When families sock away money in 529 plans, they can use the funds to pay for college-related expenses, but they don’t have to wait until their child is in college.
The tax-advantaged savings accounts can be used to pay for the cost of college courses that students take in high school if the district doesn’t cover it.
As long as students are getting college-level credit and are enrolled as students at a college, there is no age requirement about when families can start using savings from their 529 plans, according to Joseph Hurley, founder of Savingforcollege.com in Pittsfield, N.Y.
“This is an expanding area as parents look for ways to deal with higher college costs,” says Hurley.
Dual- or concurrent-enrollment courses are now offered in nearly 48 states (with Maryland and Vermont recently coming on board), and the majority have students pay a portion of the tuition, says Adam Lowe, executive director of the National Alliance of Concurrent Enrollment Partnerships in Chapel Hill, N.C.
However, parents might be asked to pay just a fraction of the tuition cost, such as $25 a credit hour, which is a bargain, says Lowe.
Using 529 plan money for dual enrollment can be helpful, as federal financial aid, including Pell Grants and Stafford loans, are not available to students unless they have a high school diploma or equivalency, he adds.
Named after Section 529 of the Internal Revenue Code and created in 1996, the education savings plans are operated by state or educational institutions to help families set aside money for future college costs, and special federal tax benefits encourage the savings. Still, many Americans are unaware of the plans.
A recent article in U.S. News has more on the topic.