When Ted Wagner goes to college and studies to be a forensic accountant – a hybrid with the sleuthing skills of a detective and the bookkeeping savvy of an auditor – he can trace his parents’ footsteps through their 529 college savings journey.

He can follow the money and see how it grew tax-free from the time he was just a few years old until the day he began college.

“When he was little, he always wanted to be a police officer, and that has never changed,” says Ted’s mom, Shannon. “As a freshman in high school he had a personal finance class, and since he is mathematically inclined, the accounting was really easy for him.

“Then he learned about forensic accounting and he thought, ‘Well, I could be a police officer that also does math and accounting.”

Of course, you don’t need to be a forensic accountant like Ted wants to be to understand how investing a little can add up to a lot in a 529 plan. Quite the opposite. Opening a 529 college savings plan is easy, and in most cases can be done online in about 10 minutes with a modest investment.

Ted’s parents started early

“As soon as Ted stopped going to daycare, we put that money that we were saving into a 529 account,” Shannon explains.

“When we started, we did an age-based plan, and we did direct withdrawal from my paycheck, so we didn’t even have to worry about it. It was one of those things that we didn’t really think about it – we just knew that it was there, and it was a comfort to know that we were saving. But college was so far away that we didn’t really think about it.”

Until now.

Let the college visits begin 

Today, Ted is a junior in high school, and he has begun to make visits to colleges. He has visited Georgetown and Arizona State, some of the top schools for criminology studies.

Shannon said she and her husband, Eric, are now seeing just how expensive higher education can be.

“As we look at these private and public schools, we look at the price tags and we gulp,” she says. “But we know that we have that savings plan there to help us out.

“That’s the whole reason we opened the 529 account. We were very fortunate not to have taken out loans for our own undergraduate degrees. We did take loans out for graduate school, but we knew that college costs were going to increase, and when it came to our son, we thought he would likely have to take out college loans, and we wanted to do everything we could to not have that happen.”

Discovering the benefits of 529

Like many young parents, Shannon and Eric had never heard of 529 college savings plans prior to opening one. A financial advisor that spoke at Shannon’s workplace explained why 529 plans were such a great way to save for college education.

Often referred to as a savings account, 529 plans are typically investment accounts, and you can be as involved as you want to be. If you’re a savvy investor familiar with things like stocks, bonds and mutual funds, you can be more hands-on with your account. If investing isn’t your cup of tea, plan-appointed investment experts have developed various investment options that allow you to choose a strategy based on your preferred risk tolerance.

“When it comes to investing and the stock market, I don’t have time to watch all of that – I trust the portfolio managers to do that for me,” says Shannon. “I don’t have to be super knowledgeable about investing, I just need to put the money in on a regular basis and watch my savings grow.”

Increases in value of 529 savings are tax-free when they are used to pay for qualified higher education expenses, including tuition, books, room and board, computers and required equipment at any eligible school.

529 plans are administered by states, state agencies and educational institutions and are authorized by Section 529 of the Internal Revenue Code.

Need another reason to save for college? Consider these stats: Collectively, Americans currently owe more than $1.5 trillion on student loans. That total is second only to mortgage debt, and ahead of credit card debt and auto loan debt combined.

With the average student paying $393 per month toward a student loan, Shannon knows how important her investment has been. She also knows that children who have a college savings account are six times more likely to attend college.

Start early, save often

When Shannon and Eric started saving for Ted in a 529 plan, they went with age-based option. Age-based options are designed to automatically shift investments in your account to more conservative investments as your future student nears college age. Some age-based options also consider your preferred “risk tolerance,” something you determine when you set up your 529 plan account.

According to, one of the most popular investment options is an age-based allocation strategy.

“The important thing for us was just to start, with something,” Shannon says. “With the 529, starting early is your best bet because the money will multiply as your child gets older. Even if it’s $5 or $10 a month, that can grow into something substantial when he or she turns 18.”

Remember, you don’t have to be a numerical sleuth to figure this out. There are all sorts of tools and a wide variety of helpful information available on this website, like our savings calculator and a fun and informative 529 quiz. And don’t miss our spotlights on other parents who have shared their experience with 529 college savings plans and why they decided it was the best path to higher education for their children.

As one of the most famous (fictional) private detectives in history, Sherlock Holmes, would say, it’s “elementary.”



The 29-state alliance involves 48 partners including state treasurers, higher education agencies, financial service firms and other state officials. The public-private partnership was formed on the basis of increasing awareness of 529s.