When a child is born, parents tend to adjust their budgets to account for diapers, baby food and child care — not necessarily for the cost of the child’s college education years down the road. But as the cost of higher education continues to rise, it’s more important than ever to start saving early and often.
Enter 529 college savings plans, which since their creation in 1996 have helped families stash away money for higher education by offering tax-free withdrawals on qualified expenses, including tuition, housing, books and meal plans. Despite the benefits that come with 529 plans, some parents hesitate to save in them: Just 30% of families use a college savings fund such as a 529 plan, according to the Education Data Initiative.
