RALEIGH, N.C. — Experts say some 3.6 million high schoolers will graduate this year.  And with the traditional calendar school year gearing up to start, students and parents alike are starting to stress about how you’re going to pay for that secondary education.  One option many financial planners suggest using is a 529 savings plan.

According to Brant Spesshardt, a certified financial planner and the president of Steward Wealth Strategies, 529 savings plans or qualified tuition plans, are aimed at helping pay for secondary education because they’re tax-advantaged.  But not all expenses that someone has in college are covered under the plan.

Included in the 529 savings plan are tuition and related fees, room and board equal to the amount charged by the education institution or the amount of the allowance for room and board used in federal financial aid calculations for the student’s school, required books and supplies, and computers and related equipment.

However Spesshardt says some of the items not covered in the 529 savings plan are sports and fitness equipment, insurance payments, transportation and travel costs, room and board over the allowed amount, student loan payments, and non-education related electronics like smart phones.

Spesshardt says it takes years to save for your child’s secondary education, so learning when and how to take your money out is key.  He says when calculating costs, it’s important to subtract any other costs covered by tax-free assistance like Pell Grants, tax-free scholarships and fellowships, tuition discounts, tax-free employer assistance, Veteran’s Education Asssistance Programs, American Opportunity Tax Credits, and Lifetime Learning Credits.  He says to never guess the withdraw amount, but to instead check with the institution.  Excess withdrawals can result in a penalty, so it’s important to keep records and a hold of receipts.

Deadlines are also key when trying to figure out when to withdraw funds.  Spesshardt says if you plan to pay the school directly, be aware of their deadlines and how long it will take to actually receive the money.  Another flexible option is paying the school from your own bank or brokerage account, and paying yourself back through the 529 plan.  A third option is paying the student directly, but Spesshardt says it’s important to check with an expert before taking that approach.  He also says it’s vital to remember you must withdrawal the money in the same calendar year as the expense.

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