While 529 balances have been growing, so have college costs.

All in, families with students in four-year private colleges spent almost $47,000 in 2017-2018; that’s up 3.5 percent from the year earlier, according to the College Board.

“We are all concerned about [college] debt and 529 plans are part of the solution,” said James DiUlio, the chair of the College Savings Plan Network. “Any time you can start and any amount you can save is better than borrowing on the other end.”

However, many people are left out altogether when it comes to being able to afford higher education. Exactly half of Americans are not saving anything on an annual basis for future education expenses, Edward Jones found.

“A lot of people fall below the line when it comes to resources,” said Josh Andrews, the financial advice director for education at USAA, the credit union and financial services firm that specializes in customers with a military connection. “There’s just not any money left to fund a 529.”

More from Personal Finance:
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To that point, “529s are a great vehicle if you are sure you want to allocate funds for higher education,” added Kyle Ryan, a certified financial planner and executive vice president of advisory services for Personal Capital in San Francisco. “However, it’s not the best thing for everyone.”

With an Roth IRA, for example, savers under the age of 50 can make after-tax contributions up to $5,500 a year, and then take tax-free withdrawals in retirement. Account holders can also withdraw their contributions at any time — say, to cover college expenses — without taxes or penalties.

“It gives you the flexibility to save for retirement and use it for education as well,” Ryan said.



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