College is one of the best investments you can make for your children. It’s also one of the most expensive. Families paying for college usually draw from a variety of sources – financial aid and grants, employer tuition benefits, savings, and loans – and choosing the right combination is important.
Save or Borrow?
Between saving and borrowing, which is better? When individuals save, they earn interest. When individuals borrow, they pay interest. It’s always better and cheaper to save than to borrow. That’s why College Savings Plans can play a valuable role in your overall college savings strategy.
About College Savings Plans
Often called “529 Plans” after the section of the Internal Revenue Code that authorizes them, these plans allow you to save not only for your children and other members of your own family such as grandchildren, nieces or nephews, but also for other children as well – even godchildren or friends.
All states offer at least one 529 Plan. As a faculty or staff member at the University of Notre Dame, you should be aware of two plans that may be right for you:
- Indiana College 529 Plan. You can open an account and contribute as little as $10 a month or as much as $298,770 per beneficiary account. Indiana taxpayers are eligible for a state income tax credit of 20% of contributions to their College Choice 529 account, up to $1,000 credit per year. Indiana residents do not pay any annual account maintenance fee and non-residents pay a $20 annual fee.
- Private College 529 Plan. This prepaid plan is sponsored by more than 270 private colleges across the country, including the University of Notre Dame. You get tomorrow’s tuition at today’s prices for up to 30 years after purchase, and the increase in value is tax-free.
Account owners pay no fees – this means 100% of your contributions will go toward the purchase of tuition. Should the beneficiary opt for a public college, a non-member private college or not to attend college at all, you can change the beneficiary, roll the account into another 529 plan or request a refund.
Regardless of which resources you use, the most important step you can take towards securing a college education is to plan ahead.
Lunch and Learn
Wednesday, May 20
12:00 – 1:00 p.m.
Lafortune – Notre Dame Room
Come to this 30-minute presentation to learn more about the importance of saving for college, 529 plans and other savings options, and how 529 plans work with the Notre Dame education benefits available to eligible full-time faculty and staff.
A question-and-answer session will follow. Please bring a bag lunch.
Learn more about 529 College Savings Plans at http://savingforcollege.nd.edu/.