Paying for college is one of the biggest expenses of many parents’ financial lives. Aside from buying a home, few things will cost a family as much as college tuition and expenses, especially if they have multiple children.

For parents wanting to save in advance for this significant expense, 529 plans are an excellent tool for maximizing savings by minimizing taxes, keeping as much as possible to cover education costs.

The way 529 plans work is that they allow all contributions to be invested and to grow federally tax-free, and also for withdrawals to occur tax-free, assuming the funds go to qualified education expenses.

Compare that to a savings account or a taxable brokerage account, where you’ll pay income tax every year on any earned interest and dividends, as well as capital gains taxes when you sell investments for a gain.

The trade-off is that 529 plans must be used for qualified education expenses. However, the realm of what qualifies is broader than many think, and the flexibility on what you can do with unused funds is generous.

For instance, much more than tuition qualifies. Student fees, books, and some room and board costs are also eligible. In addition, up to $10,000 per year can be used for K-12 tuition, and up to $10,000 in student loan debt can be repaid with 529 funds.

Additionally, if the beneficiary doesn’t exhaust the funds, they can be applied later to graduate, professional or vocational education. Or, they can be transferred to a sibling or any direct relative, including cousins, nephews, nieces, aunts, uncles -- even the parent, as there is no age limit on beneficiaries.

Given the tax benefits and flexibility of using the funds for wide-ranging educational expenses and recipients, 529s offer a solid college savings vehicle for American families.