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What is a 529 College Savings Fund?

Updated: May 10



The price of education has gotten expensive. Tuition rates have outpaced general inflation rates for years and it is assumed that higher education will only continue to increase in price. According to published data, the average cost of college in the US is $35,720 per student per year. The cost has effectively tripled in 20 years at an annual growth rate of 6.8% (Hanson, Melanie. Average Cost of College & Tuition. July 2021). That rate of price increase outpaces the US' general 2% rate of inflation.


So what can be done?


Don't wait until it's time for your child to attend college to start worrying about how to pay for it. Starting early with ongoing contributions will make a huge difference over time. This is where a 529 College Savings Fund really shines. Using this strategy will help you reach the education goals for those you care most about.

A 529 plan is used to save for a child, grandchild, or other child's future education. This type of plan also pays for graduate school studies. The money saved in the account helps cover all the following:

  • Tuition

  • Room and Board

  • Fees

  • Books, supplies, and other required equipment

  • Computers and technology

  • Up to $10,000 in tuition expenses at elementary or secondary public and private schools

The 529 College Savings Fund is all about setting up your child for a future of options. Having options provides flexibility in opportunities and personal growth. By saving in advance, there will be less reliance of big student loans with high interest rates. With less loans having to be repaid, there will be stress and a lower need to work long hours to try and repay the outstanding loans. With a lower need to work long hours, there is time to develop other skills and form stronger relationships which will produce results that will compound for years to come.


The Bottom Line


Education has become a privilege due to the high cost required to get into a traditional university. By starting a college fund early, you can help provide your child or loved one with more opportunities to attend the program they want without worrying about a big debt.





 

Units of the 529 plan investment options are municipal securities and may be subject to market value fluctuation. Before investing in a state-specific 529 plan, you should compare your own state's qualified tuition program and any state tax or other advantages it may provide.

Content, links, and some material within this website may have been created by Mofrad Financial Solutions for use by an Avantax affiliated representative. This content is for educational and informational purposes only and does not represent the views and opinions of Avantax Wealth Management or its subsidiaries. Avantax Wealth Management is not responsible for and does not control, adopt, or endorse any content contained on any third-party website.

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