The school year will soon be here. And if you have young children, you’re one year closer to the day when they may be headed off to college. When that day arrives, will you be financially prepared?
College isn’t cheap. For the 2023–24 academic year, the average cost — including tuition, fees, housing, food, books, transportation and other expenses — was nearly $29,000 for in-state students at four-year public colleges and universities, and about $60,000 for private schools, according to the College Board. Most students do get some type of financial aid or scholarships, or both, but even the “net” price of college can be considerable. So, it’s a good idea to begin a savings program as early as you can.
One popular way to build money for college expenses is through a 529 education savings plan. When you invest in a 529 plan, your earnings can grow tax deferred and your withdrawals are federally tax free when used for qualified education expenses — tuition, fees, books and so on. And while you can invest in any state’s 529 plan, you might be able to deduct your contributions from your state income tax or receive a state tax credit if you invest in your own state’s plan.
