Hair Stylist or Surgeon?
Some parents dream of their kids becoming doctors and lawyers and such. And yes, some mommas even want their kids to grow up to be cowboys.
They also dream about their kids becoming a famous chef, a cosmetologist or a golf pro. And guess what, parents? If you invested in a 529 College Savings Plan, your child can use that money for all of those types of schools.
That’s good to know. Because determining if a two-year-old wants to study at a traditional four-year university, a culinary school or a college of cosmetology is hard to do. And that doesn’t matter right now.
What matters now is setting up a 529 college savings plan so your child can attend one of those schools without potentially having the burden of substantial debt to pay back. With a whopping $1.5 trillion in student loan debt collectively owned by about 44 million borrowers, according to Forbes.com, there’s no need to grow that number.
Student loan debt is equal opportunity
By the way, you don’t have to go to a traditional four-year college to experience sizable loan debt. Take cosmetology for example. The average cost for tuition, fees and supplies is $17,000, according to a recent report in the New York Times. That doesn’t seem like an excessive amount until you consider that the average hourly wage for a hairdresser is about $10.
In that New York Times article, the story of one hairstylist explains how she is still paying off her student loan debt. She still owes $8,000 of the $21,000 she borrowed 13 years after graduating from cosmetology school.
Regardless of the education and school where the debt was acquired, those students could have benefited from a 529 college savings plan. In fact, that’s one of the main reasons for opening a 529 plan for your child, grandchild, niece, nephew, etc. – to help them minimize student loan debt.
Join the movement
Indeed, there is a movement to put an end to student loan debt. Parents who open a 529 plan for their kids are becoming part of that movement.
And it’s easy to join. First step: Set up a 529 plan. You can visit CollegeSavings.org to get all the details on your state’s plan. But in a nutshell:
- Setting up a 529 account online takes just a few minutes
- You can start one with as little as $10 or less, depending on the plan
- The money invested grows tax free and can be withdrawn tax free when it’s used for qualified expenses *
Then, to find out what postsecondary schools are eligible for 529 funds, go to IRS.gov to view schools. Eligible educational institutions include schools offering higher education beyond high school. It is any college, university, trade school or other post-secondary educational institution eligible to participate in a student aid program run by the U.S. Department of Education. This includes most accredited public, nonprofit and privately owned for-profit postsecondary institutions.
Oh, and for that momma who wants her kid to grow up be a cowboy? You can also use a 529 plan to pay for tuition at the Kentucky Horseshoeing School. Giddy-up!