To help ensure that your child or grandchild is not burdened with excessive student loan debt, consider opening a 529 college savings plan. There are plenty of misconceptions so let’s try to address a few of them.
• You are not limited to 4-year undergraduate colleges; rather, trade, vocational, graduate schools and community colleges are all possibilities.
• It is not a use it or lose it proposition. You can use the money for your own education or pass it on to another beneficiary. Worst case, if you withdraw the money for non- qualified expenses you would pay income taxes and a 10% penalty on the earnings.
• As it is considered your asset and not your child’s, it will only have a minor impact if any, on financial aid.