The Rise And Fall Of 529 Savings Plans

Posted by:  BeamaLife Editor  on 9 Dec, 2009

With tuition costs rising dramatically over the past 20 years, it’s no wonder that financially savvy parents have started saving more money more quickly, just to make sure there’s enough to put the kids through college when the time comes.  And 529 college savings plans have been promoted as the number one way to set that money aside and watch it grow.

According to Financial Research Corporation, $15.5 billion when into 529 plans it 2006, and $15.2 billion in 2007.  But when the market collapsed, many investors began to shy away from 529 plans, often at the recommendation of their financial advisors.  In 2008, the contributions fell to $5.2 billion, and in 2009 so far, the number is just $4.8 billion.

That’s still a lot of money, but like what’s happening with the stock market in general, many Americans are looking for ways to grow their college funds more securely and with greater flexibility – even if that means losing the tax advantages the 529 plans provide.  In order to get the tax benefit the 529 college savings plans provide, you have to use the funds for qualified higher education expenses.  If your child doesn’t go to college, you’ll pay taxes and penalties on the gains.

If you’re reconsidering what to do with your college savings money, call (877) 972-3262 to speak with college savings specialist.  There are many other investment choices that can help you to be prepared when your children head for higher education.  As someone who truly believes in proper risk management and multiple uses of money, I recommend you take a look at these college savings option.  They offer tremendous flexibility and guaranteed returns and might be just the solution you’re looking for.

Let me hear from you, parents.  What are you doing with your college savings money these days?