By Ruth Freeman, Family Resource Management Field Specialist
With today’s annual cost of an Iowa public university at $15,000 per year and a private college around $30,000, families need to plan ahead to have money available for children’s college.
College Savings Iowa is an excellent place to begin investing for college. Contributions are deductible from Iowa income taxes. Earnings grow tax-exempt at the state level and tax-deferred at the federal. Parents, grandparents and others can save for a child whether he lives in Iowa or not. Check other companies that sell 529 Plans to compare set-up and annual fees.
College Savings Iowa comes through the office of Michael L. Fitzgerald, Treasurer of the State of Iowa and is a qualified state tuition plan. The minimum contribution is $25 – up to a maximum contribution of $2375 per year per beneficiary in these 529 Plans. Contributions can continue until the sum of all 529 accounts for one beneficiary is $239,000. These accounts can be invested in many different types of age appropriate investments.
By investing $25 per month from birth to age 18 your contributions will total $5400. Depending on the investment you choose, that amount, through the value of time, could grow to over $12,000. If you invest $100 per month over those same 18 years, your contributions will be $21,600. Again through the value of time, it could grow to more than $48,000. These examples figure an 8 percent annualized rate of return on investment. Some investments will earn a better return; some will earn less.
No matter how much you choose to invest in College Savings Iowa or another 529 Plan, you are helping your child reduce their dependence on loans during college!
For more family resource management information, visit the Story County Extension office or the ISU Extension to Families Web site.
Ruth; Meridith
4/30/2006