The disadvantages of the 529 plan:
- The money is an investment and therefore is exposed to market risk.
- Since the growth is tax deferred, the advantage of the program encourages market risk behavior.
- The investment may only be modified once each calendar year.
- The assets of 529 plans are reportable to the Financial Aid process as a parental asset.
- There are tax implication if the money is not used for qualified post-secondary education.
Remember, every family is unique, so your use of a 529 plan will also be unique. Also, as a note of caution, consult your your financial advisor, your Certified College Planning Specialist (CCPS) or your tax advisor for recommendations in your specific family circumstances.
A future blog will discuss approaches other than, or in conjunction with a 529 Plan, to assist in paying for college costs.