X

College & Career Training in Alaska

05Mar

Saving Now for College Pays Later: 529 College Saving Plans

It’s no secret that going to college today costs more money than it did 10 years ago.  If you’re a parent who has already started saving for your student’s college –congratulations! If not, one option to consider is a 529 College Savings Plan.  A 529 College Saving Plan is a tax-advantaged investment account that allows you to save for future college costs. It’s usually offered by a state or educational institution.

The following are a few things to know about 529 College Savings Plans:

  • There are basically two types:
    • A college savings plan offers tax-free earnings on growth.  Its works similar to a 401K retirement plan. You put money in and choose your investment options.  Any withdrawal is tax-free when the funds are used to pay for college and K-12 education expenses.  Expenses include tuition, books, mandatory fees, computers, and room and board.
    • A prepaid tuition plan allows a parent to lock in today’s college rates, in a prepaid plan that can be used for the same value 10 to 20 years later at in-state schools.  Most, but not all, prepaid plans can be converted if the student decides to go to an out-of-state school.  Not every state offers prepaid tuition plans.
  • The student has the liberty to move around – they can use the funds regardless of the state the student lives in, or where the student attends college.
  • A 529 Plan can be shared. If the beneficiary decides not to go to college or has remaining funds, the beneficiary on the account can be changed to be another family member.
  • There may be yearly minimum and maximum contribution limits. Check with your state and your plan.
  • A parent can own the account while the student is the beneficiary.  This helps when the student applies for financial aid, because, compared to the student’s assets, a smaller percentage of  parental assets are presumed to be available for the family to pay for college.

 

In Alaska, there is the UA College Savings Plan, which also allows parents and students to contribute to their investment plan automatically with their annual Permanent Fund Dividend.  As long as the funds are used for education expenses at qualifying schools, the student can study anywhere they choose, in-state or out-of-state.

 

For more information go to UA College Savings Plan.

About the Author

Christina Campbell

Christina Campbell

ACPE: College & Career Specialist

Christina Campbell is a College & Career Specialist with the Alaska Commission on Postsecondary Education. She has a BS in Journalism and Communications from Eastern New Mexico University, and a Broadcast Meteorology Certification in Geosciences from Mississippi State University. Christina was on the original implementation team that brought College Goal Sunday to Alaska in 2005. 

Related

Meeting the Needs of the Last Frontier: AVTEC Celebrates 50 Years of Training Alaskans

Meeting the Needs of the Last Frontier: AVTEC Celebrates 50 Years of Training Alaskans

Today, AVTEC is still the only statewide post-secondary vocational training center operated by the S...

Read More >
Where Do We Go From Here?

Where Do We Go From Here?

Next steps and options for PK-8 students as we prepare for the next school year

Read More >
Young Mariner Training Program: Calling All High School Students

Young Mariner Training Program: Calling All High School Students

Did you know that you could become a fully credentialed Merchant Mariner before you graduate high sc...

Read More >
FAFSA Season is Upon Us!

FAFSA Season is Upon Us!

October 1st is the first day that you will be able to complete your 2021-2022 FAFSA. Whether you ar...

Read More >
EEEK! Prior Prior Year?! Independent Student, What?!

EEEK! Prior Prior Year?! Independent Student, What?!

Happy Halloween! Have you filed your FAFSA yet? Not to scare you, but most forms of financial aid ar...

Read More >
Career & Technical Enrollment Checklist

Career & Technical Enrollment Checklist

When it comes to planning, having a checklist can be very helpful – you can plan accordingly and th...

Read More >