How much has your family saved for college?
The month of May is about more than Mother’s Day and spring flowers. It’s also the time of year people around the country – and right here in Minnesota — observe 5-29 Day.
May 29 is National College Savings Plan Awareness Day, an annual day that celebrates the importance of preparing for future college expenses and the advantages of 529 College Savings Plans. A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs.
Minnesota’s plan, known as the Minnesota College Savings Plan, has been around since 2001 and currently has more than 33,000 account holders throughout the state. According to statistics provided by the Plan, there are a total of 207 account holders in the Northland communities of Duluth, Hermantown and Proctor. Together they have saved $5,161,332 for college, or an average of $24,933 per account holder.
“Many Duluth area residents have a good start, but with the cost of college going up as quickly as it is, we’re hoping more people will start saving as soon as they can,” said Robert Stern, program manager for the Minnesota College Savings Plan.
According to a CNN Money report issued in Dec. 2013, members of the Class of 2012 left school with an average of $29,000 in debt. In Minnesota, 70 percent of college graduates carried with them an average of $31,497 in debt in 2012.
Stern points out the sooner parents start saving for college, the less likely their kids will be to have to carry the debt of student loans into their adult lives. He also says it’s important to clear up some misinformation about 5-29 plans. “There’s a misconception that students will hurt their chances of qualifying for financial aid if they have a college savings account. That is not true,” he said. “Any money you save puts you in a better position to pay for school once the college presents you with their aid package.
“Also, a lot of people think signing up for a particular state’s 529 plan means they must attend school in that state. That is not true either. Students with a Minnesota College Savings Plan can use the money saved at any accredited college.”
Stern adds you don’t need to be rich to start a college savings plan. The minimum deposit is just $25 and the fees are extremely low.
To learn more about the Minnesota College Savings Plan or open an account, call 877-338-4646. The number is staffed from from 7 a.m. to 7 p.m. Central Monday through Friday. Information is also available on the Minnesota College Savings Plan website, www.mnsaves.org.
The Minnesota College Savings Plan is administered by the Minnesota Office of Higher Education. TIAA-CREF Tuition Financing, Inc. (TFI) serves as Plan Manager. This article was written specifically for the Budgeteer by Rachel Anderson on their behalf.