NEW YORK, May 29, 2015 /PRNewswire/ - There are some dates that are memorable, such as birthdays, anniversaries and special holidays. However, First Investors would like parents to know that May 29th is just as important to remember because it's National 529 College Savings Plan Awareness Day.
A 529 college savings plan is a tax-deferred investment strategy that was created in 1996 to pay for higher education expenses. It's named for Section 529 of the Internal Revenue Code that outlines its benefits.
"If you're a parent, you know how hectic life can be," said Paul Prete, Vice President for Retirement Programs at First Investors. "More emphasis is placed on day to day tasks, such as laundry, food shopping, cooking and yard work that need to get done each day or week. Meanwhile, long-term planning for things like saving for college gets pushed to 'some other day'. However, more often than not, that 'some other day' never materializes, but it should, at least on 5/29," he said.
"National 529 College Savings Plan Awareness Day was created to help remind parents that planning for future college expenses is just as important as their day to day responsibilities, especially when you consider just how much money needs to be saved within a short period of time," explains Mr. Prete.
Consider these facts from the College Board, a not-for-profit college organization that connects students to success and opportunity:
- The average cost of a 4 year, in-state college education is about $36,500 while an out of state college education is almost $92,000 and a 4 year private college education is close to $150,000.
- The average undergraduate received $14,000 in financial aid in 2014. That means a large majority of the total cost would need to come from personal accounts.
- Approximately 40% of students received scholarships and grants in the 2013-2014 school year. That means 60% of students had to find other sources of money to fund their college costs.
The good news is that you have about 17 years to fund these expenses and there is plenty of financial aid available for eligible applicants. The bad news is that college tuition costs continue to rise, and the costs listed above only include tuition and fees. Room, board, books, food and other college expenses are all extra.
So, what's a parent to do? Start saving as soon as possible and consider a 529 plan, which offers many advantages over traditional savings and investments, including:
- Federal tax benefits—your investment grows tax-deferred and distributions (at the time of college) are federal tax-free.
- State tax benefits—these vary by state, so check on your individual state's benefits.
- Flexibility—you can rollover your account to a different investment if you're not happy with its performance.
- Low start-up costs—you can open a 529 plan with as little as $25 per month.
- Ease of use—just complete an application and the investment manager charged with professionally managing the fund's assets does the ongoing monitoring and investment work for you.
"We know that first time parents are very busy and many of them are overwhelmed with becoming new parents. But thinking about your child's college education costs should be a priority during the first few years of your child's life because the sooner you start saving, the more money you can have when it's time for college," Mr. Prete added.
"You don't need to know where your children want to go to school; you just need a financial strategy to get them there. First Investors can help you estimate college expenses for children at any age and fully explain the benefits of 529 plans, so you can create a custom designed strategy for each child," Mr. Prete said.
Take advantage of National 529 College Savings Plan Awareness Day this May 29th by sitting down with your Representative and creating a complete college needs analysis. It's the first step towards creating a college expense strategy because the less debt your children take on after graduation, the better off they will be.
All investing involves risk, including the loss of principal. Please carefully consider a 529 plan's investment objectives, risks, charges and expenses before investing. Read it carefully before you invest or send money.
About First Investors
First Investors is a diversified financial services company helping everyday families reach their financial goals, offering solutions such as investment products, and life insurance as well as strategies spanning saving, investing, education funding and retirement. First Investors Corporation and First Investors Life Insurance Company are subsidiaries of First Investors Consolidated Corporation. All securities products are offered through First Investors Corporation. To learn more about First Investors please visit us at: www.firstinvestors.com
SOURCE First Investors Corporation