Author: Andrew Wingender, Regional Sales Director, 529 College Savings Plans, First National Bank of Omaha
In NEST 529’s recent college savings survey, 54 percent of Americans reported it is very likely or somewhat likely they or their child will have to take out student loans to pay for higher education. While this statistic may sound daunting, with the right tools and implementation of a savings strategy, the price tag of higher education is nothing to fear.
In today’s blog we reveal common college savings myths and address the truth to help shed light on these common savings ‘road blocks.’ Read on to learn more:
Myth: I don’t need a 529 plan. My child can just rely on financial aid, scholarships or loans.
Reality: According to the NEST 529 survey, the most common methods parents use or plan to use to pay for their child’s higher education include: Financial Aid (50.37 percent), Scholarships (47.67 percent), Personal Savings (42.01 percent), Student or Parent Loans (39.80 percent). While these are all viable methods for paying for higher education, a great way to save is with a college savings plan due to the tax benefits, including state tax-deferred growth and tax-free withdrawals for qualified higher education expenses.
Also, NEST 529 offers a diverse and personalized range of investment options to help each Account Owner fit their unique preferences and circumstances. Click here learn more about the additional benefits of NEST 529.
Myth: It’s too hard to juggle college savings with debt and other expenses.
Reality: Between retirement savings and paying off pre-existing debt, it may seem like it’s difficult to prioritize your college savings. In fact, survey respondents report that they do not invest in a 529 Plan because they are preoccupied with paying off current debt (16.41 percent) and high costs of living (13.57 percent). However, your college savings efforts do not have to come at the expense of your everyday budget.
When you set up a NEST 529 account, you can choose how much and how frequently you wish to contribute, so you can select a savings plan that fits best for your needs. No matter the amount you have saved, any amount puts your child that much closer to his or her higher education goals.
Myth: Parents should be solely responsible for all higher education related expenses.
Reality: While 51 percent of survey respondents reported that a combination of the child and the parent should be responsible for paying for the child’s higher education, in reality, anyone can contribute to a NEST 529 plan. If your teenager has a job, he or she can contribute a portion of earnings, and friends and family can gift to your NEST 529 account for holidays, birthdays and special occasions. After all, the gift of a higher education never goes out of style. Click here to learn more about gifting with NEST 529.
No matter where you are in the college savings process, NEST 529 is here for you every step of the way. Every other week on our blog we work diligently to bust college savings myths and provide our Account Owners with the most up to date information. If you have any questions for the NEST 529 team, please contact us at firstname.lastname@example.org or at 1-888-993-3746.