Can prospective students start a 529 plan to put pre-tax money in a college fund?
That’s a good question. I don’t see why not. It gets you a tax advantage. The restrictions for 529 plans are an immediate family member. The student is certainly an immediate family member. Let me explain the Section 529 plan. It’s a way of saving for college in a tax-advantaged manner. It’s akin to a 401(k) or IRA, but its purpose is college education, and money that is earned in a 529 plan is exempt from federal taxes. For financial-aid purposes, it’s treated as an asset of the account owner, not the beneficiary. In some states it’s also state tax-exempt. If you use the money for a purpose other than education, it becomes taxable with a 10% penalty. The 529 is among the best ways of saving for college. Q: What’s the impact of mortgage for someone who will need a loan to finance an MBA? A: A mortgage or other pre-existing debt will be considered by the private lender when judging your creditworthiness and ability to repay. Strictly speaking, lenders won’t allow you to borrow more than
