Press-Republican

January 5, 2014

Editorial: Get started on college savings


Press-Republican

---- — State Comptroller Thomas P. DiNapoli has some good advice for anyone with children who may someday attend college: Start saving right now.

And it happens that the state offers a convenient and lucrative way to save for college. It’s called the 529 College Savings Program, or Direct Plan.

It not only gives parents or guardians a savings vehicle, it offers up to $10,000 in New York state tax deductions a year.

If you’re new at this college preparation business, take a look at what an education costs these days. It’s hard to imagine any common expense that has ballooned more quickly than college.

Today, even a comparatively affordable education at a State University of New York four-year college can cost $20,000 a year or more, when housing, fees and books are added in. The privates are astonishing.

Without some kind of aid, a college education eclipses most people’s resources to pay for it. Parents with more than one child could designate every cent they make to tuition, room and board, books and miscellaneous expenses and still fall short.

The 529 Program offers parents a fighting chance.

“As the cost of college tuition, room and board, books and supplies continue to rise, parents should explore every option available to make their child’s educational dreams a reality,” DiNapoli said in a news release this week.

“Investing in a 529 plan is an opportunity to give a meaningful gift that can provide long-lasting benefits. For as little as $25, anyone can open up a 529 college savings plan and jumpstart a child’s future this holiday season.”

DiNapoli’s office spelled out the benefits:

“College savings plans date back to 1996 when Congress created qualified tuition programs under Section 529 of the Internal Revenue Code and have become one of the top college saving options. The Office of the State Comptroller and the New York State Higher Education Services Corp. administer New York’s 529 College Savings Program.”

The Direct Plan offers a number of investment options for parents to choose from. Three of them actually become more conservative as the prospective student goes through grade school and high school. That enables the parents to be relatively sure of gaining and not losing money from the account.

None of the options guarantee money will increase, of course. That is the nature of investment. However, most parents who have gone through the 529 experience will attest to its financial gains.

New Yorkers can deduct annual contributions made to their 529 College Savings Program accounts on their tax returns each year.

New York taxpayers who are account owners can contribute to the Direct Plan and deduct up to $5,000 from their state taxable income, and married couples filing jointly can deduct up to $10,000 each year.

Qualified withdrawals to pay for education expenses are exempt from both federal and state income taxes.

More information about the 529 program is available at http://www.osc.state.ny.us/college/index.htm.