(By Joey Spellerberg ,Nebraska State Treasurer) For most parents, the thought of saving for their kids’college expenses can be a source of stress. Rising education costs present a significant challenge, while navigating the complex world of investment and savings plans can be intimidating.
Having four young children of my own, I understand this well.
That's why my office is spreading the news about the Nebraska Educational Savings Trust (NEST 529). This tax-advantaged education savings program is more than just a simple savings account — it’s a powerful, versatile tool with important benefits.
Nebraska’s NEST 529 plans are trusted nationwide, holding approximately $7.85 billion across more than 303,000 accounts. And the program has a history of strong performance, earning accolades from respected financial authorities, which is why my wife and I own four NEST accounts for our children.
Why Start a NEST 529 Plan?
Like many other Nebraskans, I worked my way through college – so I’m passionate about saving early to help pay for education beyond high school. This is especially important as higher education costs keep rising. According to U.S. News and World Report, tuition and fees at 435 ranked national universities have jumped 112% over the last two decades.
Here are six key reasons to consider opening or contributing to a NEST 529 plan: 1. Flexible Options for a Changing Education Landscape. NEST funds can be used at accredited universities (public or private), community colleges, trade and vocational schools, registered apprenticeships, and graduate schools. Families may use up to $10,000 per beneficiary to repay student loans. If one child doesn’t need the funds, the beneficiary can be changed to another family member.
2. Strong Tax Benefits. Nebraska offers an income tax deduction of up to $10,000 a year ($5,000 if married and filing separately) for contributions made by the account owner. Money invested in a NEST 529 account grows tax-deferred – and when used for qualified education expenses, withdrawals are free from both federal and Nebraska income taxes.
3. Investment Choices. NEST 529 isn't one-size-fits-all. It offers four distinct plans, each tailored to different saver preferences and providing a range of investment options from multiple providers.
4. Versatile Spending. A NEST account can be used anywhere in the nation for qualified education expenses, including tuition, room and board, books, supplies, equipment, computers, software, and apprenticeship costs.
5. Low Program Costs. NEST 529 features low expenses and no annual account fees.
6. Minimal Impact on Financial Aid Eligibility. A parent-owned NEST account is treated as a parental asset, meaning there’s minor impact on need-based aid eligibility. Under updated rules, distributions from 529 plans owned by a grandparent, aunt, uncle, or other non-parent are no longer reported as student income and will not negatively impact eligibility for federal financial aid.
A Meaningful Holiday Gift
With the holiday season here, establishing a NEST 529 account for a child or grandchild — or contributing to an existing account — makes for a meaningful gift that will be remembered for years to come. Enroll at NEST529.com/open-an-account or learn how to give at NEST529.com/ Friends-Family-Gifting.
Remember, to help families take that crucial first step, Nebraska offers an incentive through the Meadowlark Savings Pledge. The state deposits $50 into a NEST account for every baby born in Nebraska (2020 and later), demonstrating our state’s commitment to helping families start saving earlier.
A NEST 529 plan is one of the smartest, most flexible, and most tax- advantaged ways to prepare for future education expenses. Visit NEST529.
com to learn more. Call my office at 402-471-2455 if you have questions.
Here’s wishing all Nebraskans a safe and joyful holiday season.
