By: Lynn Fitch, Mississippi State Treasurer
July 17, 2017
Children dream big. They don’t see obstacles; they see opportunities. They want to fly a spaceship to Mars or be President of the United States? Why not! They want to be a unicorn? Well, some dreams we just can’t help them reach. But, as parents, we want to do everything we can to encourage our children to take those big steps in their life journeys.
A solid education is still the key to helping them achieve almost any goal they’ve set their sights on. But, the reality confronting most parents is that the cost of that education is high and keeps getting higher. Tuition has historically risen three to five percent a year, and a college education is already the second-largest expense a person will make in their lifetime, behind only purchasing a home. 
Parents need help and College Savings programs and 529 prepaid and savings plans provide just the assistance they need to help meet their children’s higher education aspirations. These tax-advantaged savings plans offer parents and loved ones the ability to essentially multiply the impact of even small savings and ease the financial burden on their families.
Last year, the College Savings Plans Network reported an average balance of over $210,000 for account holders. But, these plans allow people at every point on the financial spectrum to save. And, the one fact that will never change is that every penny helps.
College Savings 529 programs tend to be very flexible, too, offering students a wide range of options for using the money set aside for their educational futures. It’s not just about getting your bachelor’s at a four-year college any more. There are community colleges, technical and trade schools, and graduate degrees – all of which may qualify for using that 529 plan.
If your child chooses to pursue the Steve Jobs approach or finds a way to become a unicorn after all and doesn’t need college savings, don’t worry that you’ve wasted all that money. Same thing if your child earns scholarships that pay their way through school. College savings plans have refunding options for circumstances like these. You can save the money in your account for graduate school or change your beneficiary to certain members of your child’s family including siblings and cousins. You can also take a non-qualified withdrawal (a withdrawal not used to pay higher education expenses).* What’s more, having a 529 plan will not disqualify your child from eligibility for financial aid.**
Being a parent comes with lots of responsibilities, but no instruction manual. We don’t always know what to do to support our children. But, choosing to save for your child’s education is the one instance where parents can get it right 100 percent of the time. It’s not about how much you are able to save for your children, but that you do it.
* If you do take a non-qualified withdrawal, however, keep in mind that in addition to regular income tax, you will have to pay a 10% federal tax penalty plus your normal income tax rate on the earnings portion of any nonqualifiedthat withdrawal.
**There may be an impact on needs-based financial aid.
About the Author:
Lynn Fitch is the Treasurer of Mississippi, which offers two 529 plans: Mississippi Affordable College Savings (MACS) and Mississippi Prepaid Affordable College Tuition (MPACT). MPACT was the first of the two, opening in 1997. Graduates of MPACT who have become parents themselves are now buying plans for the next generation.