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Kim Johnson ReportingYou can't start saving for your child's college education too soon. Experts estimate that four years of college at a public university or college costs an average of 34-thousand dollars. By the year 2023, that same education is expected to cost 80-thousand.
There are a number of ways you can save, but you might want to look at what Utah's non-profit education savings plan has to offer.
Russ and Gretchen Buhler want to help their two sons get a college education someday.
Gretchen Buhler: "We wanted to put something away for the kids but we really didn't know how to do it. We'd been doing our own retirement starting that, but we didn't have anything set for the kids for college."
The Buhler's say they took the advice of friends and decided to open accounts with the Utah Education Savings plan.
Russ Buhler: "There's no minimum. I can put away a dollar if I'd like and there's no maximum. It's not like I'm locked into some contract where I have to do it. Because we're just a normal family sometimes things get tight."
Under the plan, earnings on money invested are free of federal and state taxes. And Utah residents contributing to the plan can also claim a state income tax deduction of up to three thousand twenty dollars per child.
While there is always inherent risk in investing, the UESP continues to garner national recognition.
Lynne Ward: "Morningstar investors recently ranked Utah Education Savings plan as one of the top three direct sold plans in the nation. Two reasons: One, our fees are relatively low compared to other programs; and secondly, we are mostly invested in vanguard mutual funds which are highly regarded."
And regard for Utah's 529 plan is apparent when you look at a breakdown of investors. Interestingly enough, three quarters of them are from out of state. Of the roughly 28-thousand investors only 7-thousand are Utah residents. Lynne Ward hopes more Utahns will consider saving with the UESP.
Lynne Ward: "Most other states have 529 programs, and some have more than one, and you can invest in any of those programs, but if you're a Utah resident you ought to invest in Utah's program because then you can get the Utah state income tax deduction."
Money invested can be used at colleges and universities both in and out of state, as long it's used for tuition, books, room and board, and education related equipment.
Lynne Ward: "There is a federal tax penalty of ten percent that you have to pay if you don't use the money for qualified educational expenditures. If the child wants to use the money for a car, for example, there is a penalty, also the gains are taxable."
But Russ Buhler will take his chances that his sons will choose to further educations in the future because of what he's doing today.
Russ Buhler: "It makes it a lot easier when you have more education, and to help with that takes a lot off my mind." Since it became available in 1996, investors have entrusted more than one billion dollars to the UESP.
For more information, call 1-800-418-2551 or visit www.uesp.org.