By, State Treasurer Kelly Schmidt
In a study conducted by Edward Jones in 2018, only 29% of Americans are familiar with a 529 College Savings Plan. With college costs on the rise, parents have no idea what the cost of college will be when their child reaches college age; thus, they are not prepared for this considerable expense. The national average annual cost of college for the 2019-2020 year is $30,500, which means the average total cost for a 4-year education is $122,000, and we all know the price of college continues to increase every year. What is it going to be ten years from now?!
It’s not too late. Here are some things you can begin now to help your children better prepare for their college education.
First, open a 529 College Savings plan. A few advantages to this type of account are:
- Provides federal & state tax advantages, meaning funds will not be taxed when the money is withdrawn for college expenses.
- Eligible for all – there is no income, age, or annual contribution limits
- You can use it for any K-12 education PLUS college
- Extremely flexible
The Bank of North Dakota offers a great College SAVE program. They have doubled the grant amount of the Children FIRST program to $200 to every child that is born in North Dakota. You need to open the account by the child’s first year and contribute $200. You can learn more at www.collegesave4u.com
Next, start as early as possible. It may seem silly to open a bank account for your newborn baby, but you will be glad you did 18 years later. Even if you can only contribute $25 a month, it will grow over time.
Third, use bonuses and tax refunds to build savings accounts rather than spending that money on something that you don’t necessarily need, begin putting that money away for your kids.
Finally, as the holiday season is fast approaching, notify your family of this gift option. Ask them to consider a contribution to a college savings account. As a grandparent, I can share a small gift under the tree, and a donation to our grandson’s future education is a win-win. It’s never too soon to save, and it’s never too late to save.