It’s the 29th day of the fifth month of the year—which makes it “529 Day,” or more formally, National 529 College Savings Plan Day.
The landscape around saving and paying for college has no doubt changed this year, with colleges scrapping on-campus learning during spring semesters and scrambling to come up with plans for fall due to the pandemic.
But despite the uncertainty and current economic volatility due to the COVID-19 pandemic, state-based 529 plans across the country are celebrating 529 Day this year with new 529 college savings plans incentives, virtual events, and social media activities.
One backer of the awareness campaign, College Savings Plan Network (CSPN), continues to promote “staying the course” during the current crisis, and continuing investments in college savings plans for those who are in the position to do so.
Social distancing recommendations have forced many states to change their 529 Day activities to virtual events, but many plans have created fun and innovative ways to continue to highlight the importance of saving for college.
Click here to see a state-by-state list of 529 Day activities provided by CSPN.
Betty Lochner, 529forCollege Liaison (and former administrator of Washington’s 529 plan), also this week posted some helpful information and suggestions for savers from CSPN that addresses current 529 concerns on CSPN’s 529forcollege.com website.
Here are her three tips:
TIP 1: Continue making 529 contributions
While we weather this pandemic, adopt a “do-what-you-can” mantra for continuing to save for college. If you are not able to contribute as much to your 529 as you did previously, that’s okay. Give yourself a break. If it’s doable for you, even just setting aside $5 to $10 a week to invest in your 529 can add up over time. Though no one can guarantee exactly what the market will look like tomorrow, keeping your future goals in mind is important—just as it is with retirement and other long-term objectives.
TIP 2: Consider options for refunds from colleges
College students and parents who receive refunds for tuition, room and board, or other qualified expenses can re-contribute their refund back into their 529 plan account by July 15 or within 60 days of receipt, whichever is later, or use for other qualified higher education expenses by Dec. 31, 2020, to avoid paying any penalty or taxes on the earnings. Be sure to check how a refund contribution may be treated under the laws of the state where you pay taxes.
TIP 3: Save money
If your financial situation has been negatively impacted by the pandemic, here are some ideas for you.
- If you are paying back student loans, consider taking advantage of the federal government’s six-month suspension of required student loan payments. Under the CARES Act stimulus bill, payments for federal student loans held by the U.S. Department of Education are not required through Sept. 30, 2020.
- With interest on student loans not accruing during this timeframe, all payments you are able to make will apply directly to the principal. If you can afford to keep making payments on your loan, consider this an opportunity to pay down as much of your principal as you are able.
- Consider asking your employer to contribute toward your student loans. Under the CARES Act, student loan payments made by employers under IRS Section 127 Educational Assistance Programs are tax-deductible business expenses for the employer and tax-free to the employee through Dec. 31, 2020.
- Celebrate and Save! Consider asking family and friends for a gift toward higher education for upcoming birthdays, holidays and other special occasions. Most 529 plans allow account owners to invite friends and family to contribute online and there are even e-gift cards available for 529 plans and student loan accounts.
Lochner also provides answers to “frequently asked questions” in her post.
SEE ALSO:
- Student Loan Repayment Benefit Added Under Cares Act
- SECURE Act Allows 529 Plans to Repay (Some) Student Loan Debt
- Savingforcollege.com’s Celebrate 529 College Savings Day
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
