“Save, spend, invest, give,” is a popular approach to basic personal finances. There are ways to use this method to your advantage when preparing and planning for your child’s educational future. Parents and families have an opportunity to help their children avoid the burden of student loan debt by saving money, so their child or grandchild doesn’t have to spend an overwhelming amount of money on tuition. By investing in your child’s future, you’ll give them the means to reach their education goals.
An Oklahoma 529 College Savings Plan is a specialized savings account that’s used to pay college and K-12 tuition expenses. The money in these accounts can grow tax-free and isn’t taxed when withdrawn. In other words, no matter how much your investment grows in an OCSP (Oklahoma 529 College Savings Plan) account, you’ll never have to pay taxes on it as long as it’s used for educational expenses.
A 529 account is quick and easy to open, it can be managed online or by mail. You can set up automatic contributions from your bank account. Some employers also support these accounts and can set up payroll deductions directly to your savings account.
There are a variety of professionally managed investments to choose from to help grow your account in addition to providing direct contributions. These funds can be used at any accredited university, college or vocational school in the nation. Many international schools are also qualified to receive these funds. Additionally, up to $10,000 annually can be used toward K-12 school tuition.
OCSP can be used for certain room and board costs, computers, fees, books, supplies and other equipment that a student may require.
A common question is, “will these funds negatively affect my child’s eligibility for financial aid?” As long as the parent or grandparent is the account owner, funds are treated as belonging to the guardian and not the child. This will minimize the impact on the child’s financial aid. The direct impact on financial aid will vary by school.
If your child does not need all of the money for their education goals, you can designate a new beneficiary penalty-free as long as they’re an eligible member of your family.
So how to you start? You can open an account with as little as $100 per investment. There’s no application, sales or maintenance fee and you don’t have to contribute all on your own. Grandparents, other family members, friends and even the student can make gifts and contributions to the account.
It’s not too early to start investing in your child’s future. Learn more about the benefits of an Oklahoma 529 College Savings Plan here.