Is using a 529 plan a good strategy? Heck, is college worth the expense?

A July 31, 2025 article in the New York Times triggered this post. The headline reads Saving for College Once Felt Essential. Some Parents Are Rethinking Their Plans.

The article is primarily about 529 plans, but also about saving or attending college at all. One comment caught my eye as it questioned the value of college because it didn’t guarantee a good job. I wasn’t aware college ever guaranteed a job or anything else for that matter. 

Nonetheless it appears 529 plans are falling out a favor, sometimes replaced by a brokerage account where the parent has access to the funds “if needed.” Now that sounds like a bad idea to me. Not unlike early withdrawals from a 401k.

We began using 529 plans when our first grandchild was born. He will be a sophomore in college this Fall. Our oldest granddaughter starts this fall as well - at the same college by chance. 

Each month we contribute $100 to each grandchild’s account and another $100 on birthdays and Christmas. We used to print a “clever” note telling them what we did for their birthday, but stopped the note when one of the younger grandsons said he didn’t want a “coupon” for his birthday. Too bad, the 529 is still his present. 

None of our account balances will pay for their college or even one year it appears, but it helps. So far, a portion of our 529 plans are being combined with the parents savings and scholarships to pay the first year. This allows the parents a bit more flexibility with their money and delays taking loans. 

I don’t claim the 529 is always the best strategy, but they are easy to establish, they have tax advantages (sometimes tax free at the state level too) and you can set up automatic contributions as well have. Our plan’s investments are adjusted for less risk as the child nears college age. 

Qualified education expenses eligible for 529 withdrawal typically include:

Tuition and fees at eligible educational institutions (colleges, universities, vocational schools, etc.).Room and board for students enrolled at least half-time (up to the amount determined by the school for its cost of attendance).Books, supplies, and equipment required for enrollment or attendance.Computers, software, and internet access used for educational purposes.K-12 tuition and fees (up to $10,000 per beneficiary per year).Apprenticeship program expenses (fees, books, supplies, equipment).Student loan payments (up to $10,000 lifetime limit per beneficiary).

A 529 can be transferred among family members if necessary. The downside is withdrawals for non-qualified purposes are taxed as ordinary income plus a 10% penalty on earnings (subject to certain exceptions).  Within limits, unused funds can now be placed into a Roth IRA for the beneficiary.

Is college necessary, a good investment, does it guarantee success of any kind? Should a basic college education take 4-6 years? We need to rethink the structure of education post high school, and I think some publicly funded education beyond twelve years should be considered, but I’m not ready to give up on college.

It sure is expensive though. 

The post Is using a 529 plan a good strategy? Heck, is college worth the expense? appeared first on HumbleDollar.