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.
Montana has it's own state-operated 529 plan called Montana Family Education Savings Program. It is important to note that your child does not have to go to a MT 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 Montana as well. Montana's' higher education costs rose by 10.9% in just the last 10 years, ranking as the 48th highest state.
The table below shows the average one-year costs in 2020 for different types of MT 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 MT rose 15% (ranked 32nd worst in the US), while a 2-year or trade school increased their tuition by 20 percent.
Montana offers tax benefits and deductions when savings are put into your child's 529 savings plan.
|For single filers:||$3,000/yr|
|For joint filers:||$6,000/yr|
Achieve Montana is a direct-sold plan managed by Ascensus College Savings, and offers age-based and static investment options using Vanguard and DFA funds plus an FDIC-insured savings option. The Montana Family Education Savings Program (Bank Plan) was closed to new investors in July 2015.
|State Plan Name:||Montana Family Education Savings Program|
|Maximum Contribution:||up to $396,000 per beneficiary across all accounts|
|Fees:||0.67% to 0.83% of assets, depending on investments; $25 annual account maintenance fee, waived for Montana residents or people who use an automatic investment plan, payroll deduction or have an account balance of at least $25,000.|
There are 13,760 registered in Montana with a total value of $211,387,757. That is an average of $15,362 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!