<p>We have two children with a 14 year age gap. Older is in college and younger will be starting kindergarten next year. </p>
<p>Younger child has a 529 with about $8k in it right now. Older child's 529 will be depleted before his junior year. For assorted reasons, we were unable to start saving for college until a few years ago.</p>
<p>Would it make more sense to pull from younger's 529 to help with older's expenses instead of relying on as many loans? Before the younger child is anywhere near old enough to go to college, I will be working again and able to contribute more to saving. However, H and I will also be much closer to retirement and will need to focus on that also.</p>
<p>Thanks so much for any advice. I really appreciate being able to come here and get help.</p>
<p>I thought you could go downstream but not up - pass an older child's leftover funds to the younger, but not take from the younger to give to the older. I'm going to look that up right now.</p>
<p>Looked it up - looks like you can change the beneficiary to a child in the same generation.</p>
<p>In my household this decision would be easy -- use the younger child's 529 for the older one UNLESS the 529 is heavily invested in growth stocks and you believe (as I do) that the stock market will rise significantly over the next three years.</p>
<p>I would modify NewHope's advice as follows: In the unlikely event that you have gains in the younger child's 529, then use those funds for older child. The gains are not taxable if used for college expenses. However, if there are losses in the account you will not get any tax benefit from the losses, so you might as well keep them in the 529 plan.</p>
<p>I would not take from the younger child for a number of reasons. First, the $8k is not really going to make that big of a dent in the older child's loans -- not at today's tuition rates. Secondly, when you take $8k from the 5- or 6-year old, you're not just taking $8k, you're taking away all of the future potential gains that would have been earned had it been left alone. Assuming a modest 6% average return the $8k is really $16k at age 18. Later, when you're older, you might find it hard to replace the full $16k that is owed. Finally, if it were me, I couldn't and wouldn't take from one sibling to another simply because it would feel wrong; but that's just me.</p>
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looks like you can change the beneficiary to a child in the same generation.
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<p>The owner can change the beneficiary to anybody. For example, if my kids don't use up their 529s and there's money left over after all education is complete, I can change the beneficiary to my grandkids at any point. Heck, I can change the beneficiary to my neighbor's grandkids.</p>
<p>But first they'd have to stop throwing snowballs at my car.</p>
<p>Now, that's my 529s. It's certainly possible that the rules are different, depending on the 529. OP needs to investigate his/her 529 for that state's ruling.</p>
<p>kkkitty, Looking at another of your posts it seems that the loan amount your son will be assuming will total 25-30K. I think that is a moderate amount that will not handicap him in his early adult years. Given that, I would keep the younger child's $8K where it is. It would be unfortunate if you withdrew that money to help older son and then for whatever unanticipated reason could not replace it.</p>
<p>Obama will need to spend $1,000,000,000,000 (a lot of money) is some form of tax reduction, rebates, grants, incentives, guarantees, bacon and eggs. IMO, he will need to restructure student loans to encourage banks to lend, to keep research going, and to keep the rats in school and off the streets of idleness. </p>
<p>IMO, borrow as much as you can when student loan conditions improve. Offset the loans with set aside college funds. Stay short enough to pay loan interest and to take care of any chance problems.</p>
<p>I would definitely use younger's to pay for older's college. You have NO idea what the younger will want to do later on. We have friends whose kid ended up in the Navy where he will receive full education benefits. They are shifting the 529 money to younger son. Your younger son may take a similar path, or choose to become a woodworker, or earn a full-tuition merit scholarship at a great school, or who knows! Also, FA formulas take into account the number years parents have until retirement.</p>
<p>This is great news! Tell me if I can do the following. Child #1, class of 2009, had about $20,000 in a 529 in a ""moderate growth" fund, now worth about $12,000. Child #2, class of 2012, has $20,000 in a 529, "Principal plus interest". It's now worth more.. Can I switch them, and hope tha the $12,000 goes up in the next few years?</p>
<p>Your financing option for a loan compared to 529 is whether the loan interest is less than the expected annual gains in the 529. I assume that you have investigated direct or stafford/plus loans.</p>
<p>Biohelpmom, are you or your spouse the "owner" of the 529? This makes it easier, since then you can switch beneficiaries. If the child is the owner, it looks like they can "switch" with each other see, Publication</a> 970 (2007), Tax Benefits for Education. Call your custodian/financial firm to confirm this.</p>