The cost of attending college is already extremely high and is projected to grow even higher. In Alabama, one of the ways to save up for college is the College Counts Alabama’s 529 Fund.
Through the plan, Alabama families can save for education like you would a 401(k) pension plan, but without any taxes for withdrawal.
The state treasurer, John McMillan, said the best way to work the program is to start saving early, make regular contributions, and let the interest compound.
“Einstein said one time that compound interest is the eighth wonder of the world, and there’s a lot of truth to that,” said McMillan. “If you make a contribution often, even if they’re small, they add up in a hurry.”
And the savings aren’t just for college anymore.
“Congress has started allowing those funds to be spent on K-12, and they already were eligible for tech schools, community colleges,” he said.
Anyone can contribute to the account. The treasurer said a contribution makes a great birthday or Christmas gift.
“If it’s clothes, they outgrow it; if it’s toys they either tear it up or it becomes obsolete,” he said. “But this will be there and continue to grow over time to be a much larger gift than the initial contribution.”
There is also a value to those who invest in the college counts program.
“In Alabama, you’re entitled to, in the case of a single filer, a $5,000 deduction on state income tax. and with joint filing $10,000,” Treasurer McMillan said.
He said in Alabama the average student debt is over $31,000, another reminder that it’s never to early to start saving.