NEW YORK (CNN) – It’s one of the most daunting tasks for parents, saving for college. However, good news for families that are plugging money into 529 plans. They’re at a record high.
Stocks are near all-time highs. Retirement savings are at all-time highs. Also now, add one more to the list, college savings are an all-time high.
We’re talking about 529 plans. Americans have 227 billion dollars stashed in 529 plans. It’s the highest on record, and it’s also up by a solid, 19% last year.
A 529 college savings plan is an investment. It’s like a 401K, or IRA, but for college.
You pick your plan, they’re offered by almost every state. You choose how you want your money invested, most people base allocations on age, so the older the child gets, the more conservative the investment gets.
However, the investment grows tax-free and when the family withdraws the money come college time, it’s also tax free.
529 plans are at an all-time high because the stock market has been doing well and families are saving more.
However, it’s still not enough. The average 529 balance is about 19,000 dollars. Tuition, fees, room and board at a 4-year public school is 18,000 and that’s just for one year. Still, saving something is better than saving nothing.
In most plans, your choice of school is not affected by the state your 529 savings plan is from. You can be a California resident, invest in a Vermont plan and send your student to college in North Carolina.