As a proud New Yorker and Columbia Business School alum, I’ve seen firsthand how savvy professionals master the art of optimization — whether it’s maximizing credit card points, racking up airline miles, or squeezing every perk out of elite loyalty programs. So here’s a question I’ve been asking: Why aren’t we applying the same mindset to one of life’s most expensive and important investments — education?

While everyone’s busy hacking credit card points or gaming airline reward systems, we often overlook one of the most high-stakes financial hacks available to families: the 529 plan. Enter the 529 plan, a tax-advantaged savings account specifically designed to help families pay for education. These state-sponsored plans offer serious financial benefits:

• Tax-free growth: Your investment grows without being taxed annually.

• Tax-free withdrawals: Funds can be withdrawn tax-free when used for qualified education expenses.

• Possible State Tax Deduction: In may states, you can deduct your 529 contribution from your income taxes.

Too often, families leave money on the table simply because they don’t fully understand how — or when — to use their 529 funds. Used properly, a 529 plan can serve as a powerful tool to fund everything from preschool to grad school, without losing a cent to Uncle Sam.

These accounts can be used for:

• K–12 tuition

• Vocational training

• College costs (both undergraduate and graduate)

• Room and board

• Many essential school supplies

• Study abroad

• Even certain student loan repayments

The catch? You need to use the funds for qualified expenses as defined by the IRS. You can find official guidance in IRS Publication 970, which outlines what qualifies and how to avoid penalties.

So what qualifies?

Qualified education expenses are those required for enrollment or attendance at an eligible educational institution:

• Tuition and fees

• Technology like laptops and internet access (if used primarily for school)

• Supplies such as textbooks and lab materials

• Room and board, if the student is enrolled at least half-time

• Student loan payments, up to a $10,000 lifetime cap per beneficiary

Using your 529 plan for these expenses ensures you won’t pay taxes or penalties on withdrawals — that’s money in your pocket, not the IRS’s.

But just like with any financial strategy, the details matter. Every 529 plan is administered slightly differently, so review your plan’s specifics and consider speaking with a financial advisor to build a smart withdrawal strategy.

But just like with any financial strategy, the details matter. Every 529 plan is administered slightly differently, so review your plan’s specifics and consider speaking with a financial advisor to build a smart withdrawal strategy.

Want help maximizing your savings? Continue to learn more from our Qualified Education Expenses 101 series.