July 12, 2011
A flexible way to prepare for higher education expenses—the Utah Educational Savings Plan
(By Lynne Ward, Executive Director of the Utah Educational Savings Plan and a mom) — “Ummm, Mom, just wondering, why did we not start saving when I was a little kid?”
If you read Stephanie Leavitt’s latest blog post, you’ll recognize that as the question her college-bound son Jonah asked after their tour of BYU¬–Idaho. Stephanie and her husband used the five-hour ride home to help Jonah wrap his head around the costs of rent, groceries, tuition, and school supplies, and he quickly saw the importance of budgeting, finding a part-time job, keeping his scholarships, and being smart about student loans. As Stephanie put it, “We have to come to terms with the reality of funding this opportunity.”
As the Executive Director of the Utah Educational Savings Plan (UESP), Utah’s official nonprofit 529 plan, I talk daily to conscientious parents like Stephanie who face the realities of funding a loved one’s higher education. I know how they feel because I’m a mom, too. UESP’s purpose is to help parents like Stephanie and me save for the costs of college. I’d like to tell you a little about UESP and invite you to learn how you can benefit by making saving for college a family priority.
It’s easy to start saving. With UESP, you save what you can, when you can. Open a college savings account for free on uesp.org and select one of UESP’s 12 investment options. Then contribute according to your own schedule in the most convenient way for you—make contributions online, set up automated or payroll contributions, or mail in checks.
Make saving a family affair. When holidays or birthdays roll around, ask family members or friends to make a contribution to your child’s UESP account instead of buying your child another toy or video game. Kids can also participate—involving a child in saving for college early on is a great way to motivate them to do well in school and plan for their future.
Save for college, save on taxes. Money saved in a UESP account grows tax deferred from federal and Utah state income taxes, which means you could save more with UESP than with a taxable investment. And Utah residents enjoy a home-field advantage: for each beneficiary’s account, Utah resident account owners can claim a 5 percent annual Utah state income tax credit for their UESP contributions. (To qualify for the tax credit, the beneficiary must be designated as such before age 19.)
Cover college costs. Withdrawn funds are exempt from federal and Utah state income taxes if used for the beneficiary’s tuition and fees; required books, supplies, and equipment; and certain room and board costs.