When I worked for Denali State Bank, I was inspired by a conversation with a co-worker who paid for her entire college education with a UA College Savings Plan account. She told me that when she was growing up, she envied her friends who spent their Permanent Fund Dividend and cash gifts from family and friends. Her parents insisted that 90 percent of that money be invested in her 529 College Savings Plan account.
That savings strategy paid off. She graduated from college without debt. Her wise advice made an impression on me. I promised myself that my own family would follow the same 90/10 savings strategy.
I feel fortunate to have worked for organizations, like Denali State Bank and now the University of Alaska, that foster a culture that values education and saving for the future. They, like many other Alaska businesses, offer an option to contribute to a UA College Savings Plan account through payroll deductions.
Denali State Bank also offered a matching program to encourage employees to save for higher education. With the birth of my son, Andrei, that matching program was a powerful incentive for our family to open a 529 College Savings Plan account.
There are so many unknowns in parenting and “what-ifs” to navigate when planning for the future. Andrei is almost 3-years-old now. It’s too soon for him to know what he wants to be when he grows up. He could become a doctor, pilot or commercial fisherman. The only thing that’s certain is that regardless of the career he chooses, he will need post-secondary education.
That’s why my husband and I are committed to saving for his future. Families that start saving small amounts when their children are young, may end up with more money than if they saved larger amounts later on. Money saved in a 529 plan grows free from federal and state income tax, and withdrawals remain tax-free when used for tuition and fees at any university, college, technical or vocational school that accepts federal financial aid.
If my son, Andrei, chooses vocational or technical training rather than pursuing a four-year degree, he may not need all of the money in his UA College Savings Plan. The money in a 529 savings account is easily transferred between family members. That’s great news for our family now that my husband and I are expecting twins!
All I need to do is fill out a form to easily direct the funds to one of the other children’s education expenses. This money can also be used by me, if I decide to go back to school for a master’s degree or by my husband, if he wants to take some culinary arts classes. The possibilities are endless when you save for future education.
September is more than just back to school time. It’s also College Savings Month, a time to reflect on your family’s education goals and savings strategy. I have always believed that no matter what else happens in life, your education can never be taken away from you. As a parent, I may not always have all the answers for my children, but knowing that my husband and I are saving for their future helps put my mind at ease.
If you are interested in starting to save for higher education, the University of Alaska College Savings Plan can help. Call (888) 425-2752 or firstname.lastname@example.org for assistance setting up a 529 college savings plan or for answers to your questions.
Juneau employers, such as Alaskan Brewing Co., also add value to their benefits by offering the UA Savings Plan payroll deduction option. It’s a benefit that lasts a lifetime and adds value to any organization’s benefit package at no cost to the company. The UA Payroll Deduction Option makes it simple and convenient for employees to invest in their families’ future. With as little as $25 a month, participating employees can set up a 529 college savings plan for their child, grandchild, other relatives, or even themselves. This investment offers tax-deferred savings and long-term growth.
For more about the UA College Savings Plan, visit www.uacollegesavings.com.
• Elena Sudduth is a senior program specialist for the UA College Savings Plan. She and her family live in Fairbanks.