flag image

College Choice

Supplying for Your Child's Financial Future

The Importance of Starting a College 529 Plan

October 01, 2009
Much preparation goes into preparing for the new school year. Besides shopping for the trendiest new clothes and hippest new shoes, parents and students all across America buy the supplies that will prepare and assist them through the next semester, quarter or year. One would have a difficult time getting through the daily lessons, assignments and projects without having the adequate equipment and supplies. That being said, while parents are supplying their aspiring students with the required pens, protractors and paper, they also need to think about preparing for their child's biggest education expense—college.

Many of you may already be examining your financial statements and investment portfolios with the onset of the school year. But it's important to really scrutinize your family's budget in order to save appropriate sums in the most suitable vehicles. Most families are faced with the home mortgage, car and insurance bills. After the necessities are paid, the next largest expense a family will incur is a college education. And currently, the cost of college education has been rising faster than the rate of inflation. That's why it's important to begin saving as early as possible and in the most fiscally advantageous vehicle possible—an Indiana CollegeChoice 529 Investment Plan.

Recently named one of the "Top 5 Best College Savings Plans," by Morningstar, a leading investment research firm, The CollegeChoice 529 Direct Savings Plan is a tax-advantaged college savings tool that provides a wide range of investment options, but more importantly now offers a 20% income tax credit up to $1,000. Let me reiterate: a tax credit, not deduction, of up to $1,000. This is a direct 20% return on your money. So you'll not only be saving for your children's futures, but rewarding yourself at the same time!

The earnings in a CollegeChoice 529 Savings account are exempt from federal and state income taxes when used for qualified education expenses. So your money grows tax-free and can be withdrawn free of taxes when used for education. Even better is the fact that any Hoosier can contribute to a CollegeChoice Plan and also receive the 20% tax credit. So, not only can you benefit from saving for your child's college education, but grandparents, relatives and friends can too!

It is estimated that sending today's newborn to a public university in 2026 will cost more than $170,000 for a four-year degree. For a private institution the cost could rise to as much as $350,000. These numbers may seem impossible to save but they are attainable if you have a plan: especially if you begin saving early in a CollegeChoice 529 Direct Savings Plan. And even if your family can't save enough to cover the entire cost, you can take solace in the fact that your child will graduate with far less debt than those that are forced to borrow the majority of their college expenses.

So don't delay. After you're finished ironing their new outfits and packing up the books, crayons and notebooks, look at supplying their future. If you have money you are currently saving for college in other education accounts, consolidate that money into a CollegeChoice account and take advantage of the 20% tax credit. Begin saving today for your children's future plans.

Richard Mourdock is State Treasurer for the state of Indiana.

Comments ()
Race for a Cure
Childrens museum
St. Francis