It is 5/29—or as we call it—529 Day!

It is May 29th (5/29) –  a great time to remind ourselves just how important 529 college savings accounts are. 529 college savings accounts help give young people the opportunity to attend college. Although the details of 529 plans differ from state to state, their underlying purpose is the same: to help families save money so their children can go to college.

The money contributed to a 529 college savings plan can be used at eligible 2- or 4-year colleges for tuition, certain room-and-board expenses, books and other supplies.  The minimum initial contribution is just $25. Savings in these plans offer federal and often state tax benefits.

Saving for college is one of the most important actions a family can take to put their children on a trajectory towards achieving financial security. Those with a college degree earn twice the median income of someone with only a high school degree.

A study by the Center for Social Development documented that having even a small amount of college savings can foster a child’s perception of him or herself as college bound and then increase their likelihood of attending college.  The study also found that once a child is enrolled, a child with a college savings account, even with  as little as $1 to $499, is over four and a half times more likely to graduate from college than a child with no savings account at all.

Given the paramount importance of a college degree and the studies showing that it does not take a large amount of savings to foster a college identity, we believe it is critical that we help families, particularly low-income families, start saving for college.

CCC and the Financial Clinic created a proposal to make saving for college even easier for families and we are now working with the newly formed New York Asset Development Coalition to advance the proposal at the state level.

Specifically, we are asking for the State to enable New Yorkers to both be able to split their State tax refund and to be able to direct a portion of it into 529 college savings plans or other savings vehicles. This option would be particularly useful for low-income families, whose tax-time Earned Income Tax Credit refunds often comprise as much as 40% of their incomes. In addition, as part of the proposal we are urging the State to amend the Social Service law to exempt 529 college savings accounts from the asset limit tests used to calculate eligibility for public assistance.

Senator Carlucci and Assemblywoman Titus have introduced legislation to exempt 529 college savings accounts. We are so grateful and have offered our support.

Remember—it is 5/29—so help us ensure all New Yorkers know how important 529 college savings accounts are! Use social media to spread the word!

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