529 Account Plans and Emergency Savings: An Innovative Model to Increase Short-Term Liquid Savings While Saving for Postsecondary Education

“Parents can take advantage of state 529 plans to save for their children’s future education in an account with growth potential. But families with LMI—who have much to gain by increased enrollment in college and other opportunities beyond high school—rarely have 529 accounts. A key barrier is the need to have a reserve of funds that would be accessible if there is a financial emergency in the intervening years.

One potential solution to address the barrier caused by lack of a reserve of funds is to link short-term emergency savings to long-term education savings through a liquid financial product tied to a 529 account.”


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