College tuition continues to increase at about twice the general inflation rate. On average, tuition tends to increase about 8 percent per year. This means that for a baby born today, college costs may be more than three times current rates when the child begins college.
With tuition rates rising at such a rapid pace, college planning is crucial. It’s ideal to start the college investment process when your child is young, but it’s never too late to start taking advantage of college savings plans.
The Tax Cuts and Jobs Act, signed into law December 2017, expanded the 529 savings plan to include expenses for private, public, and religious education from kindergarten through 12th grade. Beginning in 2018, parents can withdraw up to $10,000 tax-free from a 529 plan to pay for enrollment at an elementary or secondary public, private, or religious school. Learn more about reducing your child’s Kiddie Tax burden under the new law.