CertifiKID Field Report: Grow Your College Savings with Virginia529!

Posted Oct 11, 2017

Paying for college is one of the most stressful issues parents face as their children grow. One minute, you're helping them learn to tie their shoes; the next, they're in high school and you're only a couple of years away from writing that first tuition check. As a parent of a high school sophomore, I know this all too well.

College costs are soaring. According to the Consumer Price Index, the price tag of a college education increased 63% from 2006 to 2016, significantly outpacing overall inflation. A four-year, in-state public university education now averages over $24,000 a year. Despite these sobering statistics, earning a college degree has never been more important. But how do you pay for it without going bankrupt, or saddling your children with crushing student loan debt?

The first thing parents can do is to start saving as soon as possible. Compound interest is a powerful tool over a long period of time. The earlier you start saving, and the longer you let your investment sit and earn interest, the more money you will have when that big tuition check comes due. As our oldest child approaches college age, we realize one of the smartest decisions we made as parents was investing in Virginia529 accounts for all three of our children before they could even walk. 

A 529 account is a tax-advantaged investment vehicle specifically for post-secondary education expenses. Virginia529 is one of the top-ranked 529 plans in the country, and one of only three plans to earn Morningstar's best-in-class Gold rating for 2016. After careful research, here are the top five reasons we chose Virginia529 plans for our children:

1. Our money grows free from federal and state taxes, and disbursements are never taxed if used for qualified higher education expenses, which include tuition, fees, room & board, textbooks and many other educational-related expenses.
    
2. Virginia taxpayers enjoy the additional benefit of deducting up to $4,000 in contributions per account per year from Virginia individual state income taxes. 
    
3. Virginia529 funds can be used at eligible educational institutions nationwide, not just at Virginia schools. This includes both public and private two- and four-year colleges and graduate schools, and even some vocational schools and job training programs.
    
4. If one of our children doesn't attend college, receives a scholarship, or the money in their account exceeds qualified expenses, we can transfer the account to another child, or even to ourselves or another member of the family with no penalty at any time. We can also withdraw the funds, if necessary, subject to tax payments and penalties.
    
5. Virginia529 offers a wide variety of flexible saving options that take into account investment objectives and timeline and risk tolerance level that let you customize your investments based on your preferences, and save at your own pace.

When we opened our first Virginia529 account, we were barely past college-age ourselves. I had left my job to stay home full-time with our son and we were the proud owners of our first home . . . and mortgage. We certainly didn't have much to put aside for something that seemed like a lifetime away. However, we knew that starting small was better than not starting at all. 

An initial $25 minimum deposit is all it takes to open a Virginia Invest529 account. After that, you may contribute as much or as little as you want at any time. While we choose to have our funds transferred automatically from our checking to our children's accounts each month, it's also possible to make periodic one-time contributions whenever you have extra cash, like a tax refund or birthday money. All of this is easily managed from Virginia529's secure online portal. Family and friends may also contribute to your account using the Virginia529 online Gifting Center.

Virginia529 offers two primary saving programs: Invest529, which allows you to save at your own pace through a range of saving account and investment portfolio options and Prepaid529, which eliminates the uncertainty of tuition inflation by allowing you to pre-purchase semesters of in-state tuition and mandatory fees at Virginia public colleges or universities.

We chose Invest529 target-date investment portfolios for our children, a "set it and forget it" option that automatically adjusts our investments over time with more aggressive investments in the early years and becoming more conservative as our kids approach college age. You can also choose from a variety of static investment portfolios where the type of investment remains the same over time, or a more conservative FDIC-insured saving account where contributions are insured by the FDIC up to $250,000.

Virginia's Prepaid529 program allows you to pre-pay for one or multiple semesters of in-state tuition and mandatory fees at two- and four-year Virginia public colleges or universities. You may pay up front with a one-time payment in full or spread your payments out monthly, depending on your budget. Prepaid529 accounts enjoy the same tax advantages of Invest529 accounts, but the account owner or beneficiary must be a Virginia resident when the account is opened.

However you choose to save, remember that there's never a better time to start investing in your child's future than right now. Thinking back to when we first set up our children's Virginia529 accounts and the tiny deposits we made back then, it's an incredible feeling to see how far we've come. And the peace of mind we have knowing we can afford to pay for college is priceless. 

Ready to jump start your child's college savings? CLICK HERE to enter for your chance to win a $529 Virginia529 account! The winner of this sweepstakes will receive a $529 contribution to a new Invest529 account or your existing Virginia529 account.

~ Kim

This post is sponsored by Virginia529. However, we only promote businesses that we genuinely believe in and think will appeal to CertifiKID subscribers.

Tags: Viginia529 college saving family kids investment

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