Does Democrats' call for free college put the need for 529 plans in limbo?

Does Democrats' call for free college put the need for 529 plans in limbo?
Proposals made by Democratic presidential candidates bring into question future need for 529 college savings plans.
SEP 07, 2019
Soaring college costs and burgeoning student loan debt have been major issues on the campaign trail for Democratic presidential candidates. Several have put forward plans that would make all or part of a college education free. Others have asserted that students shouldn't have to take on debt. If a Democratic president is elected in 2020, and some version of these proposals becomes a reality, would it mean the end of the need for 529 college savings plans? Mark Kantrowitz, publisher and vice president for research at SavingforCollege.com, said even if the cost of tuition or the size of student debt is slashed, there will still be a need to finance the nontuition aspects of paying for college, such as textbooks, room and board and other costs. Additionally, legislative proposals on reducing the college bill tend to focus on public schools. Attending a private college or university will likely still be expensive. "There are all these other expenses beyond tuition," Mr. Kantrowitz said. "There's going to be a role for 529 plans." College costs are a challenge that won't be going away and 529s will still be standing after the political smoke clears, said Christopher Beste, an adviser at RFG Advisory. "There's always going to be a need for 529s and a way for parents and grandparents to put away money for their kids' education," Mr. Beste said. "To me, they're kind of far-fetched political talking points at this point." Indeed, the political challenge of passing legislation that would make college free is enormous, even if Democrats take over the White House and Senate, according to Mr. Kantrowitz. "If you wait for this, you're waiting for Godot," he said. "It will never show. There are going to be enough Democrats with doubts that this won't get through." Still, the fact that college costs are being debated in a presidential campaign is a good thing, said Paul Curley, director of college savings research at Strategic Insight. "It highlights the importance of college financial planning broadly by having candidates talking about the topic," he said. [Recommended video: How to help clients make it through retirement]

Latest News

Goldman leads wave of prediction market bans at financial firms
Goldman leads wave of prediction market bans at financial firms

As Goldman Sachs tightens rules on event contract trading, RIAs and hedge funds are weighing their own policies

Advisor moves: Baird recruits $600M veteran pair to director roles in North Carolina
Advisor moves: Baird recruits $600M veteran pair to director roles in North Carolina

Meanwhile, Wells Fargo lures defectors from UBS and JPMorgan to expand in the East Coast, while another bank aligns itself with RayJay's financial institutions division.

AI may be nudging some older workers into early retirement, study finds
AI may be nudging some older workers into early retirement, study finds

New research suggests AI-exposed workers over 55 are leaving jobs more often than before ChatGPT’s rise.

Wall Street banks promoting AI agents from research aids into digital coworkers
Wall Street banks promoting AI agents from research aids into digital coworkers

Agentic AI is landing in trading, treasury and wealth management roles across major banks, with advisory functions as the next frontier.

People moves: FiNet hires former LPL executive Andrew Harpp, Ellevest names new CIO
People moves: FiNet hires former LPL executive Andrew Harpp, Ellevest names new CIO

Wells Fargo affiliate and women-focused wealth firm both promote leadership as they scale advisor support.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income