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I can't help you with the "Uni there", but I can share experience with scholarships and state schools. My oldest ended up loving a state school and has a scholarship that pays her tuition and fees. I am only paying for her apartment and food. I'm using the 529 to cover the room and board, no problem. I also take out the amount of money each semester equal to her scholarship, as that is allowed. I am putting it in a savings account for her, although she doesn't know that. I have massively oversaved, to the point where her master's at a private school will be covered, and I'll still have money left. I plan to convert the max that is left over to a retirement plan for her (I think limit stands at $35k) and will eventually use anything left for her siblings tuition or as a gift to future grandchildren. It won't go to waste.
I used the 529 for each kid as a means to put aside money each month for them from when they were born, as I had kids later in life and will be retired by the time the youngest is starting college. I needed to know they were covered. I have no regrets, even if I end up with some locked up money. It's a very small portion of my total net worth, and I can just leave it to heirs. I don't ever expect to need that money for any other purpose.
I hope that helps!
Many European schools qualify for 529 use, so it's a good option even if they don't go abroad. But if they don't go to a qualifying school or choose not to go to school at all, it might not be a good option.
Subject Expert
Your post is unclear. Are you based in Europe or America?
The main benefit of 529’s are US tax exemptions on contributions and gains.
If you’re based in Europe they are unlikely to be a good option.
Subject Expert
Ok thanks for clearing that up!
Many States give up front tax breaks. Eg, New York gives a tax deduction on up to $10k for married filers.
There’s also no tax on interest, or gains when withdrawing for education purposes, and many non-US institutions can qualify.
If your kid gets a scholarship then you can withdraw the scholarship amount from 529 without the penalty, but you will pay taxes on gains.
Big drawback is if you don’t spend on education you pay tax on the gains + 10% penalty
Also if you move back to Europe, the European country might not recognize any tax benefits on this account, and so you could be liable for tax on any gains, even if used for education.
Probably a mixed bag in your situation.
Very likely you’d want to max out all your retirement accounts first.
If you are getting State tax benefits it could be worth it, otherwise perhaps not.
We’re against 529’s. We plan on being retired by the time our kids go to college. All of our income will be tax free (withdrawing contributions from Roth accounts during gap years). When we file for financial aid our retirement accounts won’t be taken into consideration for determining need, whereas a 529 would be. We want to maximize the need based grants that our kids are eligible for by not having a 529.
This was also my thought but now colleges are taking the retirement accounts into account through the CSS Profile which is becoming mandatory. This scares us.