A 529 college savings plan is a tax-advantaged investment account designed to help families save for future education expenses. It can be a great way to invest in your grandchild’s future and help them avoid student loan debt.

According to Savingforcollege.com, 529 plans are a popular way for grandparents to save for college and for good reason. With a 529 plan, you can build an educational legacy for your grandchild while taking advantage of tax and estate planning benefits. All earnings in the account are tax free! Best of all, under the new FAFSA (Free Application for Federal Student Aid) rule which goes into effect starting with the 2024-2025 academic year, 529 accounts owned by grandparents will no longer have an adverse effect on a grandchild’s financial aid eligibility!

You can use Saving for College website to compare fees, investment choices, and tax benefits of more than 40 features of 529 plans across the country. Generally, the best 529 plan is one offered by the state in which your grandchild lives. This is because of the state income tax savings. However, you are not required to use your home state’s plan, and if your state does not have an income tax, your options are numerous.

Personally, my grandchildren, my children, and I live in Texas which has no state income tax. I searched through the 529 plan options over a decade ago and chose Utah’s 529 plan for my children’s college account which is managed by Vanguard. Seeting up a college savings account for them was one of the best things I ever did.

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