4 Easy Ways to Boost Education Savings this Holiday Season | My College Corner
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4 Easy Ways to Boost Education Savings this Holiday Season

Dec 02, 2022

It’s never too early or too late to save for college and other education expenses using 529 savings programs. Here are four tips to add a little holiday cheer to your 529 savings accounts. In addition to saving for college, 529 plans can now be used to pay for some elementary and secondary school expenses, $10,000 worth of student loans, and certain apprenticeship programs.

Tip 1:  Find Loose Change (and Many Dollars) in your Checking Account 

Review the automatic payments connected to your checking account and cancel those services and subscriptions you don’t regularly use or need. Imagine finding an extra $75 per month – just by tidying up your checking account. But before spending that extra money, consider reallocating at least some of it to college savings. Every little bit helps, and this repurposed “found money” will have little to no impact on your current spending or lifestyle. The only question is: How much can you find?!

Tip 2: Make the Gift of College Part of Your Holiday Giving

According to the Education Data Initiative, the average 529 savings plan account balance in late 2021 was $30,287. To help families increase savings, the industry has created innovations to simplify the savings process and make it easier for students to build a college savings nest egg. The College Savings Foundation’s (CSF) members offer a number of gifting platforms. CSF noted several years ago that 90% of parents indicated online and other gifting options would make college savings easier – and their holiday wishes have been fulfilled. In November 2022, CSF reported that 46% of parents planned to ask relatives and others to make contributions as gifts to their children’s 529 savings plans.

  • Your 529 Plan’s website likely has online gifting, gift certificates, and coupons that can be printed and presented as gifts – with the gifted amount automatically deposited into a 529 account.
  • Gift of College gift cards can be purchased online and at select retailers including CVS, Walmart,  Kroger, Save Mart, and many other locations.
  • More and more companies are offering employer-sponsored programs with direct deposit provisions into 529 College Savings Plans.

A stocking stuffer of college savings is the kind of meaningful gift that makes everyone feel good—the giver and the receiver. Toys are often broken or forgotten quickly, but investing in education reaps lifelong benefits.

Tip 3: Use Credit Card “Cash-Back” Rewards to Fill up 529 Plans

Some credit cards are directly linked to college savings programs to permit users to deposit cash back rewards directly into 529 accounts. Find the right credit card for you or be disciplined about depositing cash back rewards from other cards into a college savings account. The great thing about these programs is that they allow you to fill your college savings coffers without altering your normal spending habits: no batteries required, no behavioral changes necessary.

Just be sure to avoid rolling-up big credit card bills that you can’t pay in full each month. Paying high interest charges will easily wipe out the amount you have saved and create that “Bah Humbug!” moment.

Tip 4:  Crowd Fund College Savings with Friends & Family

Taking the journey towards savings doesn’t have to be a solo trip – share these tips with friends and family and they will help grow college savings. Grandparents, aunts, uncles, and friends can all help your family realize the dream of college. Although not many have trouble with this, remember the maximum annual contribution without encountering gift taxes is $16,000 per individual ($32,000 for joint filers). There is also a special 5-year accelerated gifting rule for 529 savings accounts to take advantage of which permits up to $75,000 ($150,000 for joint filers) to be contributed in a lump sum to a 529 plan in one single tax year, with the provision that no subsequent gifts be made over the next five years. It’s worth checking with a tax advisor to learn all of the details.

These tips can help you maximize college savings by taking a few simple steps that won’t affect your lifestyle, no matter the season. The most important piece of advice: get started today, because “Saving a dollar today is better than borrowing one tomorrow®”.

Happy Holidays!