When saving for college, a little can go a long way

By Lael Oldmixon

Update: 22 a few minutes ago Published: 22 a few minutes ago

Energy costs are on the rise. Inflation is at its highest for 40 years. Interest rates are on the rise. And yet, there’s never been a better time for Alaskans to start saving for higher education, because there’s never been a better time to start than now. It’s true – despite all the bad economic news, Alaskans can and should take action now to set aside money for college, trade school, job training, or any other desired post-secondary education.

Research shows that even relatively small investments in a young person’s education savings can increase their chances of pursuing higher education and earning a degree. In fact, kids with $500 or less saved for college are three times more likely to enroll and four times more likely to graduate. This trend is also proven in data on low-to-moderate income children. Every dollar counts, and even a small amount saved creates expectations that can help launch someone into an academic career.

Despite these encouraging statistics, far too many families delay and do not save, or not enough. A 2019 College Savings: Lessons Learned study showed that 42% of parents wish they had started saving for college sooner, and 22% wish they had researched more options. Here in Alaska, where every resident receives a dividend from the Permanent Fund, only about 2% of applicants choose to automatically invest some or all of the annual windfall for future education expenses. This is a huge missed opportunity.

In Anchorage, more than 70% of business owners surveyed said the availability of a skilled workforce was one of the biggest barriers to business growth, according to the 2021 Business Confidence Index d ‘Anchorage Economic Development Corp. Alaskan employers need to cultivate the next generation of leaders, and they actively seek recent graduates from applicable programs that fit these roles. Education has always been a wise investment in a child’s future, but right now, thanks to Alaska 529, the return on investment, when it comes to future employment, is a particularly good bet. I invite employers to participate in a solution to labor shortages by offering Alaska’s 529 Payroll Direct Deposit Program as an employee benefit.

Alaska 529 offers two of the most generous college savings incentive programs in the nation. Recently launched, the Dash to Save and Dash to Save More programs offer unique benefits not found elsewhere in the United States. Specifically, the first 5,000 new eligible Alaska 529 accounts opened this year with a minimum investment of $25 will receive an additional $250. Alaska 529 will also pay up to $100 per year into accounts with automatic monthly contributions and/or direct payroll deposits. This adds up to $350 in possible benefits, quickly bringing Alaskans closer to that magic $500 threshold that research shows makes a measurable difference in encouraging students to attend and graduate from college.

Alaska 529 accounts thrive in a tax-efficient environment and offer convenient, age-based investment options, where portfolios become more conservative as a child approaches post-secondary education. Static investment options (which maintain the same allocation over time) are also available, including the UA Wallet which offers a tuition value guarantee if used at the University of Alaska.

When is the right time to start saving? Whether your student is a baby or a teenager, the best time to start saving for their future education is now. Alaska 529 offers unique and generous benefits that can help families grow their accounts and inspire young people to continue their education after high school, earn a higher standard of living, and build Alaska’s future.

In the end, it’s always better late than never, a little goes a long way, and something is better than nothing. We owe it to the next generation to start now.

Lael Oldmixon, M. Ed.is the executive director of the Alaska 529 and UA Scholars program at the University of Alaska.

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