By Jamie Dushin, Accounting Manager, Achieve Montana, Montana’s official 529 Education Savings Plan.

July 9, 2024

At the end of last year, student loan debt in the U.S. totaled $1.74 trillion.1 That makes for an average monthly student loan payment of more than $393.2 And while loan forgiveness initiatives are up in the air every few months, here’s one thing that’s for sure – saving early can outweigh both the costs and stress of paying for college and higher education. As parents, we’ve learned to do just about anything to help our children – perpetually share the bathroom with our toddler, stay up until 4 a.m. completing school projects, watch the same cartoon episode for the twentieth time (you know the one). But what if, in 2024, instead of stretching ourselves thin to ensure our children’s future, we started saving for it?

Here are the top 5 reasons why starting a 529 plan beats taking out student and federal loans on any given day!

#1: Saving is less expensive than borrowing.

We’ve crunched the numbers, talked to advisors, factored in inflation, and considered rising tuition costs – no matter how you spin it, saving now beats borrowing every single time. And we get it; it doesn’t always make logical sense or even financial sense to set aside hundreds of dollars each month. But what if we told you that setting aside even small amounts (think $15, $25, $50) each paycheck could save you thousands of dollars in the future? Yes, thousands – tens of thousands.

#2: 529 plans can cut tuition costs.

Speaking of costs, college tuition continues to rise every year. Along with it are associated expenses like textbooks, study materials, and room and board. While 529 plans can’t directly cut the tuition price, they offer flexible spending options – allowing students to pursue their general education credits at a less expensive college and then use the rest of their funds toward their primary degree. Funds in most 529 accounts can be used at nearly any two-year or four-year university, trade or technical school, or qualified apprenticeship program. See your state’s plan for additional details.

#3: Zero interest & tax-deferred growth.

And here’s one of the best parts – no interest payments AND tax-deferred growth! What does that even mean? We’ll break it down for you. Unlike a loan, no borrowing is involved, eliminating any compound interest you would owe. But what does add up is the additional savings you acquire! With flexible investment options, every dollar saved in a 529 account has the potential to become another dollar earned. In other words, you save, and then you save again!

#4: 529 plans can be used alongside financial aid.

When it comes to saving for higher education, many parents worry that opening a 529 plan will hurt their child’s eligibility for receiving federal aid. And while the fear is valid, it’s just not accurate. Will a parent’s 529 savings be taken into consideration when reviewing FAFSA applications? Yes. Will they have a significant effect on your child’s financial aid package? No. If your student is a dependent, the funds in your 529 account are considered the parent’s asset. As a result, when determining one’s “Student Aid Index,” funds in a parent’s 529 account will generally be counted at a rate only up to 5.64% of its value – making a minimal difference in financial aid eligibility.

#5: Proactive savings ignites confidence.

We saved the best for last. As parents, we know that our children can dream anything, be anything, do anything! But, as kids, that can often be hard to understand. So, hold onto this – Not only are children who know they have college savings accounts more likely to attend college, but behind every gift, every contribution, and every investment choice is your affirming and resounding voice saying, “I believe in you.” And that voice, your voice, can be the strongest investment of all.

About the author:

Jamie Dushin is an Accounting Manager at Achieve Montana, Montana’s official 529 Education Savings Plan. To learn more, visit



2Board of Governors of the Federal Reserve System Report on the Economic Well-Being of U.S. Households in 2016- May 2017