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Fact or Fiction?

FACT: More and more families rely on student loans to pay for college, and all loans represent debt that a family incurs. Any savings, even in small increments, that a family can put away will offset the amount of debt it must take on to pay for college.

FACT: A PA 529 account is not included in determining eligibility for Pennsylvania state financial aid programs. Savings held in other state's 529 plans do not receive this benefit.

For federal financial aid, funds saved in 529 plans are generally considered to be parental assets, which means that only about six percent of these assets are currently counted towards the family's expected contribution in federal need-based financial aid calculations.

FACT: A 529 plan may be used at any school that is accredited and eligible to accept federal financial aid. Nearly all colleges and universities, community colleges, and career or technical schools are eligible. To search for eligible schools, go to www.fafsa.ed.gov.

FACT: A 529 plan may be used at any eligible school, including two- and four-year colleges, graduate schools, and vocational and technical schools. Funds may be used for tuition, fees, and certain room and board costs.

FACT: 529 plans have much lower minimum contribution amounts than many other investments, making them accessible and convenient for families of any income level. Families can start a plan with as little as $15 per month.

FACT: There is no maximum age for a 529 plan. Assets may be used at eligible schools offering adult career training or advanced degrees, including part-time programs.

FACT: A 529 account holder can change the plan's beneficiary to another eligible member of the family, such as siblings or even oneself with no tax penalty. And, in the PA 529, you can always withdraw your money at any time for any reason. Investment gains or losses might apply, you may owe federal and state taxes, and you may incur federal tax penalties.

FACT: The federal law that gives 529 plans their federal tax advantages has no expiration date. A change would require new legislation to be enacted.

FACT: A PA 529 account can be opened online or by mail, and customer service representatives are available to answer any questions you may have. Additionally, a wealth of information is available online for families seeking more information about saving for college.

Source: Modified from the College Savings Plans Network’s Top 10 Myths about 529 Plans.

The Pennsylvania 529 College Savings Program sponsors two plans - the PA 529 Guaranteed Savings Plan (GSP) and the PA 529 Investment Plan (IP). The guarantee of the PA 529 Guaranteed Savings Plan is an obligation of the GSP Fund, not the Commonwealth of Pennsylvania or any state agency. Before investing in either plan, please carefully read that plan's disclosure statement to learn more about that plan including investment objectives, risks, fees, and tax implications.

If you are not a Pennsylvania taxpayer, consider before investing whether your or the designated beneficiary's home state offers any state tax or other benefits that are only available for investments in that state's qualified tuition program.