Paying for college is one of the biggest financial goals many families face. Tuition, fees, housing and books add up quickly, and student loans can follow graduates for many years. Starting to save early, even in small amounts, gives your money more time to grow.
Washington offers families two state-sponsored programs designed specifically for education savings. Understanding how each one works can help you choose the right approach, or use both.
The DreamAhead College Investment Plan
DreamAhead is Washington's 529 college savings plan. Your contributions are invested, often in age-based portfolios that become more conservative as your child gets closer to college. Earnings grow free of federal income tax, and withdrawals are tax-free when used for qualified education expenses such as tuition, fees, books and certain housing costs.
Because Washington has no state income tax, there is no state tax deduction for contributions. That makes comparing investment options and fees especially important. Funds can generally be used at eligible colleges, universities and many trade schools across the country.
The earlier you start saving for college, the more time your money has to grow.
The GET prepaid tuition program
Washington's Guaranteed Education Tuition program, known as GET, allows families to purchase tuition units today that are designed to keep pace with future tuition at Washington public colleges and universities. Units can also be used at other eligible schools, although the value may differ. Enrollment periods, pricing and rules apply, so review the details carefully before you buy.
Many families combine both programs, using GET to lock in part of future tuition and DreamAhead to cover housing, books and other costs. Automating a monthly contribution and inviting grandparents and relatives to contribute can help your savings grow steadily.
Finally, balance college savings with your own retirement. Students can borrow for school, but there are no loans for retirement, so a strong plan keeps both goals moving forward.
The investment experts at Finance Expert Connect help Washington families build college savings plans that fit their budget. Contact us for a free expert consultation.