College Savings Plans by the Numbers

College Savings Plans by the Numbers
  • Opening Intro -

    You've been socking away money for years to cover your son's or daughter's college education.

    Or perhaps you have several children and have been amassing a small college savings plan for each one.

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In any case, college may be just a few years away with the money you have saved contributing to your children’s education.

Likely, you are wondering if the money you have saved is sufficient. You may also find yourself wondering how your savings stack up against everyone else. Well, the College Savings Plan Network can give you a good idea about where you stand through its recently published 2013 Year-End 529 Report.

That report looks at the 103 savings and prepaid tuition plans across America. The network evaluated the assets of each 529 account as well as the contributions and distributions for the full 2013 calendar year.

Growing 529 Plans

The good news about college savings plans is that they continue to grow. The bad news or at least the disappointing news for many parents is that they may not be setting aside enough money.

As of the end of 2013, American families have invested $227.07 billion in college savings plans. Total assets grew by $36.35 billion alone last year. More Americans are jumping in too as there are now 11.59 million accounts, up from 11.1 million a year earlier for a 4.4 percent increase.

Average Amount Saved

The network also found that Americans have saved an average of $19,584, representing a 14 percent increase over the previous 12 months. While that amount is quite good it may barely cover a year’s worth of tuition and room and board at select in-state universities. Clearly, more money needs to be set aside to help cover college education.

Even with millions of active accounts, not all are currently being funded. Just 52 percent had new contributions in 2013, with that deficiency attributed in part to accounts where distributions are being taken. Still, if funding has paused for students that have yet to reach college age, that’s a concern for many families.

Tax Savings Advantage

For families that have yet to open a college savings 529 account, there is a big benefit that goes beyond college education. And that has entirely to do with tax savings. With such accounts you do pay taxes on the money you put in, but you don’t pay taxes on investment earnings when they accumulate in the account nor do you pay taxes on distributions made for college. As long as the money is used to pay for tuition, room and board, books and other college-related expenses, you’ll enjoy an uncommon tax-free benefit.

Visit the IRS website for more information about 529 Plans.

See AlsoHow to Join a 529 College Savings Plan

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