IT’S NEVER TOO LATE TO GIVE THE GIFT OF EDUCATION
Q: Why does Oklahoma 529 College Savings Plan (OCSP) continue to stress the importance of saving for college early in life?
A: As the cost of higher education continues to rise, saving early becomes more and more important. The average Oklahoma student loan debt for the class of 2017 was more than $25,000 according to The Institute for College Access & Success. Of nearly 960,000 Oklahoma children under the age of 18, about 38,800 under age 18 have an OCSP account. That number is encouraging but we’d like to see it grow to ensure future generations are planning ahead on paying for college.
Q: What are the advantages of opening an Oklahoma 529 College Savings Plan instead of a traditional bank account?
A: Your contributions can compound tax-free so your account can grow more than a taxable account over the same time period. In addition to tuition, OCSP can be used for certain room and board costs, books, computers, and other fees. New this year, OCSP also be used to pay tuition at K-12 schools, up to $10,000 a year per student. Parents and guardians can save for these items while enjoying the tax advantages that come with their OCSP account. If the parent is the account owner, funds are typically treated as belonging to the parent and not the child, which minimizes the effect on financial aid eligibility.
Q: How do you give an OCSP account as a gift?
A: Any friend or relative may open an OCSP account on behalf of anyone else, with a minimum initial contribution of $100. OCSP has created an option on its website, www.ok4saving.org, to enable account owners to send an email to others inviting them to contribute to their current OCSP account. If gift-givers know the account number, they can also visit the website, print off a deposit form, and mail a contribution. While they’re on the website, they can also print a “Gift of Education” certificate to show the contribution to a loved one’s account.
Q: Is it ever too late to open an account on behalf of a beneficiary?
A: Most OCSP accounts are opened on behalf of beneficiaries ages 5 and under. The second most popular age group is 15 to 18. It’s better to start early, as there’s more time to potentially grow your OCSP accounts before your child heads off to college. But with the average annual cost of in-state tuition, fees, books and living costs standing at nearly $19,000 a year, it’s never too late. You can make an OCSP contribution up until April 15 and still qualify for an OK state income tax deduction for the previous tax year.