When our daughter was born everyone said, “Start saving for her college education now.” With 18 years ahead of us, we thought we could wait a few years before we really had to think about how we were going to pay for college.
A few years later a friend asked if we had started saving yet. I sheepishly looked at her and said, “It’s on my to-do list…” She told me how much she had already saved.
I was shocked.
When she walked me through the math, I quickly realized we had missed out on some big savings. I got my daughter’s account set up that week and have been contributing to it from every paycheck. Having worked in higher education, I’ve seen firsthand the toll paying for school takes on the students and their families. It is one of the top obstacles today’s students face. Quarterly, when I receive the account statement, I feel both accomplished and relieved. College is still nine years away but knowing how we are tracking towards our goal is exciting to see.
What is a 529 Plan?
A 529 plan is a special account you can put money into to save for the increasing cost of higher education. These accounts are created under section 529 of the Internal Revenue Code, hence the name, and are sponsored by individual states. These plans can offer tax advantages and provide great flexibility in assisting families with the cost of college and other educational expenses.
South Carolina’s plan, called Future Scholar, has been recognized as one of the best nationwide for its low fees, and tax advantages, which allow South Carolinians to deduct their contributions from their state income tax return.
It’s Easy to Set Up
All you need is an hour! Gather the name, address, social security number, and date of birth for the account holder, you, and the beneficiary, the child. You will also need to decide how you want to add money to the account, which can be done electronically, or by check in the mail. We set up automatic contributions, so we know money is deposited twice a month. Then you’ll choose the funds you want to put your money into and voila, you are enrolled in the program.
Know nothing about investments like me?
That is okay. Future Scholar makes it easy by offering an aged-based plan that automatically adjusts your investments as your child gets closer to college. Of course, you can also speak with a tax professional who can guide you in choosing what is right for your situation. Visit the Future Scholar’s Common Questions Page to learn more about the most frequently asked questions.
Think you don’t have enough money to get started?
That’s okay too. Every dollar will get you one step closer to helping your child pay for their education.
Start Early
The cost of college has risen dramatically over the past decade – much faster than the rate of inflation. This means college is much more expensive for us than it was for our parents. The rising cost can be intimidating, but do not let it stop you. Get started now!
Don’t put pressure on yourself that you have to save enough for every expense. Think of it as every dollar you save now is one your child may not have to borrow later. A 529 plan can help you both set yourselves up for more financial success.
It’s Flexible
Our big hesitation in putting money into a 529 plan was what can be done with the money if the child doesn’t use it. Maybe my kid is going to turn out to be a genius and get lots of scholarships. Or maybe they are going to be an athlete that is recruited by all the top schools! Neither is likely but putting money away now for something so far in the future was tough to wrap our heads around. After we did some investigating we learned that the 529 plan is very flexible.
The money can be used at any accredited school in the country, and over 600 international schools. This includes four-year schools, technical schools, apprenticeships, and graduate programs. It also covers more than just tuition. Books alone cost a small fortune. This, along with school supplies and room and board, are also part of what the funds can be used for.
If you have more than one child or plans change along the way, the Future Scholar plan is transferrable to another sibling. Once we learned this it made signing up a great option for us!
They Make a Meaningful Gift
Setting a child up for financial success is huge. Lessening their financial burden, while receiving tax advantages for yourself, is a great way to help everyone. By asking friends and family to contribute to a 529 plan, you can offer them the chance to make a really impactful gift.
Another great perk is the money in your account grows free from federal and South Carolina state income taxes and the same applies to your family or friends. They even have gifting options that allow you to send a personalized link so friends and family can contribute to your child’s account. How easy is that?!?
I encourage you to look at their website – where you can find the answer to any questions you have.
My family has found the Future Scholar program a great financial choice that is benefiting our family now and in the future.
Expecting a baby this Spring? May 29 is 529 Day!
Each year, South Carolina’s Future Scholar 529 College Savings Plan and State Treasurer Curtis Loftis, who administers the plan, celebrate 529 Day in a very special way: All Palmetto Babies born on 5/29/2021 are eligible to receive a privately funded $529 grant when their parents open a new Future Scholar account. The deadline to apply for the 2021 PalmettoBaby Grant Program is 8/31/2021.
