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.
New Hampshire has it's own state-operated 529 plan called UNIQUE College Investing Plan. It is important to note that your child does not have to go to a NH 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 New Hampshire as well. New Hampshire's' higher education costs rose by 41.1% in just the last 10 years, ranking as the 20th highest state.
The table below shows the average one-year costs in 2020 for different types of NH 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 NH rose 15% (ranked 33rd worst in the US), while a 2-year or trade school increased their tuition by 9 percent.
Unfortunately New Hampshire does not offer any tax benefits for socking away funds in a 529 account for your child. Thankfully, NH residents can open an account in any other state that lets them.
Fidelity Investments manages two New Hampshire 529 savings plans, a direct-sold 529 plan (UNIQUE) and an advisor-sold (Fidelity Advisor 529). Both programs feature Fidelity Investments mutual funds.
|State Plan Name:||UNIQUE College Investing Plan|
|Maximum Contribution:||up to $500,000 per beneficiary across accounts|
|Fees:||For Fidelity, $20 account fee, waived if participant signs up for a systematic investment plan or maintains a balance of $25,000; 0.05% to 1.16% asset management fee, depending on plan.|
There are 699,719 registered in New Hampshire with a total value of $18,610,471,321. That is an average of $26,597 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!