As a former Winthrop University baseball player, I naturally cheered for Coastal Carolina University during the College World Series. Watching the final game with my friend, Keith, and his two-year-old son, I wondered how much it would cost him to send his child there in 16 years.
By applying a 4 percent college inflation rate to today’s cost of $23,655, I figured it would cost Keith $44,305 for the first year in 2032. The next three years would be $46,077, $47,920, and $49,837 bringing his total to an astounding $188,139.
These are daunting numbers even for a smaller in-state school. The odds for Coastal were pretty daunting as well, but with hard work and discipline they won the series.
Saving for college is no different. And while fully funding college is nearly impossible, making a meaningful contribution is not. A 529 plan is a good place to start.
Grow your college savings free
Tax benefits offered through a 529 plan help you keep more of your money for actual college expenses. Money contributed is not taxed as it grows, and can be withdrawn tax free for college expenses.
You’re in control
You decide when, where and who can use the money you save, even after your child turns 18. If your child does not need the money or they decide not to attend college, you may transfer the account to another beneficiary or leave the money there.
Low impact on financial aid
When applying for financial aid, only a small percentage of the account’s value (currently 5.64% or less) is factored in when determining your expected family contribution each academic year.
Jason Driver is a financial consultant with Family Trust Investment Services.
_ The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you discuss your specific situation with your financial advisor prior to investing.
Prior to investing in a 529 Plan investors should consider whether the investor’s or beneficiary’s home sate offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing. _