The state Department of Treasury is reminding Pennsylvanians enrolled in the commonwealth’s college savings program to contribute before next month to maximize their savings.
The main selling point of the state’s 529 College Savings Program, so-named for its section of the federal tax code, is that anyone who kicks money into one will see his or her savings grow at the rate of inflation.
“If you have enough for one semester of college today, you’ll have enough for one semester of college tomorrow,” the saying goes at the state Treasury.
Every year, schools set their tuition rates, and those rates take effect on September 1. “The importance of saving before September first is you get an extra year’s growth on your savings in the guaranteed savings plan,” said Doug Rohanna, Deputy State Treasurer for external affairs.
So, September is a deadline for some. But the Treasurer’s office also recognizes it as “Savings Month,” and is allowing those without a 529 savings plan to open one at no cost until October (usually the enrollment fee is $50).
Earnings in the 529 guaranteed savings plan are tax-free and tax-exempt upon withdrawal, if they’re used for certain things. “Any higher education expenses related to an institution that’s eligible for federal financial aid,” said Rohanna. “So it includes many career-technology schools, community colleges, as well as some of our national colleges and universities.”