Driven by beliefs in bitcoin’s potential for significant gains, some U.S. parents are shifting a portion of their children’s college savings from traditional 529 plans to cryptocurrency.
Risk and Reward: Families Betting on Bitcoin to Fund Their Children's Education
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Disappointing 529 Returns Prompt Bitcoin Interest
Some U.S. families are reportedly putting a portion of their children’s college savings in bitcoin ( BTC), believing the cryptocurrency typically outperforms stocks. Others view Bitcoin as a diversification tool with the potential to surpass the 500% gain it registered between November 2022 and January 2025.
A Bloomberg report suggests that meager returns on tax-advantaged 529 savings plans are prompting some U.S. parents to consider switching to BTC. While bitcoin’s volatility makes it a risky and less-than-ideal investment, the report indicates those favoring this move are confident their children have sufficient time to recover from any potential crash.
One parent, Travis Headley, who reportedly converts his paychecks to bitcoin, is quoted in the Bloomberg report explaining his decision to shift his children’s college savings to cryptocurrency.
“I came to the conclusion that if I’m doing it for my personal savings, why am I not doing it for my kids? They have even longer to save money, so if this all does blow up, they’ll have time to recover,” Headley said.
Another parent, Alex Crognale, said he considered investing in bitcoin after being unimpressed by the return on investment from traditional 529 accounts. Crognale, a soccer player, argues that a 529 savings account doesn’t give his daughter a chance to capitalize on potential Bitcoin gains.
“The math is pretty clear to me that following the herd and doing this 529 plan will not put my child in the most opportunistic position in the future,” Crognale said.
One expert, however, advises against investing all funds in cryptocurrency, saying it denies children the tax benefits of a 529 plan. Withdrawals from these plans are tax-free when used for qualified education expenses, such as tuition or room and board.
Still, as the report notes, some parents investing in cryptocurrency believe bitcoin will surpass $1 million, a prediction also shared by ARK Investment Management CEO Cathie Wood. They view this as an opportunity too good to pass up.
