You do not have to go to a school in Iowa to use it either.

You can set it up in their name and you should be good to go.

But you have profound financial problems, and you do need some professional help. I would start with negotiating the balance. The problem though is it sounds like you ignored them long enough to take legal action.

The truth is most debt agencies buy debt. Meaning they buy someone else’s debt for 40-50 cents on the dollar. So as long as they collect 60-80% of the debt, they are happy. This often means you can cut your debt by at least 10-20% if you challenge the amount.

But it is likely too late for that.

If you really want to accumulate money, you need to generate cash that can be put into a cashiers check or money order and sent to the 529 plan. The Iowa plan accepts as low as $20 and it doesn’t have to be regular payments.

Either way you need some damage control. I see it over and over again. Parents with lots of debt raise kids who generate tons of debt. You need to pay up and show your kids how to pay off debt and save for the future. They will learn by your example.

The best thing you can do? Ask for contributions from family in leiu of Birthday and Christmas presents. They can write checks that get deposited into the kids accounts. This also helps protect kids in case of divorce.

Its sad to see kids drop out of college because parents fight over who pays and the college fund had been raided years before. You’ll never see a kid more bitter towards their parents.