The post Bitcoin over a 529? Crypto parents rethink college savings appeared on BitcoinEthereumNews.com.

Never mind that Bitcoin is extremely volatile. Some parents are seeing beyond that and opting to invest in cryptocurrency instead of traditional 529 college savings plans, hoping for higher returns despite the risks. According to Bloomberg, a growing number of families are banking on Bitcoin as a hedge against inflation, which got worse in December, as consumer prices rose 2.6% compared to a year earlier. That’s up from a 2.4% annual pace in November. The bet is that Bitcoin is an asset with stronger long-term growth potential than conventional savings accounts such as the traditional 529 plan. Bitcoin, these parents argue, could yield better results over time. CryptoCoinToss, a blog that delves into various aspects of cryptocurrency investing, shares a similar sentiment. According to one post, Bitcoin’s deflationary nature is a compelling reason for parents to explore it as an alternative savings vehicle to, say, the state-sponsored 529. Why? Even though 529 college savings plans help individuals save for educational expenses with certain tax advantages, they come with drawbacks. Funds must be used strictly for school-related costs (i.e., tuition, books, room and board). If a high school graduate wishes to use the funds to, say, start a business or travel abroad, withdrawals face a 10% penalty plus taxes. Additionally, 529 assets can reduce financial aid eligibility, especially if owned by grandparents. State-specific rules vary, with some plans offering better tax benefits than others, and high fees can be a drawback. Despite these limitations, 529 plans remain a popular choice for college savings. A blog posted to Upromise outlines the financial aid and tax implications of using cryptocurrency for college savings. Bitcoin and other virtual currencies are considered assets on FAFSA forms, meaning they must be reported and can impact financial aid eligibility. If sold for a gain, the profit is…

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Filed under: News - @ February 2, 2025 6:24 pm