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A reader wants to save now for their infant son's college, but her spouse has serious doubts.

Question: I just had a son five months ago, and now that I’m finally adjusting to parenthood, I’m thinking about saving for his college. My friends all got 529 plans for their young children, but my husband is totally against that.

He says if our son decides not to go to college, we lose all our money — and if he’s really smart and gets lots of scholarships, we also lose the money. I’ve tried searching online for answers, but it’s all so confusing and I don’t know who to trust. What do you think?

— Anna in Rhode Island

Howard Dvorkin CPA answers…

Howard Dvorkin on how to get out of debt fastYour husband is partly wrong about everything — but he’s not completely wrong about one thing.

529 plan is a long-term investment with a very narrow focus: Your child’s eventual college expenses. The biggest perk is that your savings grow without being taxed. The sooner you start a 529, the more you’ll have later for tuition, books, dorms, and even meal plans.

Your husband is correct, however, that if you son doesn’t go to college, you lose money.

You won’t lose all of it, though. If you decide to cash in your 529, you pay both income taxes and a 10 percent penalty on all the earnings. That hurts, but it’s not a complete loss.

That said, you can also change the beneficiary on your 529 once a year. So if you have another child who decides to attend college, it’s easy to change the name from one child to another.

Finally, if you son does go to college and excels so much that he receives a full scholarship, the IRS waives the penalty for taking out the cash. You still pay income taxes on your earnings, but you would do the same with many other types of investments.

Last year, another young mother asked me about saving for college. Here’s what I told her..


Have a debt question?

Email your question to and Howard Dvorkin will review it. Dvorkin is a  CPA, chairman of, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

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Meet the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

CPA and Chairman

Dvorkin is the author of Credit Hell and Power Up and Chairman of

college savings, investments, IRS, millennials, parents, save money

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