Saving for College Made Easy
It’s never too late – or too early! – to save for your children’s future higher educational expenses. In Wisconsin, parents (and anyone else, actually) can save for kids’ college costs through one of the state-designated 529 plans: Edvest and Tomorrow’s Scholar. These plans work much like a 401(k) or IRA: Withdrawals are entirely free from federal income tax if used for educational purposes, and contributions – up to $3,280 per child, per year (or $1,640 for single filers) – are deductible on your Wisconsin income tax return.
Contributions for the previous tax year can be made through April 15, which means if you’re the kind of person who procrastinates on filing your taxes, you have three and a half months at the start of the year to sock away some extra cash for your kids while reducing your state income tax liability. And, as previously mentioned, while 529 plans are most often used by parents, they are also available to grandparents, other relatives, or frankly anyone else to save for a kid’s college. (You can even open an account with yourself as the beneficiary.) And Edvest contributions can be made by employers, too.
Between Edvest (which people can invest in directly) and Tomorrow’s Scholar (which is offered only through financial advisors), Wisconsin’s college savings plans had $5 billion in assets as of last year. That will pay for a lot of higher ed! Learn more about them at 529.wi.gov.
According to recent survey by Sallie Mae, a major provider of student loans, an increasing share of parents are saving for college, and 529 plans are their most frequently used ways to save. Here are other big findings from the national survey, which was conducted in early 2018:
6 in 10
Share of parents who are saving for their children’s college expenses. One-third of these said they saved more last year than they had the previous year.
Share of all college savings held in tax-deductible 529 plans.
9 in 10
Share of parents who feel confident they will reach their savings goals.
Average amount parents have saved for their children’s higher education.
Average amount parents plan to save for their children’s higher education.