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At the end of last year, student loan debt in the U.S. totaled $1.74 trillion.1 That makes for an average student loan payment of more than $393 per month.2 And while loan forgiveness initiatives are up in the air every few months, here’s one thing that’s for sure – saving early can outweigh both the costs and stress of paying for college and higher education. As parents, we’ve learned to do just about anything to help our children – perpetually share the bathroom with our toddler, stay up until 4 a.m. completing school projects, watch the same cartoon episode for the twentieth time (you know the one). But what if in 2024, instead of stretching ourselves thin to ensure our children’s future, we started saving for it?
Here are the Top 5 Reasons why opening an Achieve Montana 529 savings account beats taking out student and federal loans on any given day!
#1: Saving is less expensive than borrowing.
We’ve crunched the numbers, talked to advisors, factored in inflation, and considered rising tuition costs – no matter what way you spin it, saving now beats borrowing every single time. And we get it, it doesn’t always make logical sense or even financial sense to set aside hundreds of dollars each month. But what if we told you that setting aside even small amounts (think $15, $25, $50) each paycheck could save you thousands of dollars in the future? Yes, thousands – tens of thousands.
#2: 529 Plans can cut tuition costs.
Speaking of costs, college tuition continues to rise every year. And with it, associated expenses like textbooks, study materials, and room and board. While 529 plans can’t directly cut the price of tuition, they do offer flexible spending options – allowing students to pursue their general education credits at a less expensive college and then use the rest of their funds toward their primary degree. Funds in an Achieve Montana account can be used at nearly any 2-year or 4-year university, trade or technical school, or qualified apprenticeship program. See additional uses here.
#3: Zero Interest & Tax-Deferred Growth.
And here’s one of the best parts – no interest payments AND tax-deferred growth! What does that even mean? We’ll break it down for you. Unlike a loan, there’s no borrowing involved, so that eliminates any compound interest you would owe. But what does add up is the additional savings you acquire! With flexible investment options, every dollar saved in an Achieve Montana account has the potential to become another dollar earned. In other words, you save and then you save again!
To learn more, check out our investment options along with the special tax benefits for Montana taxpayers.
#4: 529 Plans can be used alongside financial aid.
When it comes to saving for higher education, many parents worry that opening a 529 plan will hurt their child’s eligibility for receiving federal aid. And while the fear is valid, it’s just not accurate. Will a parent’s 529 savings be taken into consideration when reviewing FAFSA applications? Yes. Will they have a huge effect on your child’s financial aid package? No. If your student is a dependent, the funds in your 529 account are considered the parent’s asset. As a result, when determining one’s “Student Aid Index,” funds in a parent’s 529 account will generally be counted at a rate only up to 5.64% of its value – making a minimal difference in financial aid eligibility. So, what are you waiting for? Let’s start saving!
#5: Proactive saving ignites confidence.
We saved the best for last. As parents, we know that our children can dream anything, be anything, do anything! But, as kids, that can often be hard to understand. So, hold onto this – Not only are children who know they have college savings accounts more likely to attend college, but behind every gift, every contribution, and every investment choice is your affirming and resounding voice saying, “I believe in you.” And that voice, your voice, can be the strongest investment of all.
To learn more about Achieve Montana and open an account today, download an Enrollment Kit or call 877.486.9271 to get started.
References
1 https://www.federalreserve.gov/releases/g19/HIST/cc_hist_memo_levels.html
2 Board of Governors of the Federal Reserve System Report on the Economic Well-Being of U.S. Households in 2016- May 2017
Disclaimers
For more information about Achieve Montana, download an Enrollment Kit at achievemontana.com or call 877.486.9271. The Enrollment Kit includes a Program Description that discusses investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing.
If you are not a Montana taxpayer, consider before investing whether your or the beneficiary’s home state offers any state tax or other benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program.
Achieve Montana is sponsored by the State of Montana and administered by the Montana Board of Regents of Higher Education, as sole trustee of the Montana Family Education Savings Trust. Ascensus College Savings Recordkeeping Services, LLC provides program management, recordkeeping and administrative support services for Achieve Montana. Blackrock Fund Advisors, Dimensional Fund Advisors LP, Charles Schwab Investment Management, Inc., New York Life Insurance Company and the Vanguard Group, Inc. each provide investment management services for the underlying investments comprising Achieve Montana’s portfolios.
Except to the extent of the New York Life Insurance Company guarantee that is available for the Capital Preservation Portfolio and certain of the Year of Enrollment Portfolios, investment returns are not guaranteed, and you could lose money by investing in Achieve Montana.
Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements. See the Program Description for more details on qualified expenses.
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