher education is constantly evolving. It has even more so in the past few years as students have suddenly begun learning, studying, and networking from behind the screen. Recognizing that learning can happen from anywhere, at any time, and in a variety of ways is the foundation for increasing access to higher education. 

Diversity in education

When we think of higher education from a holistic point of view, it’s important to consider that employees who come to the workplace with education and training from vocational, technical, and apprenticeship programs are equipped with practical knowledge and skills that allow them to be job-ready and prepared to meet the demands of the specific industry. Through practice and hands-on learning alongside licensed professionals, apprentices gain insights into the real work that may not resonate as well from a classroom setting alone. This approach can be meaningful to employees and employers alike. 

Supporting economic recovery

The cost of pursuing a degree continues to increase, and students may find themselves taking out more student loans than necessary and receiving a credential that may or may not best meet their career goals. Through individual savings efforts and a careful and thoughtful educational path that supports career goals and passions, students with technical and vocational training can often gain valuable skills at a more affordable cost and enter the workforce sooner. As a result, these students may find themselves in a high-demand position with a competitive salary. 

Using 529 funds for trade schools and apprenticeship programs

Families who are saving for their child’s future education in a 529 plan can be confident that if their child prefers a program through a technical, vocational, or apprenticeship pathway, their savings will cover a variety of those expenses. 

Here are three tips for maximizing the benefits of a 529 plan for technical, vocational, and apprenticeship training programs:

Whether a student chooses to continue their education and earn a degree or certificate for their training, their options are wide open, and the experience will provide them with a positive and lasting impact. 

By embracing these diverse pathways and using savings options like a 529 plan, these future students can pursue careers that satisfy their passions and help them build a fulfilling career. 

In the words of Malcolm X, “Education is the passport to the future, for tomorrow belongs to those who prepare for it today”. Let’s give the younger generation the encouragement to pursue their dreams, the tools and information to be financially prepared and the opportunities to create their educational pathways from the variety of available options.

About the author:

Jackie Ferrado serves as the Associate Director for Community Engagement with the Washington 529 College and Education Savings Plans (WA529). Since 1998, tens of thousands of students have used more than $1.7 billion of their WA529 savings to attend colleges and trade schools in the U.S. and at least 15 foreign countries. Outside of work, Jackie enjoys baking, reading, and spending time with her three grandchildren. 

By Jørn Earl Otte, Hartford Funds’ Strategic Marketing Consultant for SMART529 in West Virginia

January 8, 2024

This is the year! You’ve made the commitment – you are going to start setting aside money for your little one’s higher education.

Excellent! Your child or grandchild will be very thankful, and your New Year’s Resolution to start that 529 plan might be one of the easiest resolutions to keep! But where to begin?

The idea of saving for college or trade school can be scary, and the options available can seem overwhelming. With so much in the news about the rising cost of college, it can feel like saving for your child’s future is too big a burden to bear. But you don’t have to feel that way. There are ways to save money for your child or grandchild that can be simple, effective, and stress-relieving.

Here are three simple and effective things you can do to start saving for your child’s future education.

1. Make a monthly “everything” budget: When folks are living paycheck-to-paycheck, the idea of saving even a little bit of money seems too daunting. Groceries, car payments, mortgage, or rent – there appears to be nothing left over. However, if you take a closer look at your monthly expenses, you may be surprised to learn that you have some money left over, but it has been used for things you don’t need. Sit down one evening and write down every single bill you have for the month. Water, electricity, and so forth, but also streaming services, cell phone plans, magazine subscriptions, how many times you ordered dinner-to-go, and how many bags of chips you bought at the grocery store. Everything. Down to the last penny. It may take a little while, but knowing exactly where your money is being spent can be eye-opening. Then, write down your monthly income. Odds are the two figures are pretty close, and likely too tight for your comfort. Look at the list of your monthly expenses – Do you need to spend $100/month on fast food? What about those subscription services? And those magazines? Do you actually read them, or do they collect dust? Be honest with yourself, and you will likely find at least a few dollars each month that can be set aside for something more significant than binge-watching a 1980s sitcom.

2. Open a 529 account: No one knows what the future holds. Your child or grandchild may go to college in-state, or they may fly across the country to follow their dreams. They may love working with their hands and pursue a career in carpentry, or they may get excited about the idea of becoming an electrician. Whatever they may do, you can prepare for it financially with a 529 plan. While most people think 529 plans are just for tuition at traditional four-year colleges, they can be used for so much more – vocational school, technical school, apprenticeships, books, supplies, room and board, and more. And you can feel good knowing that, no matter how little or how much you save for them, every dollar you give them is a dollar they won’t have to borrow from a lender to pay back for the next 20 years. Check out the 529 plan available in your home state, or compare various plans from around the country: www.savingforcollege.com (Read on for more about this).

3. Start small, commit to growth: You will need to check with your own state’s 529 plans to determine what minimums, if any, may exist for opening a plan, and what tax benefits may be available to you. You may also need to seek out the advice of a financial professional to determine which 529 plan is right for you – your own state’s or another’s. Once you know the best path for you, open a 529 account with at least the minimum required. It could be as little as $5, $25, or in some cases even just $1. Commit to the amount every month. Set up automatic contributions from your checking account, or talk to your employer about payroll deductions. After a few months of these minimum contributions, you may begin to realize that you can afford to increase them. If you can, commit to manageable increases every month until you reach the maximum figure you feel you can contribute. No matter how large or small that amount turns out to be, you will have made a tangible, meaningful difference in the lives of your children and grandchildren.

Start with these three simple steps: Budget, Open, Commit. And when your little loved one decides where they want to expand their educational future, you will have helped them to have a financial head start. Happy New Year and Happy New 529 Account!

About the author: Jørn Earl Otte is Hartford Funds’ Strategic Marketing Consultant for SMART529 in West Virginia.