Letter: Start college savings todayAs our students go back to school and settle into their routines, it is a perfect time to think about their future. There is no better gift that we can give our kids than higher education.
By: Dawn Marie Sass, Wisconsin State Treasurer, Madison, Hudson Star-Observer
As our students go back to school and settle into their routines, it is a perfect time to think about their future. There is no better gift that we can give our kids than higher education. I would like to remind Wisconsin citizens to focus on investing in the future of their children by saving for college.
A child born today will end up paying three to four times more for college then a current student. Grants are declining and loans are increasing, and one in four students are forced to pay for college with credit cards. In fact, more students drop out of college because of credit card debt than because of bad grades.
I know it seems like saving for college is an overwhelming and daunting task due to its high cost, but I want to reassure Wisconsin families that planning to pay for college with savings is the best way to prepare. It is possible to take matters into your own hands and start saving when your child is any age.
Time is one of your most valuable assets in saving for college. If you start saving early enough, even a modest monthly investment can grow into a significant college fund by the time the child matriculates. For example, saving $50 a month from birth would yield about $20,000 by the time the child turns 17, assuming a 7 percent return on investment. Even if college is a year or two away, there are always benefits to saving over borrowing, particularly with a 529 program.
You may be aware of Wisconsin’s “Section 529” college savings program, EdVest. EdVest has become one of the most desirable and cost-effective ways to save for future college expenses. In fact, the EdVest plan is the 13th largest college savings plan in the country and was recognized in the August 2007 Money Magazine as a recommended program for Wisconsin residents.
The state has created a special state tax deduction to encourage using this plan to save in advance for higher education expenses. In addition, account earnings grow tax-deferred and withdrawals for qualified higher education expenses are state and federal tax-free. For more information on EdVest, call (608) 264-7899 or go to www.edvest.com.