Student loan debt is a continuing problem for young people today, but here’s help: Parents, grandparents and even aunts, uncles or friends can lower a loved one’s college expenses by starting a 529 savings plan. Anyone can open a 529 savings account and name a beneficiary for an initial investment of $25 or less.
What’s a 529? The federal government helps make college more affordable by allowing states to offer tax-advantaged 529 investment programs for which returns are generally not taxed when used for appropriate college expenses — including tuition, room and board and even computers. Each state offers a different plan with different rules. For each dollar saved each year with an AZ 529 plan, Arizona residents are eligible for a tax deduction of up to $4,000 for married couples filing jointly, or $2,000 for a single tax filer.
“Thinking about the future and planning for college is extremely vital,” says Deena Lager, director of the Arizona Family College Savings Program. “By starting small and setting aside even $10 a week in a 529 plan, it could add up to nearly $15,000 over the span of 18 years.”
AZ 529 plan funds can be used at accredited institutions anywhere in the country, including two- and four-year public or private colleges, universities, community colleges or technical training schools. Also: Anyone can open a plan, and there are no income restrictions. Money saved in an AZ 529 account will not impact eligibility for Arizona state financial aid awards. Visit az529.gov or sec.gov/investor/pubs/intro529.htm