Did you know Utah has one of the top education savings plans in the U.S.?
Morningstar Analyst Ratings for college savings plans were released in October. Utah’s educational savings plan, my529, was awarded with a gold rating and named valedictorian.
Morningstar writes, “Virginia’s Invest529, Illinois’ Bright Start College Savings, and Utah’s my529 continue to distinguish themselves from other plans for their excellent state oversight and program management, best-in-class investment options, and thoughtful investment philosophy.”
Criteria used to evaluate programs include low fees, a strong set of underlying investments, a solid manager selection process, a well-researched asset-allocation approach, an appropriate set of investment options to meet investor needs, and strong oversight from the state and program manager.
This is the ninth year Utah has been awarded the gold, distinguishing itself from 62 other programs throughout the U.S.
Utah’s my529 program is also the third largest in the United States. This year, the fund surpassed 400,000 accounts and $14 billion in managed assets. Enrollment in the plan isn’t limited to Utahns, either. Anyone can choose Utah’s program to start their education fund. Adults can use my529 to save for their own education expenses as well.
Here’s why this matters for Utah residents, including those of us here in the corner of San Juan County: this is a great program that manages its investments well with minimal fees, which translates into more money in your pocket.
There are a number of benefits to opening a college savings account (also called a 529 account based on Section 529 of the Internal Revenue Code).
Earnings in a 529 account accumulate tax free and are not taxed as income when withdrawn for education purposes. There’s also a state income tax deduction for contributions to your 529 account.
If Utah has one of the best college savings programs in the nation, and you can see the need for your family, seriously consider opening an account. I’ve personally seen how beneficial this savings account can be. (Disclaimer: this is personal experience. I am not a financial advisor and am not qualified to give advice, so take that for what it is.)
I automated contributions to my529 savings accounts for my kids when they were born. Admittedly, we don’t have a lot to contribute for them. A one-income household on a law enforcement salary, we pinch pennies just to contribute $35 for each kid each month. But I know this will be urgent one day, and I see it as a way to try and keep my kids out of poverty (we are so close ourselves).
Fees really are that low – I pay sixty cents per month for my largest account and the earnings far outweigh the small administrative fees.
Five years later, I’m honestly shocked at how well the savings accounts have performed. Even calling it a savings account seems like a misnomer. It’s not like the half of a percent we earned at the bank years ago. Consistency, compound interest, and a great market all contributed to impressive rates of growth.
Why I save for my kids education funds
There are a lot of opportunities in San Juan County for education and scholarships, so you may wonder why save money for your kids’ educations.
We’re also some of the toughest, do-it-yourself, figure-it-out, pull-yourself-up-by-the-bootstraps kind of people I know, and you may ascribe to the belief that there’s more value in making your kids earn their own education. I hear you!
When I left Monticello for Brigham Young University, I had a Sterling Scholar scholarship, a math scholarship, a New Century Scholarship, and some others I can’t remember. I saved a load of money from working at the Shake Shack, on my dad’s farm, and as a night auditor at the motel – money I tricked myself into saving by telling myself it would go towards a Jeep one day.
I had everything figured out. (Doesn’t every 18-year-old?)
My scholarships covered my tuition for the first year, and 75 percent the second year. I got married, and my husband’s income covered rent.
I didn’t have a car or a cell phone. I took the bus, bought used books in old editions off half.com, and took a PB&J sandwich with me to school every day.
I worked off-campus to make more money. I tooked accelerated classes during the summers. In short, I did everything I possibly could to get through school quickly and without debt. And yet, it didn’t work.
In year three, my New Century Scholarship expired, and I had to come up with thousands and thousands of dollars every semester.
All that money I slaved over the greasy grill at the Shake Shack for, on the dusty fields of the farm for, and folding laundry for the entire hotel throughout the night for? Not even a year, and it was gone.
My point in this long, boring backstory is that even with the best laid plans, scholarships, savings, and opportunities – very quickly, students still come up short. As frugal as I was and as hard as I worked, it wasn’t enough. College was really expensive!
To complete college, many students turn to student loans, and the amount they are borrowing is skyrocketing. Across the United States, 45 million borrowers owe a collective $1.5 trillion dollars on student loans, with the average student loan debt totaling $28,650. Some have much, much more.
Hearing these stats, I used to think, Yeah, right, but not here in Utah. Our tuition is still relatively cheap – but it continues to rise. And while I lived along the Wasatch Front, housing more than doubled. It won’t be long before those large, student debt numbers do come to Utah in greater frequency.
I saw how incredibly difficult it was to pay for college, even if you had scholarships and every advantage in the world, and it’s only going to get worse. As hard as it was for us, it will be even harder for our children.
Saving for their education is just a small way to help them out. The $35 I save each month is not going to turn into $100,000 by the time they need it. It’ll end up being a modest sum that will help out a little, but it gives me peace of mind that they’ll be just a little closer to their dreams and further away from poverty than if I had not saved. You just do what you can, right?
Opening an account is free and easy. Go to the website my529.org and click on the enroll now button. It’ll take you from there.
The Utah Legislature established the Utah Educational Savings Plan (UESP) in 1996 to help families save for higher education. It was renamed my529 in 2018.