Santa Fe, NM, Sept. 10, 2024 (GLOBE NEWSWIRE) -- September is National College Savings Month, a national effort to encourage families to start thinking about and saving for higher education. It’s a great reminder for parents and grandparents to put money aside for future education expenses for loved ones to help them reach their academic and life goals with less debt.
The College Savings Foundation’s recently released 18th Annual State of Higher Ed Savings Survey reveals a significant increase in the use of 529 plans by parents across the United States. The survey, which gathered insights from over 1,000 parents across the country, reveals that more than half are now using 529 plans as their primary savings tool. The Education Plan®, a 529 education savings program sponsored by the State of New Mexico, offers a flexible, tax-advantaged option to support a range of qualified education expenses.
Key Survey Findings:
- Surge in 529 Plan Utilization: Across the U.S., 94% of parents are now actively funding their children’s higher education, with 48% identifying savings as their primary strategy—up from 28% in the previous year. Over half of parents saving for college for their children nationwide now use 529 plans as their main education savings tool.
- Broadening Educational Horizons: The versatility of 529 plans allows families to use them for more than just traditional four-year college expenses. These plans can be used for career and technical education, community college, and K-12 tuition. Additionally, up to $10,000 of 529 plan funds can be used for repayment of student loans, offering further financial flexibility.
- Supporting Lifelong Learning: The survey highlights that 43% of parents who are saving for themselves are using 529 plans to fund their own education. This trend reflects a broader understanding that education and skills development are lifelong pursuits, critical for both personal and professional growth.
- Commitment to Savings: Parents are saving more aggressively, with 71% setting aside over $5,000, 55% more than $10,000, and 36% exceeding $25,000 per child in educational savings—demonstrating a robust commitment to future educational needs.
"We are thrilled to see an increase in national commitment to education savings, especially through the use of 529 plans," said Natalie Cordova, Executive Director of the New Mexico Education Trust Board, the organization that administers The Education Plan®. "During September - College Savings Month - we encourage families to consider the benefits of saving for future education costs with The Education Plan®, which offers a flexible plan to prepare for a variety of paths for their child’s future."
In addition to savings, 529 plans also offer significant tax advantages. Contributions to these plans grow tax-free, and withdrawals used for qualified education expenses are tax-free. This means that parents can maximize their savings without worrying about taxes on their earnings or withdrawals. Additionally, many states, including New Mexico, offer state tax deductions or credits for contributions to 529 plans, providing further financial incentives for families to invest in their children’s education.
“The future is bright with many education options, and we are dedicated to empowering families nationwide with the tools and information needed to navigate their educational savings journey,” added Cordova. “The increasing adoption of 529 plans is a testament to the growing awareness and importance of proactive financial planning for education.”
For more information about The Education Plan® and the benefits of 529 plans, visit The Education Plan's website.
