Parents can use a 529 plan to pay for K-12, but most won’t

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Kathryn Flynn

By Kathryn Flynn

June 5, 2018 recently surveyed over 1200 parents who are saving for a child’s education to gain insight on how they use 529 savings plans and prepare their children for college. 

529 plans, originally designed to help save for college, allow tax-free earnings growth and tax-free withdrawals when the funds are used to pay for qualified expenses. Beginning January 1, 2018, this includes tuition expenses at private, public or parochial elementary and secondary schools. The survey found that although 82% of parents are aware that you can use a 529 savings plan to pay for K-12 tuition expenses, most will not be using it for that purpose. 

According to the survey, 23% of parents send or intend to send their children to a private K-12 school, but only 18% of those parents plan on using a 529 plan to pay for it. Over half of parents said they will not be using their 529 plan to pay for pre-college expenses, and 28% said they weren’t sure.   

Do you think you will use funds from a 529 plan to pay for private K-12 tuition expenses? 

529 plans, private k-12

Parents who have a 529 plan may be concerned about withdrawing the funds too early and jeopardizing their child’s college savings. By withdrawing the funds to pay for private elementary or high school, they could miss out on the potential benefits of tax-free compounding with a longer investment time horizon. To avoid this, families may want to consider opening a separate 529 plan to cover K-12 tuition expenses. Parents who live in certain states may also qualify for a tax deduction or credit for plan contributions that are used to pay for K-12 tuition. 

Private school is just one example of how parents prepare their children for future academic success. The survey also revealed attitudes regarding early education and summer activities to help prepare for college academically and financially.

Early education

Of the parents with children ages 0-5, 87% send their children to pre-school, or expect to in the future. When it comes to their attitude about elementary school, 71% feel that a good elementary school will give their child a solid foundation, but it won’t be the determining factor in future academic success, 23% believe getting into the best elementary school possible is critical and will impact future academic achievement and chances of getting into a top university, and 6% think that elementary school really won’t matter in the long run, and that future academic success will depend more on the child’s attitudes, abilities and other opportunities and experiences.

Summer enrichment programs

During the summer months, parents of school age children take advantage of enrichment programs. Parents with children ages 6-13 were most likely to enroll them in sports (63%), science, writing or other academic camps or classes (35%), arts and crafts related activities (30%) or music camp or lessons (26%). Other responses included church camps, boy scouts and dance.

Using the summer to prepare for college

According to parents of high school students (ages 14+), summers are spent helping with upcoming college costs and participating in activities that will help build a college resume. The survey revealed that 72% of students will get a summer job to help with college costs and 57% of students will search for scholarships. Less popular responses were taking summer courses at a community college (11%) and study abroad (4%).

Depending on which school your child is applying to, the college resume can be an important piece of the admission decision. According to the survey, parents said their children will participate in various summer activities to gain valuable skills and experience. Most parents said their child will get a part-time job (58%) or volunteer (55%) to boost their college resume. Other activities included sports (38%), academic camps or classes (15%), music camps or lessons (13%) and creative camps or classes (9%).

A good place to start:

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