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College expenses can really add up, and if you’re not prepared, it can be incredibly overwhelming. It doesn’t have to be. We interviewed Donna Crownover, Vice President of Relationship Management at Union Bank and Trust in Lincoln about her advice for saving for college. Here’s what she had to say.

Why save for college?

The cost of college continues to rise, so the sooner you start saving the better. Talk to your kids about the savings that you’re doing and involve them in this process from a young age. It’s, a great learning experience for all of you.

What if you are still paying off your own loans?

Taking care of your own debt and saving for retirement are both top priorities, so you will need to get creative with ways to save. As your children get older, you won’t have daycare expenses you had before, so redirect those dollars. Or, if you’ve paid off a car loan, redirect those dollars. That way, you’re in the habit of setting money aside.

What is a NEST 529 Plan?

The 529 plan is a tax-advantageous way to save for future college expenses. It’s called 529 simply because it’s named for a section of the IRS code. The NEST 529 plan is a tax-advantaged plan that’s sponsored by the state of Nebraska. It includes benefits for setting money aside for future college expenses.

How does a NEST 529 compare to a traditional savings account?

In addition to tax benefits, there are various investment options available. The first is our age-based portfolio, which is a set-and-forget-it option where the investments automatically become more conservative as your child gets closer to college age. We also have static options that are not tied to the age of the child because you may be a very conservative or very aggressive investor. Lastly, if you want to build your own type of portfolio, we have some individual fund portfolios you can select.

How do you know which investment option to pick?

It can be overwhelming if you’re not quite sure how you want to invest. Our website has a risk-tolerance tool, which helps you know how each option fits your investment style. If you work with a financial professional, reach out to them. They’re available to not only give you their professional financial advice, but they will know how the 529 Plan fits into your other investments.

What happens if I put money into a 529 and my child doesn’t go to college?

If you have a beneficiary that is not going to go to college, or maybe they go to college and there’s money left in the account, you can change that beneficiary to another member of the family. Perhaps there’s a sibling, a cousin, or even a parent going back to school. There’s some flexibility with changing the account.

How does the withdrawal of that money work?

Only the account owner can request a distribution, not the beneficiary. When you get a bill from the school for things like tuition and fees, housing and food, books and supplies, and required equipment, you can request a check be sent directly to the school. You can also get reimbursed for college-related expenses that you paid.

When is it too late to start a 529?

It’s never too late. Even if you have a student heading off to college now, you can still be setting money aside while they’re in school.

Should I have a 529 for each child or can they share?

It’s a personal choice because you have the flexibility of changing the beneficiary to another member of the family. You can only take qualified distributions for the named beneficiary, but then you can open a second account for your younger child and transfer funds between them.

How do I let relatives know how to contribute to my child’s 529?

We make this easy through our gifted program. You as the account owner can invite family or friends to contribute to your child’s 529 account.

By Sydney Burdick