Saving for College
According to the College Board, the average cost for tuition and fees at four-year public institutions has increased nearly 51% over the last 10 years (after adjusting for inflation), and these costs will almost certainly continue to rise. Saving for college can help with the increasing cost of a college education and help you be financially prepared when your children are ready for college.
Section 529 Plans
Most states, including Virginia, offer savings options, known as Section 529 plans. These are tax-advantaged investment plans designed to encourage saving for the future higher education expenses of a designated beneficiary (typically one's child or grandchild). The plans are named after Section 529 of the Internal Revenue Code and are administered by state agencies and organizations.
All withdrawals from 529 plans for qualified education expenses remain free from federal income tax. Many states mirror the federal tax advantages for 529 plans by offering state tax-deferred growth and tax-free withdrawals for qualified higher education expenses.
Find details about Section 529 plans at www.collegesavings.org, including a college cost calculator, tools that allow you to compare plans by feature and by state, and answers to common questions.
No matter how much you save, even a little can make a difference. During College Savings Month (September), you will find daily resources, tools and helpful investing information on the College Savings website and via Twitter at @College_Savings. As of the end of 2010, more than $157.4 billion was invested in 529 plans.
Saving for your child's college education is an investment in his or her future. According to the U.S. Census Bureau, college graduates earn 63-70% more than high school graduates during their careers. The value of your investment in a college education will continue to grow for a lifetime.
Saving Even a Little Can Go a Long Way
Like any other major investment, the key to saving for college is to start early and save regularly. By saving a set amount at set times, your money can grow as your child does. A family that begins setting aside $50 a month when their child is born can accrue over $21,000, in an account that earns 7% interest per year, by the time the child turns 18.
Ferguson’s Career Guidance Center (under Electronic Resources on the library’s website) includes a section on College Planning and Financial Aid, with a directory of aid available by college major and by other focuses, such as athletics, military, minorities, disabilities, religion, gender.
Also check out Jean Chatzky’s Money 911: your most pressing money questions answered, your money emergencies solved and Jane Bryant Quinn’s Making the most of your money now. Both address paying for college.
For more about planning and saving for college, visit www.tcplweb.org or call 988-2541.