Washington – Saving For College in 2023
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.
Washington has its own state-operated 529 plan called DreamAhead College Investment Plan. It is important to note that your child does not have to go to a WA 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!
Washington 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 Washington as well. Washington's higher education costs rose by 34.9% in just the last 10 years, ranking as the 26th highest state.
The table below shows the average one-year costs last year (2022) for different types of Washington 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 of these increased higher education costs. Tuition at a 4-year university in WA rose -6% (ranked 51st in the US), while a 2-year or trade school increased their tuition by 7 percent.
529 Tax Benefits for Washington Residents
Washington offers tax benefits and deductions when savings are put into your child's 529 savings plan.
Unfortunately, Washington does not offer any tax benefits for socking away funds in a 529 account for your child. Thankfully, WA residents can open an account in any other state that lets them.
Best 529 Plans in Washington
Washington offers a direct-sold 529 college savings plan and a prepaid tuition program. The DreamAhead College Investment Plan is sponsored and distributed by the Washington Student Achievement Council. Sumday Administration, LLC, a BNY Mellon Company, provides program management. The Guaranteed Education Tuition (GET) Program guarantees that the value of an account will keep pace with the cost of college tuition, no matter how much it changes in the future.
|State Plan Name:||DreamAhead College Investment Plan|
|Maximum Contribution:||Once your account hits a $500,000 balance, you can no longer contribute. However, the funds will continue to earn on its investments and you can resume contributions if your account falls below that $500,000 threshold.|
|Fees:||0.276% and 0.400% annual asset-based management fee; $35 annual maintenance fee; $25 rollover/transfer fee; $10 annual statement delivery fee|
Washington 529 Plan Statistics
There are 91,679 registered schools in Washington with a total value of $2,201,929,464. That is an average of $24,018 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!