Saving for College
Learn more about the benefits of using an Oregon 529 plan for college savings
2024-2025 Average Cost of Full-time Tuition
We all know college expenses are out of control, but we don't all have a plan for how to address the costs.
Here is where a financial plan comes in.
Oregon 529 Plan Basics
The 529 College Savings Plan is designed to help families save and invest money in a tax-deferred vehicle
How can the funds be used?
Qualified college expenses may include:
Tuition
Housing
Supplies
Technology
These are not considered qualified college expenses:
General Electronics & Cell Phone Plans
Transportation & Travel
*More than $10,000 in Student Loan Repayment (see the Secure Act)
Insurance
Sports & Fitness Club Memberships
*Secure Act 2.0 allows 529 plans to be used to repay student loans with a lifetime limit of $10,000. Employers can match payments.
What if you can't or don't use the money?
Private School Tuition
You can withdraw up to $10,000 per year to pay for private elementary through high school tuition.
Transfer to ABLE Account
ABLE accounts are tax-advantaged and can be used for disability-related expenses before age 26.
Transfer within the family
You can transfer the account to a qualified family member.
Just spend it
There is a 10% tax penalty on non-qualifying expenses, you will be taxed on growth, and be subject to recapture provisions.
Roll unused assets in Roth IRA
You can roll up to a lifetime limit of $35,000 into the account beneficiary's Roth IRA, without penalty.
Recapture provisions may apply if you withdrew funds for non-qualified expenses from your Oregon College Savings Plan account and you claimed a tax benefit for that year’s contribution, the state of Oregon will recapture any Oregon State income tax benefits that you had accrued on the principal portion of that withdrawal.
Advantages of 529 College Savings Plans
Federal Tax Advantages
Tax deferred growth & qualified expenses are tax free.
Unlimited Participation
Anyone can open an account, regardless of income-level or relationship.
High Contribution Limits
Most plans have lifetime contribution limits of $350,000 and up (limits vary by state).
Flexibility
You can change the beneficiary to a qualified family member anytime.
Professional Money Management
Professionally designed and managed investment portfolios that shift as your child ages.
Accelerated Gifting
529 savings plans offer an estate planning advantage in the form of accelerated gifting.
Wide Use of Funds
Private elementary through high school tuition. You can withdraw up to $10,000 per year to pay for private school tuition.
Transfer to ABLE account
ABLE accounts are tax-advantaged and can be used for disability-related expenses before age 26.
Age Based Investment Options
529 Plans often employ age based investment options. As your child ages, assets are automatically transferred into more conservative funds. This allows you to automatically manage your level of risk as your child approaches college age.
529 Current Impact on FAFSA
Parental assets
529 Plans owned by a dependent student or parent are considered assets of the parent on the FAFSA.
Protection Allowance
Unlike previous years, in 2025 there will be no asset protection allowance and all parental assets will be counted on the Student Aid Index (SAI) section.
Maximum of 5.64%
5.64% of parent-owned assets are considered in the Student Aid Index (SAI) section of the FAFSA application.
Oregon 529 Plan Tax Credit
Why not save on taxes while saving for college?
Oregon Residents
may qualify for up to a
$360 Tax Credit
for making contributions to a 529 account in 2025
This is how it can work!
Contributions made to an Oregon 529 College Savings Plan may allow you to qualify for a tax credit! To see how this works, take a look at the visual below.
Whether you're a parent, grandparent, friend, aunt, or any other contributor to a 529 plan, you could potentially be receiving tax credits for your contributions. All while helping a student save for college - and their future.
What are some alternatives to 529 Plans?
529 College Savings Plans | Custodial Accounts (UGMA/UTMA) | |
|---|---|---|
Minimum Contribution Limit | Initially $25, $5 for subsequent contributions | None |
Federal Tax Benefits | Tax-free withdrawals for qualified expenses | First $1300 of unearned income is tax-free and the next $1250 is taxed at the child’s tax rate. Unearned income of more than $2300 will be taxed at the parent's rate (2024) |
State Tax Benefits | Up to a $360 tax credit for Oregon resident contributors (2025) | None |
Contribution Limits | $400,000 and up (varies by state) | Unlimited, but gift tax may apply |
Who Can Contribute | Anyone | Anyone |
Usage of Funds | Qualified educational expenses | Wide use |
FAFSA Considerations | Considered an asset of the parent equating to substantially lower SAI requirements | Considered an asset of the child, equating to substantially higher SAI requirements |
Disability | Can transfer to an ABLE account | None |
How T. Mann Financial Can Help
Let T. Mann Financial help you choose the right savings path for your family.
Which college savings approach is right for you?
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T. Mann Financial can estimate potential college expenses.
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We can discuss alternative scenarios for the kids to form well-defined goals.
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We then help you select the most aligned account type to fit your needs.
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We can build these costs into your overall financial plan.
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We can recommend contribution levels and timing around your goal.
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We can support you with decisions around adjustments, distributions and transfers/rollovers.
