Investing in either of our state's plans provided no tax benefit to us so I expanded the search and discovered Utah Educational Savings Plan. Utah's plan (UESP) is highly rated in terms of returns, investment options, and low fees.
Why a 529 plan may be right for your child:
- 529 plan balances are counted as assets of the parents, not the students, on the FAFSA form so they don't affect your expected family contribution nearly as much as a savings account or other account in the child/student's name.
- 529 plans can be used for several different types of advanced learning, including vocational school.
- The beneficiary of the 529 plan can be changed to another family member without penalty.
- Earnings are not subject to federal taxes and are typically not taxed at the state level either.
- You can ask family and friends for money for college instead of toys (or so many toys) at birthdays and Christmas. UESP even has a form on their website-- those giving to the 529 as a gift can submit the top part of the form with a check, and keep the bottom part to present to the child for birthday, Christmas, etc.
- Opening a 529 plan account helps with goal setting. In our experience, I've found that when we set up an account and establish a concrete monthly savings goal, we are more likely to follow through. Goals matter.
Don't forget-- saving for your own retirement takes priority over saving for your child's education.
What ideas do you have for saving for your child's education? Are you planning on paying for it all, or just hoping to lessen the student loan burden?