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How to Adapt Financial Plans When an Education Path Changes

Published on: January 01, 2023

A confident young woman on a college campus

Editor’s note: This article was sponsored by the Washington College Savings Plans (WA529)

When it was time to choose a college, Kayla Kjoss Miller opted to attend Western Washington University. Although she hadn’t been accepted into the music program as she had hoped, Miller knew she could apply again the following year and, in the meantime, she planned to focus on her other passion: education, with the goal of combining the two someday.

“[Western] has a really great education program,” Miller says. “I love teaching and being around kids. So, I thought maybe I’ll go that path.”

But just a month after beginning college in autumn of 2012, she realized that university wasn’t the right fit for her. She struggled socially and felt isolated — and for the first time in a decade, she wasn’t doing anything involving music.

“I just thought, ‘I love music; it’s my passion and it’s what I want to do,’” Miller explains.

She decided to be proactive and make a change. Miller recalls sitting in a dorm common area and researching music schools. Because she wanted a program that focused on many different genres of music, the college that was the best fit for Miller turned out to be Los Angeles College of Music (formerly Los Angeles Music Academy).

Miller’s parents had invested in Washington’s 529 prepaid tuition program, also known as the GET Program. The program allows parents to buy “units” of tuition starting years before college is even on their children’s radar.

Because the saving begins so early in a child’s life, it’s no surprise that many students end up following a different path than they or their parents initially envisioned.

Fortunately, the GET Program is designed with this in mind so the funds can be used in many different ways when a student’s education plans change. In Miller’s case, the savings could be used toward tuition at Los Angeles College of Music, even though it’s not located in Washington state.

The 529 funds can be used at any school that accepts U.S. Federal Financial Aid, says Diana Hurley, Contact Center manager at GET. “Transferring to another school isn’t an issue as long as the school meets this criteria.”

Attending Los Angeles College of Music was more expensive than Western Washington University. Although Miller was now pursuing an associate degree rather than a bachelor’s, tuition was higher because Miller was no longer paying in-state tuition and Los Angeles College of Music is a specialty school. Furthermore, the cost of living in Pasadena was significantly higher than in Bellingham, and, because there weren’t dorms, Miller had to find an apartment in a pricey area. But between her GET funds and taking out a small loan, Miller made it work. She thrived at Los Angeles College of Music, noting that she especially loved the small class sizes and the tight-knit social environment, as well as being exposed to all different genres of music.

Miller is far from the only student to change the trajectory of their education plans. That’s why GET makes it as easy as possible to transfer 529 funds so they can still be used even if a student switches paths.

“Funds in a 529 plan can be used for many career training paths, such as makeup and hair design, or apprenticeship programs for electricians and linemen,” says Rodger O’Connor, associate director for marketing and communications at Washington College Savings Plans.

Whether a student is transferring from a four-year college to a two-year college or vice versa; switching to trade school; or pursuing an apprenticeship, the 529 funds can easily be transferred as long as the school has a code for U.S. Federal Financial Aid. They can also be used for expenses beyond tuition. For example, if a student initially planned to attend a four-year university but ends up opting for community college, the funds typically go further and therefore can be used for academic expenses such as textbooks, room and board, and anything else that’s required for the program.

One student’s parents began saving for his education when he was around 2 years old. He excelled academically in high school and the plan was always to attend a four-year college upon graduation. But when he graduated in 2020, right in the middle of the pandemic, he found himself attending university remotely from his bedroom. The virtual environment wasn’t a good fit for him as he’s an “in-person learning” personality. He began to struggle academically for the first time in his life and became depressed.

After sitting down for a long conversation with his parents about next steps, he was surprised to learn that the 529 fund didn’t need to be used at a university. Together the family did a lot of research and he decided to go to line school and become a lineman. In 2019, a new rule had been implemented that allows a 529 to be used for apprenticeship programs.

The lineman school he attended wasn’t a qualified institution, however he was able to use his GET funds on the expenses for his apprenticeship and the remaining amount was transferred to his sister’s GET account.

Today, he’s much happier, loves his work and is making good money, so things have completely turned around for him.

It’s easy to transfer 529 funds when a student switches colleges, but what if they opt to not attend college at all? In this scenario, there are several options.

“You can hang onto the funds for up to 10 years and see if they decide to use them,” says O’Connor. “You can [also] change the beneficiary to another family member to help with their expenses.” These funds can be transferred to a sibling or first cousin of the student they were intended for.

If none of those scenarios apply, the money in a 529 can be refunded to you — but O’Connor cautions that this should be a last resort, because individuals have to pay federal taxes on the earnings.

Changing education plans is common, and fortunately students can choose from many options and still make use of the 529 funds as they pursue the path that’s the best fit for them.

GET and DreamAhead, the Washington college savings plans. GET enrollment is open Nov. 1–May 31; DreamAhead enrollment is open year-round.

Sponsored by:

Washington College Savings Plans logo


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