While many adults think of saving for their children’s college educations, they don’t consider saving for their own educational needs. If you are thinking of going back to college to get a degree, you can maximize the benefits of saving for college at any time by following these simple tips:
You can start your own 529 college savings plan at any time, so there’s no need to wait until you are ready to start college. You can start saving at any time and can start enjoying tax deductions for your 529 savings account contributions every year, making your college savings nearly tax-free.
Figure College Costs
Most adult students do not have to pay for college room and board, but they have other expenses to consider, such as child care costs and transportation. If you are an adult student, talk to counselors who deal with returning students to get a clear idea of expenses you may not have considered. You may also check with your employer to see if your company has tuition reimbursement coverage that will help you pay for your college degree. According to the National CPA Financial Literacy Commission, the most important thing for adult students to do is to consider every possible source of funding, even while making deposits to a 529 savings plan.
Consider State Tax Deductions
Because most adult college students do not save until they are around a year of entering college, state matching grant programs and tax deductions can play a large part in determining the viability of starting a 529 savings plan. If your state does have a matching grant program, you can deposit your college savings into a 529 plan to earn the matching funds and then draw it out in the same year to pay for college. If your state does not have a state income tax, however, there are no benefits to depositing money in the same year you intend to use it, so you may as well pay it directly to your school.
Maximize Tax Benefits
If you previously attended college and are paying interest on student loans, you can claim the interest as a deduction. This will add hundreds to your tax refund, which can be directly deposited into a 529 savings plan. If you are also paying for children to attend college, you can take the maximum $2,500 credit to pay for your own college education. This makes the money deductible for state taxes.
While it may be difficult for adult students to cover the costs of returning to college, it is possible if you play your financial cards right. Explore all of your options and talk to professionals to learn the best ways to pay for your degree. Just remember, your advanced education will add so much value to your future earnings that it will more than pay for the costs.