State Treasurer Michael Fitzgerald has joined other state treasurers around the country in approving a resolution on minimizing student debt for the next generation. “One of the most important parts of my job is making sure families are financially prepared for education costs,” said Fitzgerald. “This bi-partisan resolution highlights the importance of 529 college savings plans as one solution to the student loan debt crisis.” As administrator of Iowa’s 529 plans, Treasurer Fitzgerald has been working for more than 20 years to help individuals achieve their education dreams while also limiting their need to borrow.
With the national student loan debt at $1.5 trillion, the group of state treasurers believes current approaches to the crisis focus too often on existing debt versus how to prevent it. The resolution calls out 529 plans as an underutilized tool that make saving for higher education attainable for families of various means. Only 35% of Americans have heard of a 529 college savings plan according to a study released in May by College Savings Plan Network (CSPN). The National Association of State Treasurers and CSPN aim to change that by bringing more awareness to the plans.
“Since the launch of College Savings Iowa in 1998, my goal has always been to educate and help families learn about the benefits of saving with 529 plans,” said Fitzgerald. “With this increased push on a national scale, I know we can encourage more families and friends to open 529 accounts for their loved ones and reduce the need to borrow in future generations.” The College Savings Iowa 529 plan is an investment account used to save for qualified education expenses, and just about anybody over 18 - parents, grandparents, relatives and friends – can open an account for a child or themselves.
“College Savings Iowa has been helping families achieve their education and career dreams for more than two decades,” added Fitzgerald. “It’s easy to open your own account and never too early to get started.”
Funds from a College Savings Iowa account can be used at any higher education program in the nation and the earnings and growth are tax-free when withdrawn and used for qualified educational expenses like tuition, room, board, books, supplies and more.* For account owners, Iowa taxpayers contributing to College Savings Iowa can deduct up to $3,439 per account from their state taxable income in 2020.**
Treasurer Fitzgerald launched the program in 1998 and under his management it has grown to more than $5.5 billion in assets and more than $3.2 billion used for qualified educational expenses. The plan has over 254,000 active accounts with an average size of $20,659.
To learn more about College Savings Iowa, call (888) 672-9116 or visit CollegeSavingsIowa.com. For more information about the plan and future events, find College Savings Iowa on Facebook and Twitter.
*Earnings on nonqualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.
**Adjusted annually for inflation. If withdrawals are not qualified, the deductions must be added back to Iowa taxable income.