February 1, 2019

3 Myths Surrounding 529 Plans and Why Opening One is Still a Good Move

Is giving the gift of a 529 college savings plan, such as South Carolina’s Future Scholar, really a good idea?

The short answer is yes. Unfortunately, there are still a few misconceptions that may be holding some back from opening an account or making a contribution.

That’s why we decided to take a closer look at three myths surrounding 529 plans and what the true benefits are for giving the gift of education.

Myth 1 – “If I open a 529 plan, it will reduce my child’s chances of getting financial aid.”

Stock Image of Outdoor Family Celebration With Grandfather Warmly Greeting Granddaughter With Future Scholar South Carolina's 529 College Savings Plan LogoThe truth is opening a 529 plan doesn’t mean your child’s chances of getting financial aid are automatically impacted.

In fact, according to Consumer Reports, the impact of saving in a parent-owned 529 plan generally has a minimal impact on your child's ability to qualify for financial aid.

In addition, a 529 plan is treated as the parent’s, or account owner’s asset, not the child’s, in determining eligibility for federal financial aid. Only 5.64% or less of the account’s value (based on the current financial aid formula) is factored in when determining a family’s expected contribution each academic year.

Myth 2 – “Only parents get a tax deduction. There’s nothing in it for me.”

Not true! Anyone can open an account or make a contribution to a pre-existing account and receive a tax deduction. The same tax benefit is available to any contributor.

What’s more, it’s not too late to make a contribution and still receive a tax deduction on your 2018 taxes!

Myth 3 – “A contribution to a 529 plan as a gift doesn’t have that ‘wow factor’ and probably won’t make much of an impact.”

Sure, it may not light up their faces as much as a stuffed bear or the latest video game, but giving a child or loved one the gift of education can help create a lifetime of opportunities for someone you care about.

Just consider this: South Carolinians now shoulder some of the country’s highest student loan debt, a median of $18,366. With your help, a child can head off that burden in advance.

What’s more, many parents already have a 529 plan. So if you’re looking for something to give – say for a birthday or special occasion – don’t hesitate to ask if you can contribute to the child’s Future Scholar account. Many parents are more than happy to receive a contribution to their child’s college fund, and it’s easy to contribute online!

Learn More.
To learn more about Future Scholar or how to send a contribution, visit www.FutureScholar.com. And if you’re still looking for that warm, fuzzy factor, you can give still give the stuffed bear and the gift of a brighter future.