Let’s talk about paying for education

By Scott Fitzpatrick
    Sunday was 529 Day, a day meant to highlight the opportunities available in state 529 plans. MOST 529 is Missouri’s 529 education plan. Named after Section 529 in the IRS tax code (thrilling, I know), a 529 account can have a significant impact on your child’s education and your family’s finances.


    According to a Georgetown University study, the cost of higher education has increased 169% over the last 40 years. And according to Sallie Mae’s annual How America Pays for College survey, 85% of families used parent income and savings to pay for nearly half of the cost of college.
    So what is a 529 Plan? In Missouri, MOST 529 is a tax-advantaged savings and investment account for education expenses, administered by the Treasurer’s Office. We’ve made the plan as flexible as possible—meaning it can be used for K-12 tuition, as well as apprenticeships, trade school, college, even graduate school tuition and other related expenses like books. You can also use money in a 529 account to pay off up to $10,000 of student loans.
    These plans are special, though, because contributors to the account (parents, grandparents, whomever), can claim a Missouri income tax deduction (up to $16,000 if married and filing jointly) for contributions made each year, and the money in the account (and any investment earnings) grows tax-free.
    Investing can be intimidating, but MOST 529 has simplified the process. Account owners have the opportunity to direct their investments based on their risk comfort level—choosing between conservative, moderate, or aggressive portfolio options. Additionally, we are able to manage your investments on a glidepath which gradually becomes more conservative, the closer your child is to college. This approach reduces the risk of volatility in the account as you approach the time when you will use the money to pay for educational expenses.
    Having this money saved for your child’s education will reduce or eliminate the need to borrow money when the time comes to pay for education expenses, and has the added benefit of saving you money you would otherwise pay in state and federal taxes. As you can see, it is a win-win.
    For those who need to pay for education in the immediate future, my Office has resources for you, too. Our Financial Literacy Portal has a section dedicated to paying for education now. On it, you will find information about state scholarships and grants as well as the Show Me the Money Scholarship Search Engine. Through a partnership with Sallie Mae, a nationwide consumer banking institution specializing in student loans, the search engine gathers more than 6 million scholarships worth over $30 billion in one place for students. The search engine connects Missouri students with scholarship and grant opportunities tailored to their unique interests—even if they’re not a straight A student or an athlete.
    The Sallie Mae survey I mentioned earlier found that only 37% of college savers used a 529 plan. While that is an increase from previous years (good news), that means 63% of savers could be saving more for their child’s future education.
    As State Treasurer, I want Missourians to have the financial tools to achieve their goals. Since taking office in 2019, I have worked to ensure MOST 529 is one of the highest rated plans in the country (it is) and to make it cost effective and flexible for all Missourians. For more information about MOST 529, Missouri’s Education Savings Plan, please visit missourimost.org.
    EDITOR’S NOTE: Scott Fitzpatrick is Missouri’s 47th State Treasurer.