From a state treasurer’s perspective, why and how can an adviser, accountant or estate planner help their clients with college financial planning?
This article features an interview with Young Boozer, Alabama State Treasurer and Vice Chair, College Savings Plans Network. This interview originally ran in the 529 Dash e-newsletter in September 2015, and we are now re-posting the content from the e-newsletter to the website due to the subsequent launch of our 529 Insiders website. Treasurer Boozer is the 39th State Treasurer of Alabama, and was re-elected for his second term in November 2014. Within the role, he is responsible for the cash management of all state funds, which includes among other roles two 529 college savings programs. In addition to these roles, he is the Vice Chair of the College Savings Plans Network, which advocates for 529 plans in order to improve access to higher education by minimizing the financial burden. Lastly, Treasure Boozer graduated with a bachelor’s degree from Stanford University and a master’s degree from the Wharton School at the University of Pennsylvania, and thank you for your time, insight and support for working with me on this article. Please read the question and answers to learn about his perspective on 529 plans, and hope that the article provides you with an opportunity to learn more about college financial planning from your peers.
Question 1 (Paul Curley, Editor of the 529 Dash): How does College Savings Plan Network (CSPN) help families save for college and achieve college affordability?
Answer 1 (Treasurer Young Boozer, Alabama State Treasurer): Our mission at CSPN is to help make college savings easy for families to understand so they can get started saving. CSPN provides the tools and resources families need to save for college, while advocating to ensure college savings plans remain flexible and affordable for families. Our website, collegesavings.org, offers a wide array of resources for families to utilize including a College Cost Calculator, a 529 plan comparison tool, biannual college savings plans data updates, informative blogs and useful infographics.
Question 2: What do you see as the top three trends in college financial planning?
— Educated investors. Account owners want to know where their money is going and how it’s being invested. They have a more solid understanding of how these plans work, tax advantages and investment options. No more “set it and forget it.”
— Awareness of early investing. Student loan debt is a frightening reality for many of today’s college graduates. As a generation of students who have been saddled with debt start becoming parents themselves, they are interested in starting college savings early to ensure their children aren’t crippled by a large amount of loans.
— Third-party contributions. Contributions to a college savings account are a smart gift that requires no assembly, and can be made by anyone. College savings plans today are making it even easier for family and friends to contribute.
Question 3: Why and how should financial advisors, accountants and estate planners help their clients work towards the goal of college affordability?
The value of education is undeniable—but the actual cost of a higher education continues to rise. For a family or student, figuring out how to pay can be quite taxing. Many families rely on financial aid to combat costs, assuming that assistance will come in the form of scholarships and grants that do not have to be repaid. The fact is about 60 percent of federal financial aid is in the form of loans that not only must be repaid, but also incur interest. College savings plans offer a way to offset the need for loans and keep families from getting saddled with debt.
Investing as early and as often as possible is the key to providing adequate funds for a child’s college expenses. Putting aside as little as $15 a month adds up over time.
It’s important that planners educate and motivate their clients to save. Research shows that children with dedicated 529 plans are up to seven times more likely to attend a four-year college.
Additionally, with 529 college savings plans offering excellent federal and state tax benefits as well as other state benefits, planners should understand the specifics and details of each to help their clients navigate the plans and leverage them to their full potential.
Editor’s Final Note: Thank you Treasurer Young Boozer for your time and insight on this article. Also, I would like to provide a special thank you to the readers for learning from your peers, for your support and your engagement.