College is more expensive than ever, and many high school grads heading to college in the next few months are unsure how they will pay for a full four years.
But parents of younger children can prepare for this expensive next step by investing in 529 plans offered by their state. Rhonda Martinez and her daughter were on a recent college tour and admitted they never signed up for a 529 plan.Andrew Kadjeski with Vanguard helps to clear up myths and misunderstandings related to education savings plans.Those misunderstandings start with what funds can be used for, outside a traditional four-year college.
"You can use them for K-12 expenses, graduate school, trade school, apprenticeships," Kadjeski said."You can even use money from a 529 to help pay down student loan debt."A 529 fund can also go toward studying abroad, books and new technology. If there's money left over in a 529, many parents worry the money will be lost.And thanks to recent legislation, you can even start a child's retirement account with leftover money.
"You can roll over a significant portion to a Roth IRA account for that same child and give them a great head start to another really important savings goal of retirement," he said.In the meantime, if you're headed to graduation parties this summer, Kadjeski said contributions make great gifts.He said plans vary by state, but no matter where you live, you don't need much to get started.
529 PLAN MYTHS 529 PLANS PROS AND CONS
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