529 College Savings Plans can be some of the most effective and beneficial methods of saving for college, but all too often they go unnoticed by a great deal of students who could be putting them to good use. Part of the reason has been inaccessibility, but that’s no longer the case. That’s because your friendly government has made moves recently to make 529 College Savings Plans much more manageable and appealing for students who may be having trouble saving up for college.
529 College Savings Plans in Review
Essentially, College Savings Plans allow students to set aside money for educational expenses in a tax-free account. They help make saving for college easier, but there are also a few other perks. Namely, these plans have been known to offer matching grant and scholarship opportunities.
Yet for all the good that they create,
529 College Savings Plans are a vastly underused resource, mostly because students and parents believe they’ll get their finances stuck in a plan they’ll soon want to get out of. And the proof is in the pudding. Last year the average 529 Savings Plan account lost 22.4% in holdings, a staggering figure that prompted the government to make some serious changes.
529 College Savings Plan Amendments
In light of last year’s struggles and the undeniable difficulties families are having affording college, the United States Treasury Department announced recently that they’ll change restrictions on 529 College Savings Plans so that students and families can now change the particular plan they’re in twice in a year. Previously, account holders were only allowed to change their plan once.
The move should make 529 Savings Plans more appealing to students and families for two reasons. The first is that they’ll now be afforded the opportunity to try out different plans and find the right fit for their situation. The second is based on the fact that Savings Plans like these fluctuate similar to stocks based on popularity and holdings. With the ability to switch plans twice in a year, students and families can now strategically shuffle their accounts to take advantage of different rates, services and holdings.
Still, all too many students aren’t taking advantages of these options. Reports out of Maryland state that only 103 of the 74,000 account holders exercised their second exchange so far in 2009, and the policy has been in tact since the New Year.
For more information on the types of 529 College Savings Plans available to you, check out this list that’s organized by state. A wealth of knowledge about How and When to Switch your 529 Plan can also be found here.