Growing up, one thing my parents stressed was the importance of saving for the future. My father supported himself throughout college and knew the price of secondary education would continue to rise. This is why it was so important for him to open a 529 account for Owen and his two grandchildren when they were born to begin saving for the future. This has been so reassuring for me. My husband and I contribute monthly and additionally when we can, such as investing our tax refunds. We also added the options for friends and family members to contribute to Owen’s 529 plan during holidays and birthdays in place of a traditional gift.
The start of this school year has been a roller coaster to say the least, but one thing that has remained constant is the importance for planning for Owen’s future, no matter what that is or when that will be. That is why I was so excited when I was given the opportunity to partner with Ohio’s 529 to share information about the importance of saving for college.
What is Ohio’s 529 College Savings Plan?
Ohio’s 529 College Savings Plan is not your typical savings account, it is similar to a 401(k) in that it generally invests your contribution in mutual fund-based investments where your account value is based on investment performance. So it truly is an investment in your child’s future. The wonderful thing about Ohio’s 529 plan is that families in any state can take advantage of it and the money saved in the plan can be used at any college, university, or educational institution that accepts federal financial aid.
What are the benefits?
There are several benefits in opening a 529 account. The biggest benefit, in my opinion, is that you save more over time than you would in a traditional savings account.
Consider this example:
In 17 years, 4-year in-state tuition and fees might cost $115,000. If you plug the average federal tax refund for Ohioans – let’s say $2,539, which was the average for Ohioans in the 2018 tax year – into Ohio 529’s College Savings Planner for 17 years, you’re projected* to be able to cover 79 percent of tuition and fees by investing that refund in Ohio’s tax-free 529 plan, versus only 38 percent of tuition and fees if deposited into an everyday taxable bank account.
*Assumes growth rate of 6% in the 529 plan and a bank savings interest rate of .09% as reported by the Federal Reserve Bank of St. Louis 1/2020. Also important to note that this is only a projection, and individual results could be lower or higher, much like mutual funds in a 401K plan.
Are you ready to begin financially planning for your child’s future or interested in learning more?
Visit www.collegeadvantage.com, there you can open an account online, browse their very informative blog posts, and even utilize the College Savings Planner. With Ohio 529’s College Saving Planner you can input your college funding goals, examine your total projected costs, and estimate the monthly amount needed to meet your objective.