Saving for College Once Felt Essential. Some Parents Are Rethinking Their Plans.

Before starting a family, Asha Bailey and her husband were already looking for the best ways to plan for their future children’s financial security. In their community in San Diego, 529 college savings plans often came up in conversation.

Wanting to learn more, Ms. Bailey and her husband visited their credit union to explore opening a 529 account. But when they learned that the plan could be used only for educational purposes, which their children might not require, they weren’t thrilled.

“As much as I would love and want to encourage my kids to go to college and further their education, it just might not be what they end up doing,” said Ms. Bailey, 29, who works as a wedding photographer. “I have no idea the kind of people that they’re going to grow up to be. So, for me, I want to have the most flexibility with that money.”

Instead, Ms. Bailey and her husband opened a brokerage account after her financial adviser recommended it to them. They liked the idea of withdrawing money in case of emergencies or other expenses not related to just education.

For generations, 529 college savings plans were a no-brainer for most parents wanting to start a college fund. They are tax-advantaged and primarily used to pay for higher education expenses. The accounts can be used for a range of education-related expenses, not just college tuition, like books, private K-12 tuition and more. If funds go unused, the account can be transferred to another beneficiary, like a sibling or a grandchild.

But now, some parents are pumping the brakes on the accounts and rethinking how they plan to save for their children’s future. With growing uncertainty around the value of higher education, and a fear of locking funds into something their child may not use, many of these parents are looking for flexible plans that don’t tie their money exclusively to higher education.

While 65 percent of parents and parents-to-be are saving for their children’s future using a saving account, fewer than a quarter are using a 529 plan, according to data provided by the Harris Poll and Intuit Credit Karma.

Among those who have used one, 19 percent have closed their 529 plans early and another 22 percent have considered doing so.

Why? Tuition costs keep climbing. Student loan debt continues to weigh on millions. And a degree doesn’t always guarantee a stable job — or any job — after graduation. Market swings have also made it tricky to find the right investment strategies for college.

At the same time, many parents are taking on second jobs, borrowing from their 401(k)s or delaying retirement to cover ballooning tuition costs. Around 61 percent of parents recently surveyed by Citizens said they went beyond typical financing options, such as 529 plans and federal loans, to make up the difference.

Many teenagers are also exploring pathways besides college, such as going to trade schools, starting a business or entering the work force after high school.

“Amid economic, tariff and job market uncertainty, it is very easy to de-prioritize college savings,” said Michelle Griffith, senior wealth adviser at Citi Personal Wealth Management.

The problem is not necessarily with 529 plans themselves. It is that many people do not even know about them. Among parents and future parents who are not contributing to or considering a 529 plan, the most common reason is that they have never heard of it, according to the Harris Poll and Intuit Credit Karma.

Jacqueline Triplett, a retirement and college funding strategist, sees this firsthand. Many of her clients, who are mostly teachers, have never heard of a 529 plan. Those who have one often misunderstand how it works, asking her about ways to withdraw unused funds without having to pay more taxes and fees.

“They’re like, ‘Oh, well, nobody told me about this — it’s just not advertised on television or anything like that,’” Ms. Triplett said. “By the time they come and want to put in a 529, their kids might be 10, 14 or 18 years old. With the economy now, it doesn’t give them a lot of wiggle room.”

New rules made last year under the federal law known as Secure 2.0 added some flexibility. Up to $35,000 in leftover funds can be rolled into a Roth individual retirement account for the beneficiary.

But to get the benefit, the plan must have been opened for at least 15 years, the beneficiary of the 529 plan must also be the owner of the Roth account and the rollover is subject to annual contribution limits. Rules and benefits of 529 plans also vary by state.

Later, she discovered she could not withdraw much money without penalties. After taxes and fees, she was left with about $2,300, which she used to go on a trip to Florida with some friends.

Now a mother of two, Ms. Marshall, 36, looked into other options. After watching TikTok videos about saving strategies, she came across indexed universal life insurance, a type of life insurance that includes a death benefit and a cash value component tied to the performance of a market index, like the S&P 500.

She decided to open two accounts for her children. Three years later, each account has $1,500 earning interest. This year, after recovering from a divorce, she said, she began contributing $100 a month into policies for each child, double what she used to put in whenever she could. When her children land their first job as teenagers, she plans to have them match her monthly contributions.

“If there’s a season where life is hard, they lost their job, this product that I built for them can meet that need,” said Ms. Marshall, who’s now a life insurance agent living in Kansas City, Mo. “It’s not just this one avenue. It’s not just college.”

Yet there are risks to being too flexible. If families do not save for their child’s college education and the child later chooses a more expensive school like an Ivy League, they may find themselves caught in a cycle of financial strain.

Ms. Bailey, the wedding photographer, liked that the brokerage account would be in her name, giving her control over when she would transfer funds to her children, unlike plans that automatically grant access at a certain age. She also appreciated that the funds could be used for noneducational purposes, like emergencies or helping her children buy a car one day.

Now, three years in, she and her husband contribute $500 each month for their two children, now 2 and 8 months. The account has grown around 20 percent, with birthday and holiday gifts going straight into the account.

“I’m hoping that I made the right decision for them,” Ms. Bailey said.