Decrease College Expenses With 529 College Funds
Gone are the days of a cheap college education. For the last twenty years or so, college costs have been increasing at a rate far higher than inflation. College costs have risen to the point where the average middle class family can not cover the costs from current income. These mounting costs can only be met through careful planning and a good savings plan started very early. The answer to this may be found in 529 college funds.
While higher education is outrageously expensive, the government has provided these 529 college funds as a means of assisting taxpayers with the difficult task of paying for college. 529 college funds are named after the section 529 of IRS (Internal Revenue Service) Code. They were created in the year 1996 by the US Congress and are now available in nearly every state in America.
There are two basic advantages of 529 college funds. The first is that whatever contributions you make to the 529 college funds will grow tax-deferred. The second advantage is that as long as you withdraw money for qualified educational expenses then you don't have to pay taxes on your earnings. In other words, qualified expenses are exempt from both federal taxes and most state taxes.
All in all, the value of higher education cannot be underestimated. However, the mounting costs of college education can deprive many families from attaining it. Paying college costs can be possible only if you start saving long while your children are young. The 529 college funds help you do so.