The 529: College Savior or Dark Lord?

I received at least 5-6 questions about the 529 on last week’s webinar I did with the Syosset (NY) library.  Questions about switching children “beneficiaries” of the 529 plan, questions about 529 accounts held by grandparents, whether the 529 hurt your chances of aid and by how much, etc. etc. etc.

You might find this ironic (I do) given the widespread chatter on this topic:  only 27% of families have a 529 college savings plan, according to a CNBC study a couple of years ago.

Further, these plans are not necessarily all they’re cracked up to be.  On one hand, they do provide certain tax benefits, including deductions for contributions (some states) and tax-free withdrawals for qualified expenses.

On the other hand, the definition of “qualified” types of tax-free withdrawals is still pretty narrow, even with a slight expansion under the Trump administration.  Meaning that if you don’t meet the definition and withdraw your money, you pay a penalty.

Perhaps the WORST part about the 529, though, is that it reduces your financial aid!

So the government extends tax benefits on one hand, but penalizes you in the financial aid formulas on the other.  Bureaucratic genius, Catch 22.

This snafu affects many, but not all families.  In other words, the 529 is “good” for some families, “bad for others.”

Tomorrow (Sunday) morning I’ll go a little deeper on this and other various and sundry topics in an “encore” webinar for the folks who missed the class I ran a few days ago.

I’ll cover which savings penalize you more than others, and which don’t hurt you at all.

I’ll discuss how a “high sticker price” private college can actually cost you less out of pocket than a so-called “cheaper” public university.

And I’ll give a blow-by-blow on how to negotiate with a college, after it’s so-called “final” merit aid or financial aid offer.

So grab a cup of cawwwfeeeee and join me tomorrow am on the ol’ Internet:

(All details about time, link, what kind of bagels you can bring, etc. are laid out clearly on that page, so you really don’t have to pepper me with questions like “What time is the webinar?” and “How do I log in?”  Honestly, it’s ok. 🙂

Please share this invitation with anyone you like. Sharing is caring.

-Andy “Sunday, Money Sunday” Lockwood

P.S.  Want to learn how to become a college advisor and write posts like this to promote your business (and piss off a few grumpy people each time, no extra charge)?  Email me about our College Guru Certification program (

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