Saving for college can seem insurmountable, especially if you have multiple children. I get it. In fact, The Bureau of Labor Statistics reports that college tuition rose 439% between 1985 and 2005. Tuition for my college has more than doubled since I graduated…If that trend continues, it should cost roughly 5 times more for my kids to attend my dear alma mater. Nowadays, it feels like saving for anything is tough to do. I know. Although it “feels” easier to just put college savings “off”, I’m here to tell you that it’s not easiest in the long run. Here is why: The earlier you start saving for college, the more time the money has to grow. Time is your friend when it comes to investing. There are various ways to save for college and I recommend you do your homework to find out what method is best for you and your family. In this post, I’m going to let you know about California’s 529 College Savings Plan, ScholarShare, managed by TIAA-CREF Tuition Financing, Inc. There have been a number of changes to the plan making it more attractive than in past years. If you looked into the California 529 in the past, I recommend you give it a second look. For those who are unfamiliar with the state 529 plans, you are allowed to participate in any state’s plan. Since I have readers from all over the country, I’m pleased to be writing about something in which all of you can participate.
September is College Savings Month and the perfect time to start contribution to a 529. One of the biggest benefits of using a 529 plan is that all the money (contributions and earnings) is tax free when withdrawn to pay for qualified education expenses. The Scholarshare website, ScholarShare.com has lots of information about how their plan operates, how to plan for college savings and how to open an account. Features of ScholarShare that I like are: the choice of nineteen investment portfolios for your account, accounts can be opened with as little as $25 and ongoing contributions can be as low as $25 (that’s less than a dollar per day!), low plan fees which means your account gets to keep more of your money, extensive customer service support online, by telephone and in three office locations in California. I love a mobile app! ScholarShare has an Android App called Saving4College and there is one for iPhone coming soon. The recent changes that have been made to the ScholarShare program have raised their Morningstar rating from “average” to “above average”.
How about some free money to kick off your college savings efforts? In celebration of College Savings Month, ScholarShare is running a Facebook contest two winners will receive $1,529 to open a new ScholarShare account or contribute to an existing one. Just “LIKE” their page and then share your college savings story – could be about yourself, saving for your child’s education, savings tips you might have, anything about saving. Simply go to ScholarShare’s Facebook page and click on the Share Your Story Tab to enter. Entries must be submitted by 9/26/12.
Some other great aspects of saving for higher education via a 529 plan are: If your child receives a scholarship, you can withdraw an amount equal to the scholarship amount without penalty or tax. Account funds can be used for educational expenses other than tuition such as books, room & board, supplies and equipment. Account funds can be transferred to be used for educational expenses of other family members. An account is owned by the person who opened it, the beneficiary is not the account owner, therefore, allowing the owner to have control of the account. Only thirteen states do not give taxpayers a deduction for contributing to a 529 plan. Unfortunately, California is one of them. I really wish California would add this incentive to encourage college savings. Maybe if enough of us trying to save for college bring this to the attention of our state legislators, it will get on their agenda. I have already contacted my representatives in Sacramento and I hope my readers in CA will do the same!
If I leave you with nothing else about college savings after you read this post, let it be this: Start saving, even a little bit, but start saving now!
Disclosure: I attended a dinner with ScholarShare and TIAA-CREF where I learned more about The California 529 Plan. I am being compensated for this post. The content is my own.