It's a gift-giving time of year. While cash is always a gift that fits everyone and comes in the right color, there are some ways of giving money that are better than others. One way you can give a gift of money that benefits you and helps someone you love with the cost of college is through a college savings plan. Known as 529 plans, these financial tools may be on the rise as investing opportunities are finally starting to recover.
According to the College Savings Plans Network (CSPN) a 529 plan is a tax-advantaged investment plan designed to encourage saving for the future higher education expenses of a designated beneficiary. They are usually started for a child or grandchild. For middle-class families, they could prove to be a lifesaver down the road. Inside Higher Ed just reported on a new study which found that college students from middle-income families are more likely to end up with student loan debt than their peers from both lower and higher socioeconomic backgrounds.
These families are caught in a crunch when they find out that they make too much money to qualify for student aid packages, but don't have the financial means to cover the costs of college. Starting a 529 plan now could help relieve many of these headaches down the road, and reduce the need to take out high levels of student loan debt.
There are two types of 529 plans: prepaid tuition plans and savings plans. These plans are administered by state agencies and organizations. Many states mirror the federal tax advantages for 529 plans by offering state tax-deferred growth and tax-free withdrawals for qualified higher education expenses. CSPN lists out some of the many advantages of 529 plans:
• They can be used at virtually any accredited university or college in the U.S.
• The account owner of a 529 plan maintains control over the use of the account.
• Some states offer matching grants and other benefits to participants in their 529 plan.
• Qualified expenses include tuition, room and board, fees, books, supplies and equipment required for enrollment.
• There are no income limitations on a person's ability to contribute to an account. Minimum contributions can be as little as $10. In most states, you can contribute as much as $300,000 or more per beneficiary.
College Financial Aid Planning Takes Many Forms
More than 11 million 529 accounts are open nationally already. They lost a little of their luster as a savings vehicle when the economy hit a downturn, but now that the stock market is picking up again, it might be time to reconsider this option. In fact, a recent article in NBC News Business asked whether investors should "super-fund" a 529. This is a strategy where large sums of money are added to an account in a short time frame. For example, some investors might put money into a 529 college savings plan now and then do the same thing again in January. Because of the combination of gift tax exclusion rules and generous contribution limits on these plans, it could be possible to set aside $14,000 now and another $70,000 in January. It is always best to check with a financial advisor and tax advisor before investing such a large sum of money.
A 529 plan is just one piece of the puzzle when it comes to paying for college these days. Parents and grandparents might need to work together to develop a strategy now so that their student will be able to receive the gift of a college education in the future.
Transit coverage: 69.4 percent (36th highest) Service frequency (minutes): 8.9 (16th lowest) Jobs reachable in 90 minutes: 30.2 percent (43rd highest) Walk score: 79.2 (3rd highest) Commuters who bike: 0.7 percent (21st highest) The Boston-Cambridge-Quincy metropolitan area's greatest strength for those without an automobile is the prevalence of dense, easily manageable communities. This makes it exceptionally easy for residents to reach amenities such as groceries, restaurants, shopping and schools. The metropolitan area's primary city, Boston, has the third-highest walk score in the country. The area's public transit also has a relatively high service frequency rate, making its use that much more convenient for the city's residents. Read more at 24/7 Wall St.
Transit coverage: 96 percent (2nd highest) Service frequency (minutes): 6.2 (2nd lowest) Jobs reachable in 90 minutes: 25.6 percent (69th highest) Walk score: 65.9 (14th highest) Commuters who bike: 0.87 percent (14th highest) Los Angeles is the second largest city by population in the United States, and its metropolitan area is fairly spread out. Due to its extensive public transit system the area has avoided a complete automobile-based culture. The metro area's 19 transit systems have more than 500 bus routes. As a result, 96% of neighborhoods are within 0.75 miles to a transit stop -- the second highest rate in the country. Better still, commuters can catch a form of public transportation from their nearest stop every 6.2 minutes. Read more at 24/7 Wall St.
Transit coverage: 89 percent (8th highest) Service frequency (minutes): 8.5 (11th lowest) Jobs reachable in 90 minutes: 58.9 percent (2nd highest) Walk score: 57.6 (29th highest) Commuters who bike: 0.78 percent (17th highest) Utah's population is expected to grow from 2010's approximately 3 million to 4.4 million in 2030. Salt Lake County accounts for more than one-third of the state's population. To accommodate this growth, the Utah Transit Authority has plans to add four more lines to its light rail system, TRAX, up from its current three lines. This investment is meant to improve transportation for the suburban and exurban population to the city. In the winter, the UTA runs ski transit lines in addition to its rail and bus services. Read more at 24/7 Wall St.
