With student debt at an all high time and college costs continuing to escalate, funding college expenses is not just on the minds of parents—it’s on the minds of grandparents as well.

That’s because the owner of the 529 Plan (technically called the Participant) can change the beneficiary whenever he/she wants. And as long as the new beneficiary is a family member of the old beneficiary, there are no income tax consequences. So, the expectant father could have opened a 529 Plan account and named himself or his wife as the beneficiary, and then changed the beneficiary once they’d obtained a Social Security number for their child.

Unfortunately, as part of the overhaul of the state budget and tax system, the state tax deduction for contributions to the NC 529 Plan is set to disappear completely in 2014. Without the tax deduction, the North Carolina 529 Plan moves from being a great option for state residents to simply being an ok alternative.

If you are the parent of a soon-to-be college freshman, we hope this change goes smoothly for your family. Perhaps you’ll want to consider some of our suggestions before you back out of the driveway later this month….

With college costs increasing at rates  between 5-10%/year, it’s critically important for parents to think about putting aside dollars now to fund some portion of their children's education. Luckily, there are very tax-efficient, low-cost savings vehicles available in the form of Section 529 College Savings Plans.