BOISE, Idaho — It's never too early to prepare for college and all the costs that come with higher education. For those in Idaho, you can start now through IDeal--the Idaho 529 plan.
IDeal is the state's tax-advantaged 529 savings plan designed to help people easily save for college in an affordable way. It's named after Section 529 of the Internal Revenue Code, which created these types of savings plans in 1996. It takes just $25 to open and start an IDeal account with a generous state tax deduction available for annual contributions.
Anyone is welcome to use a 529 account as there are no income or age limits for beneficiaries. Withdrawals can be used for K-12 tuition (up to $10,000 per year, per student) or tuition, certain room and board costs, mandatory fees, books and supplies, and computer software and Internet access for higher education. You can choose from three investment options: age-based portfolios, fixed asset allocation portfolios, and a savings portfolio.
Planning now can help avoid student loan debt in the future. The Institute for College Access and Success reports that in Idaho, 62% of 2018 graduates left school with an average debt of $27,600, putting the state 31st in the nation for average student loan debt. State funding for higher education has changed over the last several decades. According to the Idaho State Board of Education, families in the 1970s paid seven percent of the total tuition cost at an Idaho college and university compared to today's 47%.
It's not just parents thinking about future costs--saving for college is becoming a family affair. Gifting to college savings accounts continues to increase each year. To date, over $2.5 million has been contributed through gifting this calendar year, an 11% increase over last year so far. There's also been an 81% increase in gifting in the last three years. Idahoans have opened and contributed to IDeal 529 accounts in record numbers with over $75 million in contributions through December 2019.
IDeal accounts help provide opportunities for more Idaho students to continue onto higher education, a top priority for the state, its economy and its future. IDeal accounts help address factors that may discourage students from seeking higher education: by offering a financial advantage and creating a culture that sets up expections.
Setting up a 529 account is easy and can be done for any loved one. You are able to contribute at any time and you get an Idaho tax deduction. If a student already has an IDeal account or if parents want to be the account owner, they can share a gifting code through an online portal while you still get the deduction.
Plans can be used for anyone with a Social Security Number (SSN) or Taxpayer Identification Number (TIN), including adults who may be saving for their own education. Withdrawals can also be used for post-high school programs accredited by the U.S. Department of Education or Labor Department, including certificate, trade or career and technical schools, registered apprenticeships, 2-year, 4-year, and graduate programs. As of December 2019, funds can also be used to repay student loans, with a lifetime max of $10,000 for each beneficiary.
While it's never too late to start an account, Tuesday, December 31 marks a tax deduction deadline to open and contribute to an IDeal account to qualify for the 2019 state tax deduction. To learn more about starting an account, click here.