Last Updated: Thursday, October 2, 2008 9:49 AM CDT
Opinions : Start saving for education
Dear Editor,
As our students go back to school and settle into their routines, it is a perfect time to think about their future. There is no better gift that we can give our kids than higher education. Thus, during College Savings Month, I would like to remind Wisconsin citizens to focus on investing in the future of their children by saving for college.
We all know that college costs are increasing at a high rate. A child born today will end up paying three to four times more for college than a current student. Grants are declining and loans are increasing and one in four students are forced to pay for college with credit cards. In fact, more students drop out of college because of credit card debt than because of bad grades.
I know it seems like saving for college is an overwhelming and daunting task due to its high cost, but I want to reassure Wisconsin families that planning to pay for college with savings is the best way to prepare for college. It is possible to take matters into your own hands and start saving when your child is any age. Most parents will be happy to see how fast any amount of savings grows over the years and how much of a dent you can truly make.
Time is one of your most valuable assets in saving for college. If you start saving early enough, even a modest monthly investment can grow into a significant college fund by the time the child matriculates. For example, saving $50 a month from birth would yield about $20,000 by the time the child turns 17, assuming a 7% return on investment.
It is simply less expensive to save for college than to borrow. When you save, your money earns interest and when you borrow you are paying interest. Even if college is a year or two away, there are always benefits to saving over borrowing, particularly with a 529 program.
The State has created a special state tax deduction to encourage using this plan to save in advance for higher education expenses. In addition, account earnings grow tax-deferred and withdrawals for qualified higher education expenses are state and federal tax-free. For more information on EdVest, call 608-264-7899 or go to www.edvest.com.
Dawn Marie Sass
Wisconsin State Treasurer
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