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Alaska – Saving For College in 2024

ByRobert Davenport

As parents, grandparents and students, we know college is coming and that we're somehow going to have to pay for it someday. Fortunately, we have many options available to us, including savings bonds, the stock market and 529 plans. Starting a 529 account now is always the best option, no matter how old you (or your child) is. While playing the stock market may yield higher returns on your investment, placing your money into a 529 plan allows it to grow in a tax-free environment. One study even found that when the federal tax benefits were taken into consideration, 529 plans outperformed their benchmarks in every category.

Alaska has its own state-operated 529 plan called University of Alaska College Savings Plan. It is important to note that your child does not have to go to a AK college or university to use this savings account. 529 plan funds can be used at any accredited college or university across the nation, including some K-12 private schools!

Alaska College Costs & Trends

Colleges and universities across the United States experienced increased operating costs of 2.5% in 2019. This most recent inflation figure was down slightly from the 2.9 percent increase in 2018 and 3.4 percent increase in 2017. These costs are forwarded directly to students in the form of higher tuition and living expenses. As these costs steadily rise every year, parents are investigating how to help offset these future higher education costs.

These rising costs are hitting closer to home in Alaska as well. Alaska's higher education costs rose by 43.1% in just the last 10 years, ranking as the 17th highest state.

The table below shows the average one-year costs last year (2023) for different types of Alaska colleges and universities.

These costs rise every year. Rising tuition is a major driver of these increased higher education costs. Tuition at a 4-year university in AK rose 34% (ranked 1st in the US), while a 2-year or trade school increased their tuition by 0 percent.

529 Tax Benefits for Alaska Residents

Alaska offers tax benefits and deductions when savings are put into your child's 529 savings plan.

Unfortunately, Alaska does not offer any tax benefits for socking away funds in a 529 account for your child. Thankfully, AK residents can open an account in any other state that lets them.

Best 529 Plans in Alaska

Alaska has three 529 college savings plans to offer; two direct-sold 529 plans and an advisor-sold program. Each direct-sold Alaska 529 plan is managed by T. Rowe Price: The T. Rowe Price College Savings Plan is a nationally-marketed 529 plan utilizing T. Rowe Price mutual funds. Alaska 529 (previously known as University of Alaska College Savings Plan) does not receive national attention, but it does offer equivalent investment options as well as a unique, cost-saving option called the ACT Portfolio that provides special benefits to future University of Alaska students. The advisor-sold John Hancock Freedom 529 program utilizes a multi-manager approach in its investment portfolios.

Alaska 529 Plan Statistics

There are 310,549 registered schools in Alaska with a total value of $8,768,450,846. That is an average of $28,235 per account. Unfortunately, 529 plans are not widely used... a 2018 study by Edward Jones found that only 29 percent of Americans were even aware that 529 savings plans exist!