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It’s Almost ‘529 Day,’ and States Say Don’t Forget This College Savings Gift


Investing $10 a week in a 529 account over 18 years could yield just over $15,000 for college, assuming a 5 percent annual return and no withdrawals, according to the campaign’s calculation. (The calculation doesn’t take fees into account.)

The average debt of graduates of four-year colleges was about $29,000 in 2017, according to the Institute for College Access and Success.

The cost of a college education was back in the news this week after a wealthy benefactor pledged to erase the collective student debt held by the Morehouse College graduating class of 2019. Some graduates will see tens of thousands of dollars in debt relief.

But since the likelihood that a generous billionaire will pay off your student loans at your graduation ceremony is extremely low, creating a savings plan is more realistic, said Patricia Roberts, chief operating officer of Gift of College.com. The company promotes contributions to 529 accounts through an online gift registry and via gift cards sold online and through stores. Ms. Roberts said she gave the cards at baby showers, instead of toys or clothes.

Here are some questions and answers about 529 savings plans:

How should I decide what 529 plan to choose?

It may make sense to consider your state’s plan because many states offer a deduction on your state income tax return. (There is no federal tax deduction for contributions.) But you aren’t restricted to your own state’s offerings. Savingforcollege.com and the College Savings Plans Network offer tools to compare plans, and Morningstar offers ratings of plans each year.

Meanwhile, mobile start-ups are targeting users who are overwhelmed by the number of options available by simplifying enrollment and narrowing the choice of plan and investments. CollegeBacker advises users online about 529 investments, but currently enables enrollment in just one plan, Utah’s direct-sold 529 plan; users choose the fee they wish to pay. U-Nest, currently in a testing period, enables enrollment in Rhode Island’s CollegeBound Saver plan and charges a flat monthly fee of $3.

Can I donate money to the 529 account of a relative or friend?

Yes. Making a gift was once cumbersome because donors had to request the recipient’s account number to transfer money. But there are now more options, in addition to gift cards, to make it easier for relatives and friends to make gifts to a 529. Ugift, a program offered by 529 plans that are administered by Ascensus College Savings in 20 states plus the District of Columbia, lets parents share a unique code with friends and family that can be used for an electronic donation. And CollegeBacker lets savers share a special link that lets relatives and friends donate online.

Where can I find information about current 529 plan promotions?

For information on the incentives that plans in various states are offering this month, try checking a map at Savingforcollege.com.

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