BiggerPockets Money Podcast How to Create Huge Tax Savings Funding Your Kid’s College (& FIRE on Time!)
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May 9, 2025 Amberly Grant, a financial aid expert, shares her deep knowledge on funding college education while pursuing financial independence. She discusses the intricacies of FAFSA and compares 529 plans with UTMA accounts, offering insights on choosing the best option for tax savings. The trio explores how to uncover 'free money' through grants and scholarships, and they emphasize balancing college funding with retirement goals. Listeners gain a roadmap for making informed financial decisions that align with both education and long-term wealth aspirations.
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529s Favorable Over UTMA for Aid
- Child assets in UTMA accounts are heavily weighted at 20% against free aid eligibility.
- Parent assets in 529 plans are only weighted at 5%, making 529 preferable for financial aid calculations.
Early 529 Contributions Are Smart
- Start a 529 plan early to maximize tax-deferred growth.
- Use state-specific plans to gain potential tax deductions, like Colorado's generous 529 benefits.
Be Careful Not To Overfund 529
- Don't overfund your 529 plan since unused earnings face penalties upon withdrawal.
- Adjust contributions based on your child’s changing education plans to avoid waste.