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May 29 is 529 College Savings Day

05/24/2022 Written by: Jenny Boudreau

A college education is an investment in your child’s future. According to Pew Research, there is a growing earnings gap between those with a college degree and those without. Pew Research data reveals that full-time workers with a bachelor’s degree made a median annual salary of $52,000, compared to $30,000 for fulltime workers of the same age with only a high school diploma. Further, the unemployment rate is lower for college graduates.

Despite the benefits of a college education, there is growing concern over the cost of higher education. Tuition costs have long outpaced inflation as measured by the Consumer Price Index (CPI). Historically, tuition has increased at about twice the rate of inflation – about 8% per year on average. To help pay for college, many turn to loans.

But there is a better way – start saving for your child’s college education as soon as possible. Any savings can help defray the cost and reduce the amount of student loan debt. A simple savings account, a Roth IRA, and eligible savings bonds are just a few ways you can begin saving for college. You can also open a 529 plan.

Operated by a state or educational institution, a 529 plan is designed to offer an affordable, tax-advantaged way to help families save for future college costs. Named after Section 529 of the tax code, nearly every state offers a 529 plan, which can be classified as a prepaid tuition plan or a college savings plan. These plans differ from state to state, and you can put money in your own state’s 529 or any other state’s plan – an experienced advisor can help you understand the options, fees, and expenses.

National 529 College Savings Plan Awareness Day, observed every May 29, encourages families to learn more about how 529 plans can help them prepare for future college expenses. Grandparents, aunts, uncles, other relatives, and even close friends can open a 529 account for the children in their lives. In addition, there is no limit on the number of 529 accounts that can be opened for a beneficiary.

Saving for college is a top priority for many families. The sooner families begin saving for their child’s college education, the more time their money has to grow. You may be surprised by how a little preparation now can make a big difference in the years to come. Contact AssuredPartners Investment Advisors to speak with an advisor about your child or grandchild’s education.

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