Section 529 Plans

You may select to invest with any state's 529 plan, and the money can be used at any college in the country. If your state has no 529 plan, or if you prefer the one offered by another state, you may take advantage of another state's plan.

If the child doesn't go to college, the money can go to another family member for education expense. If the money isn't used for a college education (tuition, room & board, books, fees, supplies, computer), you pay a 10% penalty and taxes. There are no income or age limits. If you find that you don't like your current plan and have held it for at least one year, you can switch to another.

One type of 529 plan offered by some states is a "prepaid tuition plan". Don't go for it. Since you are locked into one school or state school system, it is too restrictive.

The person who initially funds the plan controls it. Since the assets of the plan are considered to be the parents, it is easier for the student to qualify for additional financial aid as long as the income from the plan (considered to be the child's) is a modest amount.

The only negative thing I see with a 529 plan is that you have little control over the investments since you must choose among the options offered, which usually give you 4 to 7 choices.

You can look at all the state’s 529 plans and compare them at www.savingforcollege.com/compare/

Other Financing a College Education Topics:

1. Financing a College Education
2. Coverdell Education Savings Account
3. Section 529 Plans
4. Scholarships
5. Help from your college's financial aid office
   

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