MONTGOMERY, AL (WSFA) - Picking a college or university to attend is intimidating for many, but figuring out how to pay for it could be even more overwhelming.
Patricia Roberts lives in New York, and her son Ben will soon graduate from college debt free. She attributes much of that to her family’s decision to open a 529 College Savings Plan and her son receiving some scholarships. Patricia did not want her son to have the same experience she had when graduating with student debt.
“We were diligently paying it away, but when we had our first son, we decided we wanted to do something different for him,” she said. “We wanted him to have a better experience than we had had and we were still paying off our debt.”
Former Alabama State Treasurer Young Boozer launched a national campaign in March designed to encourage families to open a 529 account. He learned that 68 percent of people had not heard of 529 plans.
“It’s better to save today than to borrow tomorrow,” Boozer said.
Alabama has a 529 College Savings Plan that aims to help families save for higher education. Boozer said families deposit money into the savings account. He said it is free from federal and state income tax and withdrawals are tax-free when used for education-related expenses.
“They are the generation that has the most student debt outstanding. They have lived through this,” he said. "They don’t want to create the same issue for their children as they are now facing.”
Evelyn Pope and her husband live in Montgomery and opened a 529 plan for their two daughters when the first child was born.
Pope said once her first daughter began high school, her family seriously began to consistently invest into the account. She did not want her child to have loans like Pope and her husband.
“We both had student loans. Not huge student loans, but we have relatives that have crushing students loans they’ll never get rid of,” she said.
Currently, one daughter is in college and the other is in high school. Pope said she believes her daughter will be debt free after graduating.
“One of the gifts we wanted to give our children was to walk out of college debt free,” she said.
Boozer gave an example of how much someone could save if they invested $10 a week for 18 years. He said If you put it in a 529 account and earn 7 percent on it, someone would end up saving $20,000.
The owner of the account can always change who the beneficiary is. The money can only be used for people in the immediate family as determined by the IRS.
Boozer said the campaign is called “For Their Future Movement” and is led by the 529 College Savings Planning Network. The campaign partnered with Fred Rogers Productions to air ads before and after the show Daniel Tiger’s neighborhood. Boozer said this is the most-watched show with both children and parents combined.