I have two high school seniors headed off to college next year. After some scholarships, both 529s are easily overfunded by $20k, potentially up to $70k. Have a $50k LOC maturing in a couple months. Was thinking about submitting last years high school tuition for reimbursement. I think the maximum I can use for HS is $20k per student. Then use the cash flow to pay down the LOC. Does this sound like a good idea? Are there any negative tax consequences or something else I’m not considering?
529 overfunded. Should I use to pay private HS tuition?
byu/Remarkable-Rice7167 inpersonalfinance
Posted by Remarkable-Rice7167
2 Comments
A few points to consider:
Are you only considering undergraduate education? What if they decide they want to pursue graduate level degrees?
529 can be rolled into Roth IRAs for your kids (up to $35k). That is an enormous head start for them if you go that route.
I’m not a great source of financial info, but why not give them the remainder once they finish to be transferred to a Roth? 20k would be a fantastic start to saving for retirement, and on the off chance they need a bit more time to finish, they will still be able to use the 529. The kids have earned the scholarships to make those funds available, I would reward them for their success rather than just trying to empty the account.