It’s that time of year when many college graduates leave campus to head off into the working world, many of them shouldering the burden of enormous student loans. And, next week, May 29 is also designated as National 529 Day (get it? 5-29), in order to draw attention to the easy-yet-flexible 529 college savings plan designed to enable a less-stressful post-college life.
A 529 college savings plan, such as California’s ScholarShare (sponsors of this post), is a state sponsored program with tax advantages to help families save for college. Each state has their own 529 program, which is named for IRS code that created them.
Maybe it has to do with the internet enabling families to plan finances without the help of experts. Maybe it’s because some of these plans, like ScholarShare, are direct sale plans that don’t provide commissions to financial consultants in order to keep fees low. Whatever the reason, I’m leaning that there are way too many parents and grandparents who do not know that 529 plans exist. You can also estimate the cost of college at the time your kids will need to go.
And, that is exactly why we’re celebrating National 529 day. So that you can participate, too, here are five very basic bullet points that are easy to share with friends.
It is easier to keep contributing beyond that once you jump the hurdle and open an account.
2. It takes less than 10 minutes to open an account online.
Visit ScholarShare online to open an account. We have one.
If junior has too many toys, send aunts and uncles the account number. They can make deposits as birthday or other holiday gifts. With summer jobs on the horizon for many high school students, they can even contribute to their own accounts.
4. There are tax advantages.
Earnings in the ScholarShare account grow tax deferred. Withdrawals from the account for qualified higher education are free from federal and state tax. Higher education includes college, community college, trade schools, and graduate degree tuition, certain room and board costs, books and other mandatory supplies.
ScholarShare is launching a sweepstakes today on their Facebook page. Click on the image below, which will direct you to the ScholarShare Facebook page. Then click on the tab that says 529 Day Sweepstakes. The sweepstakes ends at 8:59pm PT on Thursday, May 29. The winner will be randomly selected and announced on Friday, May 30.
Knowing that they’ll graduate with substantial debt can both deter kids from going to college in the first place or cause them to choose a school that isn’t best for them.
A 529 college savings account can equal more money for hard-working kids. Graduating college with less debt means starting a retirement account sooner and with higher contributions, a larger down payment on a first time home purchase and, perhaps, a more secure financial future.
Having a bachelor’s degree versus a high school diploma can increase earning potential by a million dollars over a working lifetime.* And, children are seven times more likely to go to college if they know they have a college savings account!
Now, go enter the sweepstakes and spread the word about National 529 Day!
*Source: US Census Bureau 2011 American Community Survey
**This post is part of a series sponsored by ScholarShare. Discuss ScholarShare with your own financial adviser to determine if it’s right for you.