College and a 529 Plan

Costs are rising. We are seeing inflation hit record highs and the cost of living is soaring around the world. 2022 seems to be bringing more challenges and saving for college is harder than ever. Tuition and fees at four-year National Universities are significantly outpacing inflation. The United States Bureau of Labor Statistics says that total consumer price index inflation shows that tuition in the US has risen 54 percent within the last 20 years. The total consumer price index inflation increased by around the same amount from July 2001 to July 2021, according to the U.S. Bureau of Labor Statistics.

 For a quick look at how much fees have jumped since 2001 here is a snapshot :

• The average tuition and fees at private National Universities have jumped 144 percent.
• Out-of-state tuition and fees at public National Universities have risen 171 percent.
• In-state tuition and fees at public National Universities have grown the most, increasing 211 percent.

Consider investing in a 529 plan. A 529 college savings plan can help you face rising education costs. It doesn’t stop there — you can also use the savings to benefit your loved ones. If you value education then a plan like this is something to explore. Even if you don’t use it to pay for one of your kids or grandkids, you can still use the money to fund your education in retirement. Many folks further their education and get a degree or a master's that they always wanted. Study something that you could never find the time to do or a subject that fascinates you and it will benefit your mental health as well as provide stimulation overall. A 529 plan can be used to fund any of your loved ones’ future education expenses or you can just use it for yourself.

Remember that it has to be used for qualified education expenses. Certain expenses don’t qualify. Transportation and travel costs must be paid for by you. Application and testing fees as well as sports expenses & health club dues or any other extracurricular activities are not included in the list of things you can legitimately spend the saved money on. You have to take care of your own health insurance as well. Other than that, all other education expenses can be covered by the 529 plan. 

 

 

 

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

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Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

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David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC