529 Plan and College Savings

College planning and the 529 plan are becoming more and more important each day. With the escalating cost of college, college savings, college planning, or setting up a 529 plan have become part of most families’ financial planning. For most people, a 529 plan is essential for college savings. The tax advantages of 529 plans for college savings have allowed parents to save for the future of their children.

This 529 Plan College Savings website is dedicated to providing information on the tax advantaged 529 plan. We discuss college planning, how to set up a 529 plan for college savings as well as other college savings plans. 529 plans are merely a way of saving for college. There are many other ways.

Why college savings?

The cost of college is escalating every year. In 1985, the average cost of college was only $9,751. College planning and college savings were not essential then. However, the cost of college jumped to $13,256 in 1989. As the cost of attending a college rose, more people started saving for college. In 2001, the average cost of college was $25,340. There is no debate that college cost will continue to increase at a very steep rate, making college planning and saving for college increasingly important.

The chart below demonstrates how worrisome the actual increase in tuition costs have become:

Chart of College Cost showing increasing cost of attending college.

Question: What are some good college savings funds which can keep up with soaring tuition rates nationwide?

Answer: The 529 Plan is the most well-known and probably the most respected college savings plan out there. I don’t know much about it, but here’s a website:

http://www.collegesavings.org/whatIs529.aspx

Upromise is also a pretty cool program. It gives you money every time you buy something from their partners. And it’s places you’ll shop at all the time, not like unknown companies.

http://www.upromise.com/what-is-upromise-earn-save-pay-for-college.do?cx=l1&cm_re=gav1-_-L1VisitorNav-_-WhatIsUpromise

If you’re wanting to save for next year, or if you aren’t going to need the money soon, I would put your savings in a Certificate of Deposit (CD). They have much higher interest rates than regular savings accounts (which are like 1.4%). I just recently put $10K in a 7-month CD that has a fixed interest rate of 4%. So, that’s not bad considering interest rates are pretty low right now. You can also do shorter CD’s, like 3 months. Anyway, that’s what I do. You just have to make sure the interest rate you’re receiving is larger than the inflation rate. Otherwise, you aren’t really gaining anything if you think about it.

Rates are at All Time Lows!