By Lisa Groen
Senior Writer, Utah Educational Savings Plan (UESP)
August 28, 2014

Andres, a junior at University of Nebraska Omaha, played soccer from the time he could walk, eventually earning his way onto a soccer club’s premier team. His father shuttled him to and from games around their home state of Utah, and to summer tournaments in California, Arizona, Colorado, and Nevada.

By the time Andres began playing varsity soccer in high school, he had his sights set on a college soccer scholarship. Though his parents had invested a lot of time and money into their son’s sport, they knew his chances were slim. They never counted on a scholarship. They had opened a 529 college savings account when he was a toddler, and contributed to it regularly. They cheered for him from the stands, and hoped for the best.

Andres got lucky.

He beat the odds and landed a rare partial athletic scholarship for $6,300 per year. The total cost of attending the University of Nebraska Omaha — including tuition, fees, books, housing, and meals — is about $14,700 per year, more than double the amount of his scholarship.

Andres got lucky again; his parents had saved more than enough to cover the difference.

Andres’ parents had saved $60,000 for their son’s college expenses in a 529 plan, roughly the equivalent of four years of full tuition to the University of Nebraska Omaha in today’s dollars. If Andres receives scholarship funds of $6,300 for his senior year in college, and he graduates on time, a balance of at least $25,200 will remain in the 529 account.

Andres’ parents need not worry about losing the money left in their 529 account.

Because Andres earned a scholarship, his parents may make a non-qualified withdrawal from the account up to the amount of the scholarship without incurring the 10 percent federal penalty tax on the earnings. The earnings will be subject to federal and state income taxes, but that would be the case if they’d saved for college using a traditional investment, money market account, or savings account, plus they would have had to pay taxes on the earnings each year rather than after making a non-qualified withdrawal.

Andres’ parents may opt to leave remaining funds in the account to help pay his graduate school expenses. Another option would be to change the beneficiary on the account to one of Andres’ family members or to transfer the money to another beneficiary who will attend college – a sibling perhaps.

Ideally, college planning begins before your child enters high school and starts applying for scholarships. Before your son or daughter steps onto the high school athletic field, or walks across the stage to accept a National Honor Society award, open and contribute to a 529 account. Saving for your child’s future today helps to ensure a more manageable college tuition bill tomorrow.

About the Author
Lisa Groen is senior writer for Utah Educational Savings Plan (UESP). UESP is Utah’s official 529 college savings plan, gold-rated by Morningstar. UESP offers multiple investment options, low fees, and requires no minimum account contributions. Please visit or call 800-418-2551, to open an account today. 

Read the Program Description for more information and consider all investment objectives, risks, charges, and expenses before investing. Call 800.418.2551 for a copy of the Program Description or visit 

Investments in UESP are not guaranteed by UESP, the Utah State Board of Regents, the Utah Higher Education Assistance Authority (UHEAA), or any other state or federal agency. However, Federal Deposit Insurance Corporation (FDIC) insurance is provided for the FDIC-insured savings account. Please read the Program Description to learn about the FDIC-insured savings account. Your investment could lose value.

Non-Utah taxpayers and residents: You should determine whether the state in which you or your beneficiary pays taxes or live offers a 529 plan that provides state tax or other benefits not otherwise available to you by investing in UESP. You should consider such state tax treatment and benefits, if any, before investing in UESP.