College Savings Should Be Top of Mind for Many Clients
It’s not only the time that school starts and families across the country begin to shell out thousands for this semester’s tuition, but it’s a time where several 529 college savings plans are also giving away several hundred (or even several thousand dollars) to state residents enrolled in their plans.
Clients that are state residents in Georgia and Oklahoma are offering a $5,529 prize to parents or grandparents of kids born in 2014/2015 as well as several $1,529 prizes. Connecticut is offering a $1,529 gift, Nebraska and Utah are offering several $1,000 gifts; Kentucky, North Carolina and Ohio are offering $529 prizes; and finally, California is offering several $500 awards to students from ages 3-14. All prizes are going to be handed out as contributions to the state’s respective 529 plans. Deadlines for these gifts vary—beginning in late September through the end of December…except for Oklahoma, their deadline is April 14th, 2016.
These incentives could potentially convince clients to increase investments in 529 plans and other college savings programs—which are needed now more than ever. While college costs are rise at a rate much higher than inflation and student loan debt continues to accumulate at a record pace, families are amplifying the problems by saving less for college.
Parents are saving less—a 12% drop in the last six years of parents with children under the age of 18 are saving for college this year. Families who have saved for college have put away less money this year over last.
What’s even more troubling is that only 27% of these parents who are saving for college are using 529 plans to save for college—even with the tax benefits.
This presents an opportunity to add value to their client relationships—the lack of awareness and understanding in regards to the importance of saving for college tuition, as well as how to save in an efficient way come tax season has provided financial advisors the perfect situation to discuss college savings plans with their clients.