New Jersey – Saving For College in 2024
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 Jersey has its own state-operated 529 plan called NJ BEST College Savings Plan. It is important to note that your child does not have to go to a NJ 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!
New Jersey 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 New Jersey as well. New Jersey's higher education costs rose by 18.3% in just the last 10 years, ranking as the 44th highest state.
The table below shows the average one-year costs last year (2023) for different types of New Jersey colleges and universities.
| Ownership | Degree | Schools | Public Out-of-State Tuition | Public In-State Tuition | Median Debt | Total Annual In-State Cost |
|---|---|---|---|---|---|---|
| Private | 2 year | 79 | $19,368 | $17,731 | $10,783 | $21,394 |
| Private | 4 year | 38 | $33,908 | $33,908 | $22,645 | $21,140 |
| Public | 2 year | 24 | $8,171 | $4,532 | $9,889 | $8,484 |
| Public | 4 year | 13 | $23,507 | $13,342 | $21,517 | $18,844 |
These costs rise every year. Rising tuition is a major driver of these increased higher education costs. Tuition at a 4-year university in NJ rose 12% (ranked 39th in the US), while a 2-year or trade school increased their tuition by 18 percent.
529 Tax Benefits for New Jersey Residents
New Jersey offers tax benefits and deductions when savings are put into your child's 529 savings plan.
Unfortunately, New Jersey does not offer any tax benefits for socking away funds in a 529 account for your child. Thankfully, NJ residents can open an account in any other state that lets them.
Best 529 Plans in New Jersey
New Jersey has two 529 savings programs, both managed by Franklin Templeton Investments. One 529 plan is direct-sold and available only to New Jersey residents (NJBEST), and the other is sold nationwide through financial advisors (Franklin Templeton 529 College Savings Plan).
| State Plan Name: | NJ BEST College Savings Plan |
|---|---|
| Minimum Contribution: | $25 |
| Maximum Contribution: | up to $305,000 per beneficiary |
| Fees: | Program management fee of 0.1% of assets each year. $25 annual maintenance fee, waived for New Jersey residents. |
New Jersey 529 Plan Statistics
There are 249,350 registered schools in New Jersey with a total value of $5,729,291,336. That is an average of $22,977 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!