When it comes to college savings, many parents think they can’t save enough to make a difference, they won’t choose a smart investment, or it’ll come down to a choice between paying for college or retirement. First things first — take a deep breath. It’s not about paying for everything — it’s about saving what you can. Next, know that you’re not alone in this. There’s a smart way to do it affordably and conveniently with the Minnesota College Savings Plan.
The Cost of College Shouldn’t Keep You Up At Night
Yes, college tuition costs are far outpacing inflation, and yes this is a big concern for most parents. But there’s good news: the Minnesota College Savings Plan can pay for these costs. If you’ve got $25 and a spare 15 minutes, you could open an account today. Since your account can grow tax deferred, you’ll save more over time, so the sooner you start the better.
The Minnesota College Savings Plan Gives You More Choice
Choose from a variety of investments that fit your timeline and investment goals, including an Enrollment Year Investment Option intended to automatically position your savings for optimal performance throughout the lifetime of your account. This option automatically shifts from aggressive to conservative investments as your child approaches their expected year of enrollment in school. Use the money at any state or private college, technical school, or community college that offers financial aid — even schools outside the US. Make qualified withdrawals free from tax on not just tuition, but certain room and board, books, computers and related technology expenses, equipment and supplies. In addition, up to $10,000 annually per student, in aggregate from all 529 plans, can be withdrawn free from federal tax if used toward K-12 school tuition. Please see the state tax treatment of withdrawals used towards K-12 school tuition here.
Don’t Choose Between College and Retirement
Many parents worry they’ll need to make a choice between retirement and their child’s education. They understandably feel like making sure their child receives a college education should be the priority. In reality, retirement should be the priority, but you should save for both if possible. Don’t stress if you can’t pay for all of college, just start small and save steady. With the Minnesota College Savings Plan you can start for as little as $25, and keep feeding your retirement nest egg. Also keep in mind there are many smart ways to reduce the cost of higher education before you even spend a dime.