I grew up in a home where there was a heavy emphasis on education. We were the family that played board games and visited museums on vacation. As a child, you would never find me without a book in my hand…even if it was a quick trip in the car to the grocery store.
Neither of my parents went to college, so they made every effort to ensure that I would be the first one…regardless of what they had to sacrifice. Interestingly enough, if my parents did forgo certain luxuries, I didn’t notice it. We traveled and shopped and I never felt like I needed or wanted anything. We lived simply within our means.
My mother was and has always been a “saver.” She paid for most of my undergraduate and graduate schooling with minimal loans. Of all the things that I have to thank my parents for, it is the gift of education that enabled me to go on to pursue my career as an RN.
My children are 5 and 2, and I’m embarrassed to admit that we haven’t officially started saving for their college education. Until recently, I had not even thought about college (we’re just trying to get acclimated to elementary school). But if you consider the fact that in 12 years, the price of higher education could cost five times it’s current amount, I should have been saving from the moment they were born.
I recently spent some time learning about ScholarShare, California’s 529 College Savings Plan. Through this program, families can open an account to begin saving for their child’s education. It’s never too early (or too late) to start saving because even a small amount invested could result in profitable returns. The money invested can be used (at the right time) for everything from school tuition and other fees to books, supplies and housing. The best part is that the money is free from state and federal income taxes!
I have to admit that when I first began reading the information, I was a bit overwhelmed. It helped to speak face to face with the representatives from ScholarShare to help me understand the program. Perhaps you have some of the questions I had so I’ll answer them here!
How do I get started?
For just $25, you can open an account to begin saving for your child’s college education. You’ll definitely want to open up an account for each child and all you’ll need is a Social Security number or federal Taxpayer Identification Number. You must also be a U.S. citizen or resident alien.
What are the benefits to opening a 529 account?
Any account earnings are income-tax deferred (state and federal). With ScholarShare’s revamped plan, fees have been reduced by approximately 30 percent, making it one of the lowest in the country.
What, if any, risk is involved with the 529 plan?
Any investment is a risk. One of my most important questions was whether or not I was guaranteed the money I invest. The answer is no since the market fluctuates daily. However, ScholarShare now offers 19 different investment portfolios which vary by strategy and degree of risk. My children are young, so it would be wise for us to start early and somewhat aggressively so that our money can grow. However, if we had children that were within a year or two of starting college, we might be more prudent in our investment strategy.
Does my child have to attend a school in California with the money earned through the 529 plan?
No. In fact, your child can attend any eligible school (within or outside of the US) including public and private colleges and universities, graduate and post-graduate schools, community colleges, and certain proprietary and vocational schools.
According to ScholarShare’s Saving4College app, I would have to save an amount equivalent to our mortgage every single month in order to have enough money to pay each of our children’s college tuition in it’s entirety. At this point in our lives, that is not feasible. But that doesn’t mean we should just forego the entire venture. Every little bit counts and since we have time (13-15 years), we could save a significant amount and minimize the amount our children will have to take out in loans. Going to college is stressful enough on a student without having to worry about how they are going to pay for it. If I could give my children one lasting gift, it would be a college education.
To learn more about the 529 plan, just visit ScholarShare, which is an incredibly resourceful site. On it you’ll find a savings calculator, a risk tolerance questionnaire, and detailed information on opening and setting up an account.
This month is College Savings Month, and to celebrate, ScholarShare is running a Facebook contest where two winners will receive $1,529 to open a new ScholarShare account or contribute to an existing one. To enter, simply like their page and
share your college savings story. Entries must be received by September 26th, 2012.
This is part of a compensated campaign with ScholarShare and One2One Network. All opinions remain solely that of the author.
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