The 529 college savings plan: a holiday gift that keeps on giving
The holiday season has arrived, and with it, the quest for the perfect gift. Hours spent at crowded shopping malls or perusing online retailers often prove fruitless, and shoppers commonly settle for something that falls short of perfect.
While a trendy toy or must-have gadget might prove popular today, perhaps no gift is more universal and enduring than the gift of education. Shoppers can give that gift by setting up or making contributions to a 529 plan, an education savings plan that has special tax benefits designed to help people save for college.
Now more than ever, contributions to a college-savings fund make for an ideal holiday gift. For example, the Project on Student Loan Debt reports that the average student-loan debt increased 24 percent to $23,200 in 2008, up from $18,650 in 2004. Those figures paint a bleak picture for the college students of tomorrow, many of whom likely won’t be able to afford a college education by the time they turn 18.
Experts say that even relatively small, regularly-scheduled contributions to a 529 plan, which is run by a state or educational institution, can add up, especially if such contributions become a monthly or annual tradition.
FinAid.org notes that families who put aside just $50 per month from the time a child is born can grow a nest egg of more than $20,000 by the time that child turns 18, assuming a 7 percent return on investment. Those who increase their contributions to $100 per month can yield more than $43,000 by the time their youngster is ready to enter college.
“Saving with a 529 plan offers a direct-deposit option that is an affordable and attainable way to save for a loved one’s future college expenses,” said Richard Norman, interim executive director of Ohio Tuition Trust Authority. “Many times, just beginning the process can help families feel like college is a realistic and achievable goal.”
One 529 plan that offers a diverse choice of investment options from leading fund managers is CollegeAdvantage, a plan established by the state of Ohio. A CollegeAdvantage 529 plan account is tax-free when used for college expenses and specially designed to make it easy for families to save for the escalating costs of a college education. In addition, anyone can contribute, making it ideal for relatives who aren’t sure what to get for their school-aged special someone this holiday season.
Funds invested in a CollegeAdvantage 529 plan can be used at any college in the country to pay tuition, fees, books and even room and board. What’s more, families can open an account in a matter of minutes by going online at
www.collegeadvantage.com or by calling 1-800-AFFORD-IT (233-6734) and requesting an enrollment kit. CollegeAdvantage even offers a free, $25 bonus contribution to all new $100 accounts opened by December 31, 2011. New enrollees can just enter the promo code SAVINGS at sign-up.
For more information about CollegeAdvantage, or to start saving with Ohio’s 529 plan today, visit