Saving for College with the 529 Plan - FOX 32 News Chicago

Saving for College with the 529 Plan

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ATLANTA -

May 29th is National 529 College Savings Day. It's a reminder why it's important to look into the state's "Path2College 529 Plan" for college savings.

First, let's look at what it is going to cost to send a child to college in 12 years. According to state stats, the prediction is that a four-year school can set you back more than $300,000. So, unless you win the lottery, you have to start saving early.

Ron Hart is a financial advisor with Morgan Stanley and he has served on the Tennessee Board of Regents. He says even student load debt today, not down the road, is hard to manage.

"Student loans are huge. Some students are leaving college with $100,000 in student loans. The average student loan debt is now, out of undergrad, $27,000. It's not dischargeable out of bankruptcy. It can plague you your entire life."

If you are not familiar with the Georgia's 529 college savings plan, it's time to get acquainted. Think 401K except it's available to anyone who wants to contribute. The "529 Plan" let's you make a deposit each pay period toward college costs. In Georgia, you can also deduct up to $2,000 each year, per student.

The sooner you get started the better. Even if it's just $50 a month for the next 10 years, the compounding interest adds up.

"The sooner you start compounding your money the better off you'll be long term especially if you compound it tax free which is the case of the 529," added Mr. Hart.

He said that college costs are going up twice the rate of inflation. In helping parents plan for their childrens' education, he's telling folks to think outside the box a bit -- consider a two-year community college. Think about taking a year off - a gap year - before heading to college to make sure you are ready to settle down before you go.

And, finally, think hard before going to a school with a high price tag for a degree where you simply are not going to get out and find a decent paying job in that field.

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