Paying for college is a real challenge. Tuition, room, board, books and other expenses can easily exceed $30,000 a year. There is a way to save for these expenses that is effective and flexible. In spite of this, few families take advantage of it. In a recent article from Business Insider I read that only about 13% of families surveyed reported using a 529 plan to cover college expenses – down from 16% the prior year. The plan allows parents or anyone else to open a 529 account and contribute through direct contributions, payroll deductions or automatic transfers – before a child is even born. The money grows tax free and can be withdrawn tax free at any point as long as it’s used to cover college tuition, fees, books and supplies.
Each state runs their own plans so check with your state department of higher education for relevant details. You can read about 111 options for investing funds in 529 plans at savingforcollege.com. Starting a 529 plan early can help make paying for college easier and reduce the need for student/parent school loans.
