In recent years, the rising cost of higher education may have led you to question whether your child should pursue a degree. However, research has shown that, in the long run, degrees increase earning potential and raise the likelihood of career advancement.
Case in point: The median salary for workers with high school diplomas is $38,792, compared with a median salary of $64,896 for workers with a bachelor's degree, according to a Northeastern University analysis.
Gaining that degree requires a sizeable monetary investment, though, which is why you should ideally start saving early in your children's lives. After all, the average cost of tuition, books, supplies, and living expenses in the United States is $35,331 per year, according to Education Data Initiative. The price rises for out-of-state or private institutions.
Because saving money for such a large investment can be intimidating, WA529 Washington College Savings Plans were developed to offer a collection of 529 savings account programs to the state's future college students. These accounts offer tax-free growth and withdrawals for eligible purchases and can be used to finance education at learning institutions nationwide as well as in some foreign countries.
Here is what you need to know about the two 529 programs when deciding how to make an education nest egg grow.
Guaranteed Education Tuition
Since 1998, the GET program has allowed over 57,000 students to use more than $1.2 billion in benefits to pay for qualified higher education costs.
"The State of Washington guarantees that the value of your GET account will keep pace with resident, undergraduate tuition and state-mandated fees at Washington's most expensive public university, no matter how much it changes in the future," according to the GET enrollment guide. "With GET, you don't have to worry about the ups and downs of the stock market. You are assured that the money you save with GET will be there when your student is ready for college."
You can choose how much and when to contribute, whether you make periodic deposits, set up a monthly withdrawal from your bank account, or divert an amount from your paycheck. Your contributions go toward the purchase of a "unit" of one year's tuition. A single year is made up of 100 units.
This year, the cost of a GET unit is $114. However, if tuition continues to increase and you don't use the proceeds from your account for 10 years, that unit will still equal 1/100th of a year's tuition at that time, regardless of how much costs have risen.
You can save up to 800 units per student. If your child decides not to go to college or there are funds left after they finish their education, those units can be rolled into another student's name or refunded to you.
DreamAhead College Investment Plan
Another 529 account available to you is the DreamAhead plan. This money market style account allows you to contribute any time or set up monthly transfers. You can use it at any public or private college or university in the U.S.
The account's interface allows you to choose or change investment options any time. There is higher risk because the account is vulnerable to market changes, but there is also the chance for high returns. Any money earned is tax-free when used for eligible purposes.
For more information about Washington College Savings plans or to open an account, visit wastate529.wa.gov.