By 2018, one of her sons pointed out that she’d done more than rack up $110,000 of 529 savings — she’d given them a leg on which to stand.
“He said, ‘Mom, I can’t thank you enough that I’m not strapped with student loans starting out in life; all my friends have ’em,'” Brayfield said. “That made it all worth it, that he recognized that.”
Getting her sons 529 accounts at birth
As one of six kids put through college by her parents, Brayfield set out to do the same for her two sons.
“I always wanted them to know that they could do whatever they wanted, not to worry about money,” she said. “Maybe it was a way to brainwash them [into going to school]. They had this [account] over there for college, so it was theirs to use. I didn’t want money to prevent them from going.”
In 1993, when Brayfield’s elder son Logan was about three months old, she opened her first 529 plan with Kansas-based Learning Quest. She’d learned about it on a college savings website and via her local TV station.
One of the main draws to the 529 plan for Brayfield and her then-husband was a $6,000 tax deduction awarded to married Kansas couples contributing to a 529. Later, according to Brayfield, the 529 plans became reciprocal, meaning her sons could use the money to attend a public or private school in any state.
Fifteen months later in 1995, Keegan was born, and Brayfield opened another 529 plan with Learning Quest.
In those days, Brayfield remembers how she was able to contribute a maximum $2,500 per year, post-tax (like a Roth IRA account) from her paycheck. Whenever she’d receive a bonus from work, she’d increase her contribution.
“It was not easy; it was a sacrifice,” said Brayfield, now the CEO and owner of advertising agency J.Schmid. “I was in my mid-30s, and that couple hundred dollars a month was a big deal.”
Once the money came out of her account, Brayfield learned how to live without it by budgeting what she had left.
Looking back, Brayfield wished she squeezed her family’s budget a little harder and contributed a little more each month to her sons’ accounts. But she didn’t yet have the salary to sock away all the cash they’d need for the rising costs of college.
Avoid this potential 529 plan pitfall
But her real regret about her sons’ 529 plans stems from her divorce about a decade ago.
“I know this sounds fatalistic, but I wouldn’t recommend opening a joint  with anyone because intentions can change,” she said.
Brayfield grew concerned that her ex-husband — the accounts’ co-owner — wouldn’t leave the funds as they were. Her 529 plan administrator set a safeguard forcing both parents to sign documents when one of them sought a withdrawal.
Brayfield added another layer of protection by creating two more Learning Quest accounts, this time as the sole owner. She then switched her monthly contributions to the new accounts to avoid potential arguments down the road.
How to make strategic withdrawals from 529 accounts
With four 529 plan accounts humming along as her sons entered their teens, Brayfield found that they didn’t need all $110,000 or so of savings.
Her younger son, Keegan (a 2016 graduate), earned the Missouri A+ Scholarship Program award, covering his tuition for his two-year program to become an aviation technician.
Instead, Brayfield made withdrawals from Keegan’s 529s for all his other college expenses. Brayfield withdrew more than $50,000 to cover his room and board, books, and other essentials. Brayfield also transferred $5,000 from her elder son Logan’s 529 plans to cover Keegan’s living costs.
“I kept track of every expense, charted it out at the end of the year,” she said.
Brayfield was able to do this because Learning Quest sent her a 1099-Q tax form, which reports withdrawals made during the year. It’s important to file because it tells the IRS that you used the funds for qualified education expenses.
Keegan’s school also sent a receipt listing all paid college expenses, such as tuition and fees. Then Brayfield forwarded everything to the IRS around tax time without a hitch.
Plus, the Brayfield family still has 529 funds to spare. Even though Logan took a hiatus from college, he still has untouched savings in a 529 plan earning interest until he decides to return to campus.
How you should start saving for college
Brayfield knows that 529 plans aren’t for everyone. While she liked a conservative, hands-off approach, you might prefer more investment flexibility, for example.
Similarly, you might struggle to find room in your budget to contribute $100 to $200 or more on a monthly basis for a decade or longer, especially if you have debt.
Still, whether you open a 529 plan or choose alternative ways to save for college, Brayfield’s advice is simple: Get going.
“Start now, don’t wait,” she said. “I like the fact that it’s separated [from your other investments] and you can watch it grow. [It] keeps you from dipping into it if you get the itch.”
By adding to your account balance without interruption, you’ll also reap the interest growth with which your bank can’t possibly compete. You and your child might even be able to avoid federal and private student loans altogether.
Finally, Brayfield recommended asking family members and friends for help if you’re struggling to make ends meet and save for the future simultaneously. Her parents, for example, contributed at least a few thousand dollars to their grandsons’ 529 plans over the years.
“Instead of lavish gifts, invest in 529 plans,” she said.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB) or Turnstile Capital Management, LLC (TCM), which are not affiliated entities. Certain restrictions and limitations may apply. Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. All loan products may not be available in certain jurisdictions. Other terms and conditions apply. Ascent is a federally registered trademark of TCM and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.69% – 10.94%1||Undergraduate, Graduate, and Parents|
|3.97% – 12.97%3||Undergraduate and Graduate|
|4.34% – 12.99%2||Undergraduate and Graduate|
|4.12% – 10.98%*,4||Undergraduate and Graduate|
|5.03% – 11.23%5||Undergraduate and Graduate|
|4.00% – 13.00%6||Undergraduate and Graduate|
|4.72% – 9.81%7||Undergraduate and Graduate|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents|
|4.19% – 12.06%9||Undergraduate, Graduate, and Parents|