Oh the loveliness of school mornings: make five breakfasts, pack two lunchboxes, three snacks, locate library books and mittens and folders and hair ties and sneakers and try to drink my coffee before it gets cold (again). Things that run through my head during these mornings: How many days till Jack goes to kindergarten too? Where did I put that coffee cup?? When am I finally going to start saving for all of these children to go to college?!?
Have some of these same kinda thoughts? Relax, you got this.
Now, I’m not proud to admit just how much procrastination I’ve done about saving for college for all five kiddos, but with my oldest going to middle school next year (HOW?!) I am starting to get mini panic attacks about the fact that college is so much closer than I think it is. The thing is, while it’s a huge priority, it’s also far down my list because it seems like it would be super complicated, especially for FIVE KIDS.
I was wrong.
Enter New York’s 529 College Savings Program Direct Plan, a kind of investment account you can use for higher-education savings, and guys, it is so easy to set up and use. I had an easier time setting this up than I did trying to change my wifi password. Truth.
If the idea of your kids taking out student loans makes you break out in a cold sweat, keep reading, because with the 529 college savings plan the more you can put aside for college now, the fewer loans you and your child may have to take out later on. Saving rather than borrowing also makes your overall college cost much lower, and unlike other types of accounts (like a custodial account under the Uniform Gifts/Transfers to Minors Act UGMA/ UTMA), a 529 plan account is generally considered part of the parents’ assets, not the child’s, so it will have much less impact when it comes to financial aid eligibility.
The earlier you start saving the better, because the longer you keep your money invested, the more time it has to add up and potentially grow. Let’s say you set aside $100 a month in a tax-deferred 529 college savings plan, for a total investment of $21,600 over 18 years. If this investment earns 5% a year, you’ll have about $35,400 at the end of 18 years. But if you wait 9 years before you start saving, you’ll have accumulated about $13,900, factoring in that same 5% return. In other words, you’ll only have earned about $3,000 in that 9-year span—as opposed to nearly $14,000 over 18 years! *read more here
Just about anybody can open a 529 account—parents, grandparents, other relatives, friends, and there are no income restrictions to open an account. As an account owner, you’ll pick investments, assign a beneficiary, and determine how the money is used. And you can change your beneficiary if needed. If your child doesn’t use the money in the account, you can choose an eligible family member, such as one of your other children, or even yourself, to be the beneficiary without paying a penalty.
You can use it to pay for anything that’s considered a qualified higher-education expense, including tuition; books; supplies; equipment; expenses for the purchase of certain computer equipment, software, and computer-related services; and certain room and board fees. Beneficiaries can attend college in any state, not just the state sponsoring the #529 plan, and your child can attend any eligible higher-education institution, not just a 4-year college or university. This includes vocational and trade schools, as well as community colleges and graduate schools.
The account owner—not the beneficiary—is always in control of the account, even when the beneficiary becomes an adult, and there is no age limit for beneficiaries of a 529. Also, a beneficiary can have more than one account. For example, you can open an account for a child and the grandparents can open an account for the same child. Friends and family can contribute to your child’s #529 account for special occasions too like a Christening or a big birthday, even holidays using Ugift (less toy clutter and more college savings sounds like a serious win to me).
So, whether you have a newborn or a teenager, it’s never too early or too late to save for higher education. Now, how easy is it to actually set it up? Easy enough to fit into the scraps of time you find between school drop off and the grocery run? Yes siree.
To get started you just need some basic info, then you’ll set up your account where you’ll choose your investment options and set up your contribution method (with payments as little as $25 and you can make your contributions by check or electronic bank transfer). Or, you can set up recurring contributions (also known as an automatic investment plan, or AIP) when you open your account or at any time later on. After you decide how you want to receive confirmations and updates you’ll confirm your information and that’s it! For us we chose to do some quarterly deposits, nice and easy. Done and done! Click here to get started right now.
Now that I have this all set up I still may wake up in a cold sweat worrying about things I haven’t gotten crossed off my list yet (hello science project) but saving for college won’t be one of them. Have questions? Leave ’em in the comments below and I’ll answer them in my next post!
For more information about New York’s 529 College Savings Program Direct Plan, obtain a Disclosure Booklet and Tuition Savings Agreement at www.nysaves.org or by calling 1-877-NYSAVES. This includes investment objectives, risks, charges, expenses, and other information. You should read and consider them carefully before investing.
Disclaimer: Compensation was provided by NY 529 Direct via Momtrends. The opinions expressed herein are those of the author and are not indicative of the opinions of NY 529 Direct or Momtrends.