Over an adult’s working life, high school graduates earn an average of $1.2 million; associate’s degree holders earn about $1.6 million; and bachelor’s degree holders earn about $2.1 million, according to the Census Bureau. The difference in income is creating greater demand for continuing education. But paying for it isn’t easy.

With more students enrolling in college, the costs continue to escalate. Today, the annual cost of tuition, fees, and room and board is about $13,000 at a four-year public university and more than $30,000 at a private college.

A 529 college savings plan is one way to meet these rising costs. Whether it’s your child, grandchild, niece or nephew, brother or sister, or yourself, a college savings plan is likely to be a viable option.

Tax Advantages
A 529 college savings plan is an investment plan with special tax advantages to help individuals save money for a college education. The plans, named for the 529 section of IRS Tax Code, are available in all 50 states. In most cases, earnings on contributions made to a 529 plan are deductible from federal and state taxable income. Withdrawals are not subject to state or federal income tax as long as funds are used to pay for college-related expenses.

The Oklahoma College Savings Plan is administered by a Board of Trustees chaired by the State Treasurer of Oklahoma and managed by TIAA-CREF. Those contributing to the plan may deduct contributions from their Oklahoma income tax up to the first $10,000 each year for each contributor or $20,000 for a married couple. There is no limit on the amount that can be put into the accounts each year, other than a cap on contributions if an account reaches $300,000. A minimum of $100 is needed to open an account; additional contributions can be as low as $25 (or $15 for payroll deduction at participating companies). The expense ratio charged for managing the contributions is an industry low and there are no application fees or annual maintenance fees.

Any U.S. citizen or resident alien can open an account or be a beneficiary in the Oklahoma College Savings Plan, but only Oklahoma residents can receive the tax benefits on Oklahoma income taxes. You can open an account for yourself and receive the same tax benefits. Qualified Oklahoma taxpayers, other than the account holder, can contribute to an account and also receive the tax benefits.

Oklahoma Options
Currently, the Oklahoma Plan has six savings options. Investment options have varying degrees of risk so participants may choose the option or combination of options that best fits their needs.

While some state plans require the beneficiary to attend college in that state, the Oklahoma Plan has no such restrictions. Earnings may be used to cover expenses at any accredited college, university, or for post-secondary training, including career tech and trade schools.

One advantage of a 529 plan is the ability to pay for educational costs over and above tuition and fees. The 529 covers books, room and board, and transportation or other costs associated with attending college. It’s a great supplement for students receiving grants, scholarships, fellowships, and other sources of financial aid. 529 funds do not impact other sources of needs-based financial aid, such as the college work-study program.

Even if children are teenagers or young adults, establishing a college savings plan provides tax benefits, although there is limited time to build up account earnings. The primary disadvantage of a 529 Plan is having limited options for investing the funds. However, the benefits of opening an account far outweigh that limitation.

To open an account online or to download enrollment forms, visit OK4Savings.com. The website also provides historical data on the account performance and offers suggestions on investment strategies. Enrollment and additional information is also available by calling, toll free, 877-654-7284.

Sue Lynn Sasser, PhD, is an associate professor of economics at the University of Central Oklahoma. In addition, Dr. Sasser serves as executive director of the Oklahoma Council on Economic Education and director of the UCO Center for Economic Education. She is past president of the Oklahoma JumpStart Coalition for Personal Financial Literacy. She and her husband live in Edmond, OK with their dog Lily.