September is College Savings Month: New York 529 Savings Program Remains a Smart Investment

September 14, 2009

September is a month that brings sightings of children returning to school and families waving goodbye as the little ones ride the bus, sometimes for the first time. It marks the beginning of a new school year and is a reminder of how quickly our children grow up. Before you know it, our “little ones” are graduating high school. Because the time goes by so quickly and it’s so easy to let the years escape us, saving for college should begin as early as possible.

In this difficult economy, I realize money is tight on all ends, but college savings programs are affordable and are incredibly important because the average cost of college continues to rise each year. In fact, the average private college education cost is $25,143 annually, and it’s $6,585 per year for public colleges.i With September being College Savings Month, there is no better time to take a closer look at how you can begin to save for your child’s future education. And saving is not nearly as expensive or as difficult as many people think.

New York State offers 529 plans, programs designed specifically for college savings. Creating a 529 is easy and anyone – not just a parent or guardian – can contribute. You can set up a College Savings Program Direct Plan online with as little as $25. Additional plans are available with the help of money managers, but no one need be intimidated – creating a college savings plan can be done with ease and the benefits of doing so are numerous.

A sizeable tax deduction adds to the attractiveness of 529 plans – the state doesn’t charge any tax on the income you invest, up to $5,000 annually for an individual or $10,000 for a jointly filing couple. So not only do you get to save money for your child’s education, but you also have the potential to save hundreds of dollars a year on your income taxes.

The money that is earned in the 529 is never taxed by either the state or federal governments. And all money earned and saved that is used on qualified education expenses is also never taxed. Just this year, qualified expenses expanded to include computers for college students and students’ families; this is in addition to the traditional qualified expenses – college tuition, mandatory college fees, books and some room-and-board expenses.

Since 529s are investments, there is some risk. But New York’s 529 direct plan ranked fifth in the nation for one-year performance.ii In fact, about 70 percent of 529s nationwide did better than other investments in 2008. Contributions can be made regularly or periodically, depending on your ability and preference – further allowing 529s to be an easy choice for college savings.

Traditional non-529 college savings plans are still available. Customary savings accounts, certificates of deposit and savings bonds have been options for years. The main disadvantage of these programs is that none keep pace with inflation.

Regardless of how you save for your child’s college tuition, it’s important that you do. For further information or to set up a 529 college savings plan, visit or call my office at 718-370-1384.


ii (accessed Sept. 10, 2009)