For many kids, goals will include pursuing a college education. According to the U.S. Department of Education, 19.9 million students will attend American colleges and universities this fall.
While the number of college enrollees is expected to remain stable over the next 10 years, the price of tuition is expected to continue to increase. According to the State Comptroller’s Office, the average cost, including room and board, for attending a four-year private college or university is nearly $44,000 a year and for public in-state schools, the average cost of attendance is about $20,000 a year. In 10 years, the price for attending an in-state four-year public school is expected to increase to more than $33,000 per year and as much as $70,000 for a private college.
The costs associated with higher education can be daunting for both families and students. When it is time to apply for college, students may qualify for a combination of loans, grants, and scholarships and are encouraged to fill out the federal FAFSA form which stands for Free Application for Federal Student Aid (https://fafsa.ed.gov/). Financial aid and scholarship awards are determined on an individual basis and are dependent on household income, student abilities, the college the student wishes to attend, and other factors. There is also a list of loan, grant, and scholarship programs available to New York residents on the state’s higher education website, https://www.hesc.ny.gov/pay-for-college/financial-aid/types-of-financial-aid.html. For example, Tuition Assistance Program (TAP)—the state-funded student financial aid program—is explained on this site. TAP helps low- to middle-income households receive up to $5,165 annually to help pay for college education costs.
In addition to these grant, scholarship, and loan programs, students and families have the option to open a 529 college savings account. Money that is saved in the account is invested in a combination of stocks and/or bonds that is jointly administered by the State Comptroller and the Higher Education Services Corporation. People may open an account for themselves or a beneficiary. The account does come with risks but when opening the account, individuals can determine their own risk level which ranges from conservative to more aggressive investment options.
The savings and any earnings which accumulate in the account can be spent on qualifying higher education or vocational school expenses such as tuition, room and board, books, fees, supplies and equipment. Up to $5,000 a year is tax deductible on state income tax forms or, for couples filing jointly, up to $10,000 is tax deductible. The earnings are not taxed and withdrawals on the account are tax free as long as the earnings are spent on qualifying expenses. It should be noted that any 529 in a college applicant’s name will be considered when determining financial aid and can influence award amounts.
To open a 529 account, visit www.nysaves.org or call 1-877-697-2837 (1-877-NYSAVES). Applications can be filled out online or printed and mailed to New York’s 529 Program. Residents can also call and request an application be mailed. There is much more information available at the above site or by calling the number above. People have the option to open an account with a financial advisor that can offer different investment options but fees are associated. Other banks and lending institutions may offer a 529 account but if it is not managed by the state, consumers should ask if the state tax deductions apply.
Investing in higher education opportunities often leads to higher earnings potential and better job opportunities so the investment can pay off in dividends depending on the career chosen. To learn more about the value of a degree, visit the U.S. Bureau of Labor Statistics site at https://www.bls.gov/careeroutlook/2018/data-on-display/education-pays.htm?view_full. If you have any questions or comments regarding this or any other state issue, please contact me. My office can be reached by mail at 200 North Second Street, Fulton, New York 13069, by e-mail at [email protected], or by calling (315) 598-5185. You also can friend me, Assemblyman Barclay, on Facebook.