Happy 529 Day!
The thought of college savings can be overwhelming. This is because when many parents talk about saving, they (wrongly) believe they have to set away enough money to pay for 100% of school. The reality is in order to pay for college, most families use a mixture of resources including savings, financial aid, scholarships and student loans.
Every year college tuition gets more expensive, and the numbers can seem very frightening depending on which institution you are considering. Tuition prices have risen faster than many other costs over the past decade and it doesn’t seem as if they’re going to slow down anytime soon. For private schools, tuition costs have risen an average of 2.4 percent a year, and for universities, 3.5 percent. In fact, according to US News, in-state tuition prices among public National Universities grew by 63% over a 12-year period from 2008 to 2020. That increase was more than the published tuition hikes among private National Universities during that period.
Reflecting on the future of your child and taking action to help them achieve their educational and career goals are crucial decisions. When determining how to save for a child’s education there are several choices. Through a traditional old-fashioned savings account to investing bonds or mutual funds, parents can select something. According to The Wall Street Journal, most financial experts also recommend that parents pursue 529 plans.
A 529 plan is a tax-advantageous savings plan created to promote future cost savings for education. 529 Plans are formally named “Qualified Tuition Plans”. They are sponsored by States, State agencies or educational institutions and are authorized under Section 529 of the Internal Revenue Code.
This is why May 29th is recognized as national “5/29 Day”. A day designated to promote and encourage interest in utilizing 529 plans as a means to obtain higher education for your child. These plans are administered at the state level so the benefits and program’s rules may vary depending on where you live. Some states offer Prepaid 529 savings plans that are especially attractive to parents who may be worried about inflation on future tuition prices. Prepaid plans enable you to pay future tuition costs at today’s prices, which may be appealing given the rising cost of college.
Many states including Ohio, Oklahoma, South Carolina and more are finding creative and effective ways to increase awareness about the 529 plans available in their states. Saving and paying for college doesn’t have to be a huge burden on your and your family. By researching and finding the options that best suit your finances you can give your child an advantage to leave college debt free. If you need help deciding the best way to approach your child’s future tuition plan, contact us today to speak with one of us at SJK Wealth Management.