College is Worth Every Penny—Start Saving Today with a 529 Plan!
The College Savings Plans Network (CSPN) is excited to participate in America Saves Week 2017. Like the many organizations involved this year, we strive to motivate and encourage American families to practice smart and responsible financial habits. This America Saves Week, we are encouraging Americans to recognize the importance of opening and saving in a 529 plan to pay for college.
According to the College Board, the average cost for tuition and fees at four-year public institutions has increased 225% over the last 30 years (after adjusting for inflation), and will likely continue to rise. One way to prepare for these financial challenges is to open a 529 college savings plan, a tax-advantaged investment plan designed to encourage saving for the future higher education expenses of a designated beneficiary (typically one's child or grandchild).
Some additional motivators to open a 529 college savings plan include:
- 529 plan earnings grow free from federal and state income-tax. Also, withdrawals are exempt from federal income tax when used for qualified higher education expenses.
- Saving and investing for college instead of relying exclusively on loans cuts the total cost by more than half. For example, the actual cost of a $100,000 education would be $145,593 through borrowing but only $65,593 through saving (assuming 8% interest and level payments over a ten-year period). By saving with 529 plans, you can earn interest instead of paying interest and help you loved one graduate debt-free.
- According to the U.S. Census Bureau, four-year college graduates earn an average of $1 million more than high school graduates during their careers. The value of your investment in a college education will continue to grow for a lifetime and will pay for itself both personally and professionally.
If you’re already saving with a 529 plan—you’re on the right path! This week, challenge yourself to reconfigure your budget and increase your 529 plan contribution amount by spending less on material items. Try cutting your weekly grocery bill by $20 or packing your lunch for work. At the end of the week, you’ll be surprised at how much those smaller expenses add up and be grateful to add them to your loved one’s education.
If you do not have a 529 plan and are interested in learning more, CSPN is hosting a Twitter Q&A on Thursday, March 2 at 2 pm Eastern, 11 am Pacific. Tweet your 529 plan questions to @College_Savings with #529QandA to join the conversation. We look forward to hearing from you and answering your questions. I also encourage you to visit the CSPN website at CollegeSavings.org and follow CSPN on Twitter and Facebook.
- Written by Young Boozer, Chair of the College Savings Plans Network and State Treasurer of Alabama
- Category: Blog
- Published: 28 February 2017