ROANOKE, Va. (WFXR) – Paying for college has gotten more expensive. In addition to tuition, students also have to pay for books, food, housing, transportation, and other school-related expenses. To help prepare to pay the increased costs, people can start putting money aside in a tax-advantaged 529 savings account.
“Many people are not aware of all the ways they can use their 529 savings account to cover post-high school education costs,” said Mary Morris, CEO of Virginia529. “An education savings account is a versatile tool that can help lessen the financial burden of education in more ways than one.”
Morris explained a 529 savings account can be used for more than just costs associated with attending a four-year university. The money can also be used for community college, training programs, and graduate degrees.
“The one thing people think of most often is tuition and fees. That makes sense. As long as you’re attending part-time, which is only six credit hours, you can also use your 529 account for room and board, books, other types of fees, special needs equipment, and computers,” Morris said. “And in addition, folks actually can save even longer or more, if they have the ability, for some parts of K-12 tuition costs. And in some instances, you may have taken on some debts not knowing how much you’ll have. You can actually use [529 savings] to pay down some portion of student debt as well.”
Opening a 529 savings account requires about 10 minutes and an initial contribution of as little as $10. Click here to create an account. Once an account is created, Morris suggests getting into the habit of consistently making contributions to the account.
Morris said, “Really, the best practice for us is just do it all the time. Setup your account when you open it for automatic recurring contributions, ACH withdrawal is what we call it, for $10 a month from your bank account or $50 or $100 or whatever you can comfortably save, but do it regularly and start as early as you can if you have children, or if you’re saving for yourself.”
Anyone can open a Virginia529 savings account for a student, however, it is important to note whoever owns the account is who gets the state income tax deduction.
“Maybe 15 percent of our accounts are owned by grandparents. A lot of times grandparents wish they had been able to do more for their children in college but they weren’t aware of the program or they didn’t have the funds and so they’ll start the account and hopefully have their children either pick up their own account or take it over,” Mary Morris said.
Virginia529 also offers a gifting platform that allows people to contribute to existing savings accounts.
“We try to make it as easy as possible to let others help you save for those higher education goals because it can be difficult. Birthdays, holidays, celebrations, family gatherings, 529 Day which [is] May 29th — those are good days to put money into your own or somebody else’s 529 account,” Morris said.
Click here to find answers to frequently asked questions regarding Virginia529 savings accounts.