Transit coverage: 83.7 percent (12th highest) Service frequency (minutes): 8.1 (10th lowest) Jobs reachable in 90 minutes: 47.5 percent (10th highest) Walk score: 60.4 (23rd highest) Commuters who bike: 0.79 percent (16th highest) Denver has bus service, light rail lines, and an airport shuttle service. The city is currently undergoing a multibillion dollar expansion of its transit system, called the FasTracks Expansion. This plan is meant to increase light rail, commuter rail and bus rapid transit lines. The project, which is expected to be completed in 2019, currently faces a $2 billion shortfall. Read more at 24/7 Wall St.
Transit coverage: 95.6 percent (3rd highest) Service frequency (minutes): 6.9 (5th lowest) Jobs reachable in 90 minutes: 58.4% percent (3rd highest) Walk score: 54.5 (34th highest) Commuters who bike: 1.56 percent (7th highest) The San Jose-Sunnyvale-Santa Clara metropolitan area's public transportation is overseen by the Santa Clara Valley Transportation Authority. Like Los Angeles, the area relies heavily on buses, running about 100 routes. Public transit covers 95.6% of neighborhoods, the third greatest in the country. Public vehicles also run under 7 minutes apart, the fifth smallest frequency. The metro area also has the seventh highest rate of commuters who travel to work by bicycle. Read more at 24/7 Wall St.
Transit coverage: 85.3 percent (11th highest) Service frequency (minutes): 8.8 (15th lowest) Jobs reachable in 90 minutes: 33.4 percent (35th highest) Walk score: 73.6 (6th highest) Commuters who bike: 1.07 percent (9th highest) Seattle's public transportation system not only includes bus and rail transit, but a monorail in the city center, as well as ferries. The city also has the sixth highest walk score in the country, due to its high number of easily accessible amenities. According to Bicycling magazine, Seattle is one of the most bike-friendly cities in the country and "has a 10-year, $240-million bike master plan that seeks to triple the number of journeys made by bike and add 450 miles of bike paths." Read more at 24/7 Wall St.
Transit coverage: 97 percent (the highest) Service frequency (minutes): 9 (18th highest) Jobs reachable in 90 minutes: 59.8 percent (the highest) Walk score: 63 (19th highest) Commuters who bike: 0.95 percent (12th highest) Honolulu currently does not have an urban rail system, but its bus system helps cover 97% of neighborhoods -- the highest rate in the country. Additionally, almost 60% of jobs are accessible within 90 minutes to those who live in neighborhoods covered by transit. This is also the highest rate in the country. Nevertheless, the city is planning a $5.5 billion rail project called the Honolulu Rail Transit Project. This will include 20 miles of track, connecting East Kapolei with the Honolulu International Airport and downtown Honolulu and will end at Ala Moana Center. Read more at 24/7 Wall St.
Transit coverage: 89.6 percent (7th highest) Service frequency (minutes): 4.5 (the highest) Jobs reachable in 90 minutes: 36.6 percent (25th highest) Walk score: 85.3 (the highest) Commuters who bike: 0.52 percent (32nd highest) New York City ranks first in the nation for total number of passenger trips and government spending per capita on public transit, according to US News. It also has the highest rate of service frequency. The Metropolitan Transportation Authority's 2010 operating budget was $13.4 billion. The average weekday ridership for the city is estimated to be over 8.4 million trips. The city also has the highest walk score on this list, thanks to the ability of city dwellers to reach just about any amenity on foot. Read more at 24/7 Wall St.
Transit coverage: 83.5 percent (13th highest) Service frequency (minutes): 7.4 (8th lowest) Jobs reachable in 90 minutes: 39.9 percent (16th highest) Walk score: 66.3 (13th highest) Commuters who bike: 2.23 percent (2nd highest) Portland is such a good place for people to live without a car due to both its public transit system and the ease of walking and biking around the city. The metropolitan area is served by TriMet, which in addition to other services offers a Free Rail Zone -- a region that includes most of downtown Portland and where light rail and streetcar rides are always free. The city has a number of benefits for bike riders, including designated bike-only areas at traffic signals and free bike lights. It has the second highest rate of commuters who ride bikes to work in the country. Read more at 24/7 Wall St.
Transit coverage: 91.7 percent (5th highest) Service frequency (minutes): 8.5 (12th highest) Jobs reachable in 90 minutes: 34.8 percent (30th highest) Walk score: 84.9 (2nd highest) Commuters who bike: 1.65 percent (6th highest) San Francisco is held in high regard for its many successful transit systems, including the San Francisco Municipal Transportation Authority and the Bay Area Rapid Transit district. These systems cover nearly 92% of neighborhoods -- the fifth highest rate in the country. San Francisco also has the second highest walk score and is excellent for bicyclists. Commuter rails within the city allow bicyclists to mount with their bicycles, and there is a bike shuttle across the Bay Bridge to help cyclists during rush hour. Read more at 24/7 Wall St.
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