By: South Carolina State Treasurer Curtis Loftis, Administrator of Future Scholar College Savings Plan

February 18, 2020

Most parents think that their children are the smartest and most talented kids around, and they should. All children deserve to have parents who are supportive and believe in their ability to succeed. But relying on a child’s dazzling genius or amazing dribbling skills to fund his or her future college education could be a pretty risky strategy.

The truth is scholarships that cover the total cost of a university, technical college or trade school education are hard to come by. Mark Kantrowitz, author of Secrets to Winning a Scholarship, reports that less than three-tenths of 1% of all undergraduate students have been awarded enough scholarship money to cover the cost of tuition, and that includes both athletic and academic scholarships.

Saving is Still Important

That’s why the best strategy for meeting the cost of a child’s future education is saving with a 529 college savings plan.  Besides tuition, 529 funds can be used for housing, meals, computer equipment, art supplies, textbooks, fees, study abroad programs, and summer classes – qualified expenses a child needs to complete his or her education. Those expenses add up quickly. So, if your child is one of the lucky recipients of a scholarship and you’ve saved with a 529 college savings plan, you will more than likely still want and need to apply your savings to college expenses.

Plenty of Options

But what if you are a parent whose child is a star student or a gifted athlete? What if your child’s education is completely paid for with scholarship money? The answer is simple. You still have plenty of options. Betty Anne Black, who saved with South Carolina’s Future Scholar 529 Plan for her daughter, was one of those lucky parents. Her daughter attended Clemson University “on a full ride” for her academic talents. Still, Betty Anne was happy she had saved with a 529 plan.

“My daughter only had to pay for books and didn’t need all of her Future Scholar funds for undergraduate school, so I transferred them to help with my son’s tuition needs,” Black said. “Then, I put the remaining funds toward my daughter’s graduate school tuition.”

There’s no time limit or age cap on using 529 funds, so the money can be used for graduate school at any time, or, like Ms. Black, you can change the beneficiary to another qualified family member who wants to attend college, including siblings, parents, nephews, nieces, aunts, uncles, spouses, or in-laws. Even your future grandchild could become the beneficiary someday.

Withdrawing Your Funds

If your child receives a scholarship, and you decide you need the funds for another purpose other than education, you can always withdraw up to the amount of the scholarship without penalty. Because your child has earned a scholarship to pay for college, you will only be responsible for paying the federal and (possibly) state income tax on the earnings portion of the withdrawal. In this scenario, your tax-free 529 college savings fund simply becomes a tax-deferred investment fund.

Here’s hoping your child is a gifted athlete, a talented scholar or both! Regardless of whether the scholarship offers come pouring in, you will rest easy knowing that a 529 plan can help your child reach his or her educational goals.


About the author

Curtis Loftis is the State Treasurer of South Carolina. He also serves as the administrator of South Carolina’s Future Scholar 529 College Savings Plan. Visit or for more information on ways to save through a 529 plan.