By Marissa Rowe, Executive Director, Indiana Education Savings Authority
May 31, 2022
I don’t follow sports, but I love sports movies. Favorite Disney movie? “Miracle.” Rainy day at home? We’re rewatching “Remember the Titans” for the 47th time. There has always been something about grit, teamwork, and hard-fought victory that pulls me in and makes me cry. It’s not unlike saving for future education in a 529 plan.
Grit is having courage, perseverance, and passion. It’s setting a goal and chasing a dream. You have to find the best path for your family, map out a course, and keep moving forward despite setbacks. This might be paying for four years of traditional college expenses or two years of technical or trade school for your daughter, a registered apprenticeship program, or an MBA for yourself. Whatever the goal is, you can start saving today in a 529 plan to help offset the costs and reduce the need for student loans in the future. Saving isn’t an easy road, and there may be times when you have more month than paycheck. Use your grit to start the account and contribute what you can because every little bit counts.
Next comes the teamwork. With a 529 plan, you can invite friends and family who back your goals to contribute to your account. Holidays and birthdays can now mean a nudge of support through an account contribution from your teammates. Most, if not all, 529 plans offer gifting options, and small gifts will add up over time. Some states even offer tax benefits for contributors who aren’t owners of the accounts. Do a little research and get others involved. That’s a win-win for the entire team!
You’ve opened the 529, asked friends and family to contribute, and have the program acceptance letter in hand — the hard-fought victory!
But wait. What about the ability to qualify for need-based financial aid? Will all this saving mean that you no longer qualify for federal grants? While 529s impact need-based financial aid eligibility, it’s minimal. A parent-owned account will only be assessed at a maximum rate of 5.64% of your account balance for the Expected Family Contributions (EFC) calculation. That means that if you have $1,000, it will impact you the same as $56.40. Saved $10,000? They look at it as $564. Perspective is everything, and with minimal impact on need-based financial aid, you can start saving today.
That’s a victory worth celebrating.
About the Author
Marissa Rowe is executive director of the Indiana Education Savings Authority, which administers Indiana’s CollegeChoice 529 Direct, Advisor, and CD Savings Plan. A proud first-generation college student, Marissa received her B.A. in Mass Communication from the University of North Carolina at Asheville and her M.A. in Philanthropic Studies from the Indiana University Lilly Family School of Philanthropy. She paid off her student loans in 2020.