Busted: Four Common Myths about 529 College Savings Plans
To Commemorate ‘National 529 College Savings Plan Day,’ Sallie Mae
Helps Dispel Some Common Misconceptions About 529 College Savings Plans
NEWARK, Del.–(BUSINESS WIRE)–lt;a href=”https://twitter.com/hashtag/529Day?src=hash” target=”_blank”gt;#529Daylt;/agt;–May 29 is “National 529 College Savings Plan Day,” the perfect
opportunity to start mapping out your plan to save for college.
Unfortunately, there are many misperceptions about 529 plans, how they
work, and how to qualify. In fact, according to “How
America Saves for College,” fewer than one-third of families are
using 529 plans to save for college.
Sallie Mae® busts four myths to help educate families on 529
college savings plans:
Myth: A 529 plan is expensive to open.
Reality: The
minimum amount required to open an account varies, but many 529 plans
require as little as $25. Some plans offer lower minimums if you enroll
in direct deposit.
Myth: I have to use the 529 plan my state offers.
Reality:
While each state offers at least one 529 plan, you can choose whichever
plan feels right for you and your family. You have a variety of options
to choose from, and many plans have different tax benefits. If you need
help selecting the best option for you, a financial advisor can help.
Myth: I’ll lose the money in my plan if my child doesn’t go to
college.
Reality: If your child doesn’t go to college,
you can change the beneficiary to a sibling, grandchild, niece, nephew,
or other relative. Even if you don’t use the funds for qualified
education expenses, you may not lose the entire investment. Instead,
you may pay a penalty and income tax on your earnings.
Myth: A 529 plan only covers tuition.
Reality: For
K-12 private schools, yes, but for post-secondary education, 529 savings
can be used for room and board, books, fees, and other qualified
education expenses, in addition to tuition.
“Our research shows most parents are proactively preparing financially
for college and more can benefit from opportunities to maximize their
savings,” said Martha Holler, senior vice president, Sallie Mae. “It all
starts with opening an account, and ‘National 529 College Savings Plan
Day’ is a good prompt to do that and get started toward your college
saving goal.”
Sallie Mae recommends the 1-2-3 approach to saving for college: first,
open a savings account; second, set a goal and make deposits regularly;
and third, explore tax-advantaged options such as 529 college savings
plans.
For more information about saving, planning, and paying for college,
visit SallieMae.com.
Sallie Mae (Nasdaq: SLM) believes education and life-long
learning, in all forms, help people achieve great things. As the leader
in private student lending, we provide financing and know-how to support
access to college and offer products and resources to help customers
make new goals and experiences, beyond college, happen. Learn more at
SallieMae.com. Commonly known as Sallie Mae, SLM Corporation and its
subsidiaries are not sponsored by or agencies of the United States of
America.
Contacts
Connor Peoples
302.451.0402
Connor.Peoples@SallieMae.com