In the minds of young people preparing to enter the workforce lives an omnipresent question: How, exactly, am I supposed to start my career?
Hiring across the country has slowed, workers are staying in their positions longer, and the narrow bottleneck of entry-level openings has tightened, leaving new graduates caught in the dizzying paradox of needing experience before anyone will give them the chance to gain it.
As a college student myself, this stress is palpable among my peers: an ever-humming engine powering countless job applications, extended hours in the library, and the nagging suspicion that a diploma, once advertised as the ticket to professional life, may now serve only as permission to join an increasingly crowded line outside the door. However, as I have moved closer to the end of college and begun thinking less about getting through school than about what comes after it, my attention has shifted to what the 529 can offer after graduation.
Historically an effective way to save tax-free for college,529 accounts can now support a broader array of career-building expenses, including eligible vocational schools, registered apprenticeships, graduate education, and professional credentials. For students pursuing a traditional degree and for those ready to leave the conventional classroom behind after high school, the modern 529 can help bridge the awkward and often expensive interlude between education and employment.
To illustrate the breadth of the plan’s capabilities, let us look at the Smith family’s two children, Charlie and Emma. The Smith family has funded a 529 account for each child but plans to put the accounts to use in different ways:
Charlie: the non-college track
Charlie is a senior in high school and is on track to graduate at the top of his class, but the idea of college lecture halls and term papers just doesn’t appeal to him. He enjoys working with his hands and hopes to become an electrician, although he worries that pursuing a trade will leave the money in his 529 stranded; a small financial monument to the bachelor’s degree he decided not to pursue.
Thankfully, his concerns don’t need to become reality, and the 529 account can support several important steps in his career.
Trade school: A 529 can pay qualified expenses at an eligible vocational or technical school. Charlie could use the money for tuition, required fees, textbooks, and equipment required for enrollment or attendance in an eligible electrical technology program, allowing him to build specialized skills without abandoning the savings his family accumulated for his education.
Registered apprenticeship: A 529 can also cover certain expenses associated with an apprenticeship registered with the U.S. Department of Labor. If Charlie enters an electrician apprenticeship, his account could help pay for required books, tools, and safety equipment while he earns a paycheck and learns on the job.
Professional credentials: Certain expenses required to earn or maintain a recognized professional credential may also qualify. After completing his training, Charlie might use his remaining funds for examination or continuing education costs as he works toward his license.
Charlie’s path may not include a bachelor’s degree, but it will still demand education and diligent preparation. Even though his classroom might take a different shape, the 529 can still help pay for the learning required to succeed.
Emma: post-college launch
With the help of her 529, Emma recently graduated from college with a business degree and hopes to become an accountant.
Like many students, she entered college imagining graduation as a triumphant finish line, but as she learned more about accounting, she quickly came to the realization that job recruiters wouldn’t simply line up at her door after she received her diploma. Before becoming a CPA, she still needs additional coursework, exam preparation, and a professional license.
Because Emma still has money remaining in her 529, the account could help support that next stage:
Graduate education: Emma could use the account for tuition, required fees, and books in an eligible master’s program in accounting, helping her earn the academic credits and specialized knowledge she needs.
Professional credentials: Certain expenses required to earn a recognized professional credential may qualify, including eligible preparation courses, required study materials, and examination fees. Emma might be able to use her remaining 529 funds to help cover some of the costs associated with preparing for and taking the CPA exam as she works toward becoming licensed.
For Emma, the 529 can help finance the credentials she needs to differentiate herself after earning a more generalized degree. Her diploma provides the academic foundation, while the remaining money in her account helps finance the final layers of preparation to launch her career.
Investing in more than a degree
What families and students can learn from the Smiths is this: as the labor market has changed, so has the 529. While there is no savings account that can guarantee someone employment, the 529 offers an opportunity for young people to control their skill development and preparation as they enter the workforce. As ambitions take shape, the flexibility of the 529 offers a backstop, supporting learning no matter what changes come. Whether college is the beginning of the path or never part of it at all, the 529 can help to lay the foundation for a successful career.
