Did you know May 29 is 529 College 🧑🏼🎓 Savings Day?
Did you know that May 29th is 529 College Savings Day? While I do think 529 plans can be a great solution for many of my clients, I’d like to take this opportunity to offer additional words of wisdom for saving and paying for college.
First of all, did you know that tuition, room and board, can exceed $80k per year at some US institutions? That is over $300k for one child’s college education 👨🏾🎓. If you have multiple children 👩👩👧👧, and do not qualify for financial aid, that can be a bitter pill to swallow. However, in-state tuition, room and board, for your home state, is often in the $30k - $40k/year range – less than half that of the priciest private institutions, just saying.
And there are plenty of colleges available, both in the US 🇺🇸 and abroad 🌎, that offer an amazing education at a price that works best for your family’s budget and long-term goals. However, please start the family college budget conversation early. I often suggest that parents review their cash flow and other resources available to help their children pay for college BEFORE they enter high school. I help my clients understand their full financial picture AND help communicate their situation to their family. That way, your children are aware of the college costs before starting high school and can tailor their high school activities in a way to best qualify for scholarships to help defray the cost of college.
And while there is plenty of loan money available for your children, I’m not a fan of parents co-signing loans. I have had clients call me wondering why their social security wages were being garnished😤 (it was due to the non-payment of federal student loans). And a general rule of thumb 👍🏽, if you must borrow to pay for college, do not borrow more than one-year’s salary upon graduation. For example, if you’re a woman in engineering, you may have access to higher-paying job opportunities upon graduation, than if you’re studying art history and want to work at museum.
And now, some advice for students – hint, parents, you may want to forward this email to your children, or simply discuss this around the dinner 🍴 table one night.
There are multiple ways to improve your chances of receiving merit aid and scholarships 💵. Good grades, in the most rigorous courses available at your school, should be your primary goal. So, tailor your schedule to allow yourself enough study time, in the courses you are most interested in. If you’re a STEM kid, be sure to work your way to the highest STEM classes available, and work hard to achieve your best grades possible. Same thing if you’re NOT a STEM kid – take those classes that most apply to your interests – could be Advanced Placement History, or Honors Film and Literature – really, whatever is the highest level you can reach, that is your goal. And don’t force one love over another – by high school many kids have a natural affinity to one area or another – so play to your strengths. This does NOT mean you are restricting your future education or career opportunities – but it does mean you’ll have the best chances of getting good grades in the classes where you are most interested 🤔.
Next, schools love to see some amount of consistency in activities. If you can choose a few activities, sports ⚽️, clubs ♣️, work, volunteering, etc, that interest you enough to do for 3-4 years, you should aim for that. And in your junior and senior years at high school (if not before) strive for leadership positions within those organizations.
For parents, if you want to really have a positive impact on your children’s college savings, one of your options, a 529 plan, should be explained. A few tidbits about this 💪🏽 powerful savings/investing tool include:
While 529 plan assets can be used to pay for tuition and books, they can also pay for computers, internet access and other equipment.
529 plans aren’t just for college. They can be used to pay up to $10,000 per year per student for K through 12th grade programs.
529 assets can also be used to pay for registered apprenticeship programs and repayment of college debt. (In December 2019, college debt was deemed a new qualified expense that can be paid for by 529 plans).
And if you do set up a 529 plan, consider asking for birthday🎁 and holiday gift contributions to be made to the plan. Every penny counts!
And to conclude on a personal note, while my family is quite global, so far 3 out of 4 of my daughters have chosen to study abroad. I have 2 daughters studying at McGill University in Montreal 🇨🇦 🍁, and a third who will be starting at Trinity College, Dublin 🍀 🇮🇪. They have been taking advantage of amazing educational opportunities, in fun cities, and at the right price for our family.
Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.