The Heartbreak of Student Loan Debt: How 529 Plans Can Help

By: Patricia Roberts

Featured image licensed by author.

With Valentine’s Day upon us, many adults are looking for gifts for the children they love. Whether a parent, grandparent, aunt, uncle, or family friend, finding just the right gift for a child so soon after the December holidays can be challenging. Rather than adding yet another stuffed animal or toy to their growing collection or giving a Valentine-themed article of clothing that may be quickly outgrown, gift givers may prefer a more meaningful option that the children they love can benefit from for years to come.

Theres one gift in particular that can help young ones be better positioned to pursue their future academic and career dreams: a contribution toward a 529 college savings plan account. Named after Section 529 of the Internal Revenue Code and offered by nearly every U.S. state, these easy-to-use and tax-favored investing plans can help families minimize or avoid the heartbreak of student loan debt.

With approximately 44 million former students struggling to repay over $1.6 trillion in outstanding educational debt, and with an even greater stress on women who typically have larger student loans than men, there’s every reason to consider a gift toward college.

Here are five ways 529 plans can help future students and their families have brighter educational and financial outcomes.

1) Tax-free growth and tax-free withdrawals.

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2) Versatility.

3) Flexibility.

If not needed for the original beneficiary, the money in the account could even be saved and used for the original beneficiary’s own children someday. While there is no time limit in which the funds must be used, this added flexibility provides families additional peace of mind.

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4) Easy for others to contribute.

Beyond this, many 529 plans make it easy for account owners to invite their friends and family to pitch in with a simple electronic invitation. For gift givers who are not certain if an account has yet been set up for a particular child and who don’t want to spoil the surprise by asking, there are gift cards that can be purchased online or through retailers around the country that recipients can redeem into most any new or existing 529 college savings plan account.

It takes a village to get a child to and through higher education, and including others in the journey can be rewarding for all involved!

5) Valuable financial education.

This Valentine’s Day, rather than spending money on more traditional gifts that are quickly outgrown or discarded, those with children in their life may consider planting a seed for the future by opening a 529 college savings account or contributing toward one that’s already been set up. Every dollar saved is that much less that will need to be borrowed and repaid with interest. And planning for a child’s educational future helps everyone involved avoid the heartbreak of student loan debt.

[Related: Women and Money: Are You in Control of Your Finances?]

Patricia Roberts has helped tens of thousands of families prepare for the cost of higher education through her leadership in nearly every aspect of the 529 college savings arena over the past 20+ years. She has authored a top-selling new release called Route 529: A Parent’s Guide to Saving for College and Career Training with 529 Plans, writes for Thrive Global and other publications, and serves as Chief Operating Officer at Gift of College, Inc. You can follow her on LinkedIn and Instagram.

Originally published at https://www.ellevatenetwork.com.

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