Reasons to Invest in College Savings
Education is a gift that keeps on giving. And that’s not just something that sounds nice to say. Let’s look at the statistics. College grads out earn people without degrees consistently and by a decent margin. On average, a holder of a bachelor’s degree earned a starting salary of $45,500 compared with the average high school graduate who earns $28,000 per year.
Over time that earning disparity has actually grown. So one of the top reasons to invest in college is the long term earning potential. And over 80% of graduates say that college was worth it or has paid off.
But how to pay for college? That is the question.
529 Plans are an excellent way to save for higher education. They have great tax benefits and don’t compromise the student’s ability to qualify for financial aid (since the investment is made in the parents’ names).
If grandparents are doing the investing, your contributions qualify for the $14,000 annual gift tax exclusion. If you start early enough and make it an annual affair, where instead of gifts for certain holidays or birthdays, ask family members to contribute donations to the 529 Plan. A debt-free college degree is a truly wonderful gift.
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