The state’s CollegeAdvantage program has a total of $9.1 billion in assets. With 640,000 accounts, the average amount of the tax-advantaged investment accounts is about $14,000. The average account size nationally was $20,671 midway through 2014, according to the College Savings Plans Network.
The net total of Ohio accounts is growing by about $250 million a year, according to Paul Paeglis, executive director of the Ohio Tuition Trust Authority, the state agency that manages CollegeAdvantage plans.
“Having something saved at all is a benefit to not saving,” Paeglis said. “It takes a lot less to save in advance and watch it grow than it does to borrow it and pay it back with interest in the future.”
Not all families can afford to save in advance, but Paeglis said, “Every little bit helps. Four-thousand dollars saved over a number of years will help, even if it just pays for books or half of a semester.”
The trust authority offers two primary plans, similar to 401K savings plans. The Direct Plan — a “do it yourself” option — is managed by Paeglis’ group. It has about 250,000 account-holders with $4 billion in assets.
The Advisor Plan is managed by BlackRock and can be purchased through a financial advisor. It has about 350,000 accounts and $4.7 billion in assets.
Each offers tax-saving benefits, but consumers are encouraged to explore each plan thoroughly to determine whether such an investment would work best for them.
Nationwide, there are nearly 12 million 529 accounts worth about $250 billion, according to the College Savings Plans Network. In the past 10 years, total assets have nearly quadrupled from $64.7 billion.
State Sen. Shannon Jones, R-Springboro, wants to give Ohioans a bigger tax break if they save more for education. A bill she introduced last November would increase the maximum income tax deduction for college savings contributions to as much as $10,000. Currently, the highest deduction for state taxpayers is $2,000 per beneficiary.
“Too many kids are taking on too much debt in order to afford higher education,” she said. “While there’s no one solution to the problem, this is one that could immediately pay dividends.”
Jones’ bill, which she plans to re-introduce next year, would bring Ohio in line with neighboring states. Pennsylvania allows deductions of up to $12,000. For joint income tax filers, Michigan allows $10,000 and Illinois allows $20,000.
“I’m hopeful that as we head into budget discussions next year that this is a primary piece of that,” she said.
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