Many parents dream of sending their kids to college. But there’s a problem: College is expensive. Really expensive. The average cost of college in America is over $35,000 per year and climbing.1 That big of an expense can feel daunting but don’t despair. If you live in Colorado, here are 3 ways to kickstart your kids’ college funding!
A 529 plan is an investment account specifically for your kid’s college and offers a triple-threat when it comes to maximizing college savings.2 First, every dollar you add to the account is state income tax-deductible. Second, you can invest the proceeds to have your money work for you through compound interest. Third, if you invest your contributions and grow your funds, all of the growth is tax-free as long as you spend it on qualified education expenses.3
If you had a baby in Colorado on or after January 1st, 2020 (and yes, adoptions count too!) and have opened a Colorado 529 Plan, then the state will contribute $100 to your account to help you kickstart your savings. It’s totally free, all you have to do is apply! Every little bit helps, right?!
Once you’ve received your $100, you will be automatically enrolled in a matching incentive program. Colorado will match your contributions dollar-for-dollar up to $500 per year for 5 years. That’s an extra $2,500!
So, you’ve opened your 529 plan but what if you missed your chance to enroll in the First Step Program? For low to middle-income households, Colorado will still match all of your 529 contributions dollar-for-dollar up to $500 per year for 5 years or until your child is 8 years old (whichever comes first).4 However, you do have to reapply every year and there are income limitations, but if you qualify it’s a great benefit!
If you take advantage of these 3 resources, you will be well on your way to empowering your children to go to college!