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.
Kansas has it's own state-operated 529 plan called Learning Quest 529 Education Savings Program. It is important to note that your child does not have to go to a KS college or university in order 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!
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 looking for ways to help offset these future higher education costs.
These rising costs are hitting closer to home in Kansas as well. Kansas's' higher education costs rose by 31.5% in just the last 10 years, ranking as the 30th highest state.
The table below shows the average one-year costs in 2020 for different types of KS colleges and universities.
|Ownership||Degree||Schools||Public Out-of-State Tuition||Public In-State Tuition||Median Debt||Total Annual In-State Cost|
These costs rise every year. Rising tuition is a major driver in these increased higher education costs. Tuition at a 4-year university in KS rose 11% (ranked 42nd worst in the US), while a 2-year or trade school increased their tuition by 19 percent.
Kansas offers tax benefits and deductions when savings are put into your child's 529 savings plan.
|For single filers:||$3,000/yr per beneficiary|
|For joint filers:||$6,000/yr per beneficiary|
Kansas’ three 529 college savings plans all use American Century Investments as program manager. The direct-sold Learning Quest 529 program is available nationally and features American Century and Vanguard mutual funds. Learning Quest Advisor is sold through financial advisors and utilizes multiple fund families in its age-based and asset-allocation portfolios while also offering a menu of 12 American Century individual-fund options. The Schwab 529 College Savings plan is also a multi-manager 529 plan, but is sold through discount broker Charles Schwab & Co.
|State Plan Name:||Learning Quest 529 Education Savings Program|
|Maximum Contribution:||up to $402,000 per designated beneficiary.|
|Fees:||No annual account maintenance fee. However, there is a program management fee of 0.20% as well as fees for “underlying fund expenses” charged against portfolios for expenses incurred. Age-based index track investments have a different fee structure: an all-inclusive 0.25% fee against assets.|
There are 242,403 registered in Kansas with a total value of $6,939,427,786. That is an average of $28,628 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!