The bear market has been especially painful for parents of college students or children about to attend college. Their “529” tax-advantaged, education-savings plans—which families can use to pay for college tuition, books and supplies—may have suffered losses of 10% or more.

But you can use these strategies to avoid drawing from a beaten-down 529 portfolio and give it time to recover…

Use the 529 assets for a younger child or for graduate school. You are allowed to change the beneficiary of the 529 to a member of your current beneficiary’s extended family without penalty. Downside: You’ll need to cover current college costs with other savings or sources of cash.

Use Parent Plus loans and Stafford student loans strategically. No one likes to take on additional debt. But most federal loans don’t require repayment to start until six months after the student graduates. 529 beneficiaries are allowed tax-free withdrawals of up to $10,000 in total to repay loans. An additional $10,000 can be withdrawn to pay the loans of each of the beneficiary’s siblings.

If your child still has several years before college, continue contributions to your 529. Many parents stop adding money to their plans in bear markets for fear of further losses—but investing more at lower prices allows you to recover bear-market losses even faster when the stock market does rebound. In 2022, contributions to your 529 of up to $16,000 per donor per beneficiary qualify for the annual gift-tax exclusion.

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