It’s no secret that education costs are rising all around the country. If you are considering going to a vocational school, earning a higher degree, or simply taking educational classes that interest you, you may need to start saving or want to start college planning.
One effective method of saving for educational costs is opening a 529 plan. This account takes your savings and invests it so you can benefit from market yields and a compounding interest rate.
The 529 basics: Is a 529 plan an effective way to save for school?
A 529 plan can be used for many types of higher education, such as four-year colleges and universities, vocational school, community college, some foreign institutions, and qualified kindergarten through 12th-grade tuition.
If you are planning to save for your own higher education, there is no doubt that a 529 plan can be a helping hand for your savings. For example, a 2023 College Board pricing report (PDF) found that the average cost of in-state tuition at a public university is more than $11,000 per year. That price only continues to increase if you are also paying for your own food and housing, so a college 529 plan can be beneficial.
One of the many benefits of having a 529 account is compounding interest. If you put your money into your bank’s savings account, your money will not earn much interest over time. However, if you put some of your savings for education into a 529 account, that money is invested and has the potential to grow at an exponentially higher rate over time. Starting as early as you can helps make college planning even easier.
What can a 529 Plan be used for?
529 plans offer much more flexibility than just paying for college. 529 plans can be used for a variety of qualified expenses including:
Can other people assist with your 529 plan?
One of the benefits of a 529 plan is that you are not the only person who can deposit savings. If anyone is able to make contributions to your education, it can drastically increase your investment over time.
Scholar’s Edge offers an easy, tech-friendly way to make a contribution. With Ugift®, you can share your unique code with friends or family so they can deposit funds directly into your 529 account.
Looking at financial aid?
FAFSA, the Free Application for Federal Student Aid, allows students to apply for financial aid from federal and state governments as well as most colleges and universities. Financial aid may include student loans, scholarships, grants and student employment.
The FAFSA Simplification Act has created significant changes to federal college financial aid. Those applying for aid for the 2024-25 award year will begin to see the new FAFSA, including a redesigned and streamlined FAFSA form and the replacement of the Expected Family Contribution (EFC) with the Student Aid Index (SAI). These are the changes you need to know (PDF).
Estimate your Student Aid Index (SAI) for the 2024-2025 school year, a key to calculating financial aid. This calculator is a helpful college planning resource, showing both parent and student’s contribution portions and assists in completing the FAFSA form. Learn how your SAI is used by colleges in determining student eligibility.
Student loans
Student loans are similar to other types of loans – you borrow money and you repay both the principal amount plus the interest. Student loans are offered by the Federal government as well as private lenders. These loans can typically be used to fund tuition, fees, supplies, room and board, and transportation to name a few. Terms and conditions are specific to each lender.
Calculate your estimated loan payments and view estimated payment changes that may occur if interest payment begins while attending school. Additional results include total interest paid and estimated annual starting salary to make future monthly payments manageable.
Learn more
If you are interested in learning more about opening a Scholar’s Edge 529 account, click here for information on enrollment. Have questions on 529 basics or looking for additional college planning resources, click here!