Proposal to include Bitcoin in U.S. college savings '529 plan' emerges as a strategy to ease tuition burden

A study found that including Bitcoin in the U.S. college savings program known as the 529 plan could raise long-term returns and help ease inflationary pressures. Discussions are spreading at the state government level to introduce digital asset options into retirement and savings programs, strengthening moves toward formal inclusion.

On the 8th (local time), Cryptopolitan reported that the Bitcoin Policy Institute argued in a research report that Bitcoin should be allowed as an investment option to address the structural limitations of the 529 plan and the rising burden of tuition. Currently, 529 plans offer tax benefits, but they have long been criticized for relying on limited mutual fund portfolios designated by state governments, resulting in lower returns and fewer investment choices compared to IRAs or HSAs.

The report analyzed that, given Bitcoin's long-term performance and low correlation with equities, even a small allocation (1~2%) would improve a portfolio's annualized returns and Sharpe ratio, increasing risk-adjusted efficiency. The institute suggested allowing Bitcoin in 529 plans through federal guidance or changes to tax law, and creating an independent plan like Wyoming's to serve as a model for nationwide adoption.

As state-level reform measures, the report included incorporating alternative assets such as Bitcoin, adding ACH-based contribution features, and expanding rules for adjustable portfolios. The institute explained, "Modernizing the current system would increase the resilience of education savings and investment choice."

This discussion is taking place amid a broader spread of efforts in several U.S. states to allow digital asset investments in retirement funds. In Indiana, a bill was recently introduced that would require offering a Bitcoin investment option within public retirement programs.

Representative Kyle Pierce, in bill HB1042 submitted on December 4, stipulated that public pensions and savings plans include Bitcoin-related ETFs as default options and allowed some public pensions to invest directly in digital asset ETFs. It also included authority for state treasurers to allocate certain account funds to stablecoin-based ETFs.

The bill sets clear standards for the use, custody, payment, and mining of digital assets and specifies self-custody protection provisions. If enacted, Indiana would become the first U.S. state to mandate Bitcoin exposure in public pensions.

Other states in the U.S. are also pursuing digital asset legislation. Oklahoma passed a law last year protecting residents' self-custody rights and prohibiting a special tax on Bitcoin transactions, Kentucky officially recognized self-custody as property rights this year, Wyoming allowed digital asset investments in public pensions, and Arizona has introduced a bill to allow Bitcoin ETFs as a choice in retirement accounts.