At Extreme Investor Network, we believe in thinking long term when it comes to finances, especially when it involves your child’s future. While the latest toy may bring temporary joy, investing in your child’s education can have a lasting impact. Daniel Trujillo, a CPA from Albuquerque, New Mexico, was pleasantly surprised when a friend suggested contributing to a college savings account instead of a traditional gift for his son’s birthday.
The trend of gifting towards college savings plans is on the rise, with total investments in 529 plans reaching $450.5 billion as of June. Plan gifting platforms accounted for about 5.4% of contributions in the most recent quarter, showing that friends and family are increasingly willing to support a child’s education to mitigate student loan debt in the future.
According to the College Savings Foundation, more parents are turning to family and friends for contributions, recognizing that it truly takes a village to afford higher education. In fact, in 2024, 65% of parents surveyed said they would ask for contributions, up from 45% in 2023.
Financial experts and investors agree that 529 plans are a smart choice for many families. Despite this, Fidelity found that only 30% of parents are on track to hit their college savings goals. Gifting towards a 529 plan can help bridge this gap, with even small contributions compounding over time to make a significant impact.
So, how can you ask for college savings gifts from friends and family? Setting up a personalized gift page or utilizing a plan’s gifting platform makes it easy to invite loved ones to contribute towards your child’s future. And don’t hesitate to combine traditional gifts with contributions, as most parents are open to receiving contributions in lieu of traditional presents.
The benefits of a 529 plan extend beyond tax advantages. Earnings grow tax-free and withdrawals are tax-free for qualified education expenses. Recent legislative updates have made 529 plans more flexible, allowing funds to be used for a wider range of educational expenses.
When it comes to gifting towards a 529 plan, there are maximum contribution limits to keep in mind. High-net-worth families may consider “superfunding” accounts to front-load contributions and potentially generate more earnings over time. With careful planning and strategic gifting, you can set your child up for a bright educational future without the burden of student loans.
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