The 529 college savings plan: a holiday gift that keeps giving
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The holiday season is here, and with it comes the quest for the perfect gift.
While a trendy toy or must-have gadget might prove popular today, perhaps no gift is more universal and enduring than the gift of education. Shoppers can give that gift by setting up or making contributions to a 529 plan, an education savings plan that has special tax benefits designed to help people save for college.
Now more than ever, contributions to a college savings fund make for an ideal holiday gift. The Project on Student Loan Debt reports that the average student-loan debt increased 24 percent to $23,200 in 2008, up from $18,650 in 2004. Those figures paint a bleak picture for the college students of tomorrow, many of whom likely won’t be able to afford a college education by the time they turn 18.
Experts say that even relatively small, regularly-scheduled contributions to a 529 plan, which is run by a state or educational institution, can add up, especially if such contributions become a monthly or annual tradition.
FinAid.org notes that families who put aside just $50 per month from the time a child is born can grow a nest egg of more than $20,000 by the time that child turns 18, assuming a 7 percent return on investment. Those who increase their contributions to $100 per month can yield more than $43,000 by the time their youngster is ready to enter college.
“Saving with a 529 plan offers a direct-deposit option that is an affordable and attainable way to save for a loved one’s future college expenses,” said Richard Norman, interim executive director of Ohio Tuition Trust Authority. “Many times, just beginning the process can help families feel like college is a realistic and achievable goal.”
One 529 plan that offers a diverse choice of investment options from leading fund managers is CollegeAdvantage, a plan established by the state of Ohio. A CollegeAdvantage 529 plan account is tax free when used for college expenses and specially designed to make it easy for families to save for the escalating costs of a college education. In addition, anyone can contribute, making it ideal for relatives who aren’t sure what to get for their school-aged special someone this holiday season.
Funds invested in a CollegeAdvantage 529 plan can be used at any college in the country to pay tuition, fees, books and even room and board. For more information about CollegeAdvantage or to start saving with Ohio’s 529 plan today, visit collegeadvantage.com.
The state of Illinois’ 529 plan is Bright Start College Savings. Again, money saved through Bright Start can be used at any college in the country for any college-related expenses. Find more information at brightstartsavings.com.