What is a 529 savings plan?

Contributions to a 529 savings plan go into an investment account managed by your plan’s fund manager, which is normally an investment firm or bank. Once you open an account, both you and others, such as grandparents, can put money into it.

Funds from a 529 savings plan can be used to pay for qualified expenses at private colleges, public universities, community colleges, graduate schools, and trade schools. Also included are tuition and fee expenses for elementary or secondary public, private or religious school. Some foreign schools  may also be eligible for the use of 529 savings plan funds. Effective December 20, 2019, up to $10,000 from a 529 plan can be used to repay student loans.

Nearly every state offers at least one type of a 529 savings plan. You can invest in any state’s 529 plan, but some states offer tax advantages for residents. If you are considering enrolling in a 529 savings plan, be sure to understand the differences between 529 plans and the costs associated with each plan you are considering.