By Alexa Freeman
INDIANAPOLIS – Aaron Bacon’s daughter is just seven months old, but he’s already thinking about how to help her avoid student loan debt.
“I didn’t have much help with college. So I know how difficult student loan payments are,” Bacon said. “So if I can do anything to help her out in the future, it’s going to be beneficial to her and me in the long run as well if I want to pay for her college.”
CollegeChoice 529 savings plan has a new logo for their 20th anniversary. Treasurer of State Kelly Mitchell, as chair of the Indiana Education Savings Authority, revealed her future plans for the 529 savings plan. Photo by Alexa Freeman, TheStatehouseFile.com
Bacon opened a 529 account for his daughter, just like thousands of other Hoosier families. 2017 is the 20th anniversary of the accounts that are designed to help families save for future college costs.
“Today, Hoosiers have invested over $3.6 billion in over 317,000 accounts, with nearly $300 million used for qualified education expenses each year,” Treasurer of State Kelly Mitchell said. “These numbers will continue to rise as more and more future learners and their loved ones learn the benefits of CollegeChoice 529.”
The accounts can grow free of federal and state taxes. They also offer tax-deferred investment growth and tax-free withdrawals for qualified expenses, including tuition, room and board, and computers. Money in the account can be used at eligible colleges, universities and vocational schools.
Additionally, Hoosiers are eligible for a state income tax credit of 20 percent of contributions to a 529 account, up to $1,000 credit per year.
Indiana Commissioner for Higher Education Teresa Lubbers was a senator when the 529 saving plan passed in 1996 with a unanimous vote. She said people finally saw that financial planning is needed for college costs.
“People who start saving early will, in fact, start to save more and be much better prepared to actually get into a college and prepare to succeed,” Lubbers said.
Bacon said college degrees are becoming increasingly more important and he knew that getting started on the 529 plan early would help invest in her future.
“One: you’re saving for her college,” Bacon said. “Two: there’s a tax credit as well. No matter how much it is, every little bit helps.”
Alexa Freeman is a reporter for TheStateHouse.com, a news website powered by Franklin College journalism students.