Education opens doors — but paying for it can be a heavy lift. Whether your child is starting preschool or nearing high school graduation, it’s never too early — or too late — to start planning for future education costs.

Here’s the good news: a thoughtful savings strategy can significantly reduce or even eliminate the need for student loans.

Understanding 529 Plans

One of the most popular and effective tools for education savings is the 529 plan — a tax-advantaged investment account specifically designed to help families save for education expenses.

There are two main types of 529 plans:

• Education Savings Plans: These allow you to invest in a variety of portfolios, often comprised of mutual funds or ETFs. The account grows tax-deferred, and withdrawals are tax-free when used for qualified education expenses such as tuition, books, and room and board. Funds can be used at eligible institutions nationwide, including colleges, universities, community colleges, and many trade and vocational schools.

• Prepaid Tuition Plans: These let you to lock in today’s tuition rates at participating in-state public colleges and universities. Plans typically do not cover room and board and are less flexible if your child chooses to attend an out-of-state or private institution.

Choosing a 529 Plan

You’re not limited to your home state's plan — families can generally invest in any state's 529 plan, regardless of where they live or where the student plans to attend school. When comparing plans, here are key factors to consider:

• Tax Benefits: Some states offer state income tax deductions or credits for contributions to their own 529 plans. Others do not.

• Fees and Costs: Review the plan’s administrative fees and investment management expenses. Lower fees can help more of your money go toward education savings.

• Investment Options: Look for a plan that offers a diverse range of investment choices that align with your risk tolerance and time horizon.

• Flexibility: Consider how easy it is to change the beneficiary or transfer funds if your original plans change.

• Residency Requirements: Some state-sponsored benefits are available only to residents. Be sure to understand any residency-related perks or restrictions.

Nebraska’s NEST 529 College Savings Plan

If you live in Nebraska, the NEST 529 College Savings Plan may be a solid option. It offers:

• State Tax Deduction: Nebraska taxpayers can deduct up to $10,000 per year ($5,000 if married and filing separately) in NEST 529 contributions from their state taxable income.

• Tax-Free Growth: Contributions grow tax-deferred, and withdrawals used for qualified education expenses are tax-free.

• Low Minimums: You can open an account with as little as $10.

• Broad Usage: Funds can be used nationwide and for K–12 tuition, apprenticeship programs, and certain student loan repayments.

• Gifting Options: Family and friends can contribute to a child’s account, making birthdays and holidays opportunities to grow savings.

Even if your child doesn’t end up using the funds for school, 529 plans provide options — such as changing the beneficiary to another family member or using up to $35,000 to fund a Roth IRA for the beneficiary (subject to conditions).

To learn more about Nebraska’s NEST 529, visit the Nebraska Treasurer's site.

Every year since 2020, the Meadowlark Savings Pledge has automatically given every Nebraska newborn a one-time $50 seed contribution to a NEST 529 account owned by the Nebraska Educational Savings Plan Trust to help pay for future higher education costs. If your child was a Nebraska resident at birth and born on or after January 1, 2020, they have a head start on their future dreams. 

Other Ways to Save

529 plans aren’t the only way to prepare for education expenses. Consider these alternatives:

• U.S. Savings Bonds: Series EE and Series I bonds may be used for qualified education expenses, and interest may be tax-exempt under certain conditions.

• Savings Accounts and CDs: These provide safety and stability, though usually with lower returns and no tax advantages.

• Custodial Accounts (UTMA/UGMA): These accounts allow you to invest on a child’s behalf. However, once the child reaches the age of majority, they control the funds — which can be used for any purpose, not just education.

• Automatic Savings: No matter what method you choose, setting up automatic monthly contributions — even just $25 or $50 — can build consistency and discipline into your savings strategy.

Every family's financial journey is different. What matters most is getting started. Saving even a modest amount now can ease future burdens and create meaningful opportunities for your child.