Fidelity 529 college savings plan, contributions started approximately 2002
We have a 21 year old son who still lives at home and thinking of going to a local junior college this fall F/T for a 2 year degree. We would like to see him pay the initial fees up front to make sure he receives a ‘C’ or higher in his classes, around $2,000 for one semester. If we keep his receipts and take a withdrawal AFTER report card proof will a 529 plan allow this? We told him we would pay for a 2 year degree but due to past financial issues with him we need to see some maturity on his part to pay for his education. We are a one income family, this money took a long time to save and we have two younger children. Your thoughts and comments are much appreciated.
Terry Says
You are acting wisely. There is no reason the two younger children who haven’t done anything wrong should be deprived while you subsidize this young man. I agree that he should pay the fees. And his tuition — by applying for Federal student loans to cover this program.
And KEEP the 529 money going for your younger children. Then keep saving a bit on the side in a special savings account. If he GRADUATES from this 2-year program, then you should offer to pay him HALF of the total cost of tuition. But then he will be able to afford to pay back the other half, if he has to take out student loans to finish the 2-year program.
That’s a much better solution. It will teach him an important lesson. And specifically, the money in a 529 must be used to pay approved college expenses in the year it is withdrawn. But don’t do it for him. The mone in a 529 can also be used for other children in the same family.
