Article for magazine aimed at teens that was part of the work we did for the

nonprofit College Foundation of North Carolina

529—The Three Numbers that Mean College Savings

Do you know what your parents are doing to save for college? You need
to. The cost of school is skyrocketing, and a lot of students are graduating
with mountains of debt. Even if you qualify for financial aid, a lot of times it
doesn’t cover everything. And you want to make sure you can go to a
school you like!

One of the big ways parents save for college is with a 529 plan—you may
have heard of these. They’re basically a place to stash money for college
without getting taxed on the profits, and they’re great because the money
can grow a lot faster (yes, it grows!) than with a savings account. So you’re
going to want to ask your parents, do you guys have a 529 plan?

North Carolina has a really good one called NC 529, it gives extra state tax
breaks to residents so they can save even more money. If your family
already has a 529 or other savings plan started, they can roll that money
into an NC 529 free of charge and keep more of their cash. And if they
don’t have an NC 529 already set up for you, tell them you want one! Here
are some of the reasons you’re going to want to do that.

It’s super easy

Parents can just sign up online, it only takes a few minutes, and they can
start with only $25. There’s an autodraft option so no one has to remember
to contribute, and they’ll get regular statements telling them how much is in
there. You guys can pick the investments you want (higher returns, or
lower risk), or just get one based on your age that adjusts automatically.

Anyone can contribute

Got an aunt who always gives you ugly sweaters for Christmas? Tell her
you’ve got a college fund and you’d love a contribution to that instead.
Your grandparents can show their love by making sure you don’t have a
bunch of student loans when you graduate, and they’ll avoid gift and estate
taxes. You can even put summer job money in there—after you’ve spent
some of it on fun stuff, of course! All anyone needs to contribute is your
account number, and the money doesn’t count against your financial aid
like regular savings accounts do.

It’s a laptop and taco fund, too

Paying for college is more than just tuition. Even if you get financial aid or
have a college savings plan, a lot of times it won’t pay for stuff like housing,
food, and the other things you need—like a sweet new computer. The NC
529 plan lets you use your money for all that, and you can put a lot in
there—up to $420,000—to cover those expenses you didn’t even realize
you’d have. And if you wind up not needing all the money as an undergrad,
use it for grad school, transfer it to a little brother or sister for their college,
or pay a small penalty and cash it in. Having extra money when you
graduate can give you some breathing room while you look for that first job.

A little money can become a lot

The money in your NC 529 gets invested into high quality stocks and
bonds—just like in your parents’ retirement funds. That means the power of
the market works for you, helping your money make you money. On top of
that, the profits your fund earns are reinvested back in, so your growth gets
supercharged through compound interest (look it up). It may sound like
magic, but it’s not—it’s just a time-honored way to save for the big things in
life. What it means for you is that your college money can grow way faster
than in a savings account, so the rising cost of college won’t be such an
issue down the line.

With the NC 529 plan, you can go to school anywhere—out of state, in a

foreign country, to a public or private university—and the money you save
can be used for almost any college expense you’ll have. Your family will
save on taxes, and you won’t have to worry that aid won’t cover you, or that
you’ll have to go to lesser school to make ends meet. Now, who doesn’t
want to make it easier for their parents to give them money?