Patricia Roberts

AI Summary

→ WHAT IT COVERS Patricia Roberts, author of Route 529 and COO of Gift of College, explains how 529 college savings plans work, debunks common myths about losing unused funds, and details recent expansions allowing use for trade schools, apprenticeships, non-degree credentials, K-12 expenses, and even Roth IRA rollovers of up to $35,000. → KEY INSIGHTS - **Federal and state tax advantages:** Contributions to 529 plans grow tax-free and withdrawals for approved education expenses are never taxed federally. Additionally, 37 states plus DC offer annual state tax credits or deductions for contributions, creating dual tax benefits that compound over decades of saving for education costs. - **Debt threshold rule:** Limit student loan borrowing to no more than the expected first year salary in the chosen field. This prevents decades of repayment stress that can delay homeownership, marriage, and career flexibility. Roberts herself took 20 years to repay over $100,000 in student loans despite career success. - **Account ownership control:** Unlike UGMA custodial accounts that transfer to children at age of majority, 529 account owners retain full control indefinitely. Parents decide whether and when to distribute funds, protecting savings if a student goes off track. The beneficiary can be changed to any family member at any time. - **Financial aid impact minimal:** Parent-owned 529 plans count as parental assets at only 5.64 percent in federal aid calculations, versus 20 percent for student-owned accounts. Accounts owned by grandparents or other relatives are not counted at all on the FAFSA, making them strategically advantageous for financial aid eligibility. - **Unused fund flexibility:** Families can keep funds indefinitely, change beneficiaries to family members, use for their own education, or roll up to $35,000 to a Roth IRA for the original beneficiary after 15 years. Nonqualified withdrawals only incur taxes on earnings plus a 10 percent penalty, waived entirely for scholarships, military academy acceptance, disability, or death. → NOTABLE MOMENT Roberts shares how her high school guidance counselor discouraged her from attending college despite being valedictorian and newspaper editor, suggesting she continue waitressing instead due to her family's poverty. Her mother's insistence changed everything, leading to undergraduate and law degrees that enabled her to purchase a home for her family and disabled brother after two decades of loan repayment. 💼 SPONSORS [{"name": "Grainger", "url": "grainger.com"}, {"name": "Stamps.com", "url": "stamps.com"}, {"name": "AutoTrader", "url": "autotrader.com"}, {"name": "Function Health", "url": "functionhealth.com/somoney"}, {"name": "Gelt", "url": "joingelt.com"}, {"name": "Shopify", "url": "shopify.com/somoney"}, {"name": "CarGurus", "url": "cargurus.com"}, {"name": "Verizon", "url": "verizon.com"}] 🏷️ 529 College Savings Plans, Student Loan Debt, Education Funding, Tax-Advantaged Investing, Financial Aid Strategy