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Does Your State Give Newborns a College Savings Account?

Various educational initiatives across the country may benefit forward-thinking parents who want their sons and daughters to attend college in the future. Some states give newborn babies a college savings account that helps their mothers and fathers put aside money for future tuition needs and other college-related expenses. If you live in one of the following states, you should investigate the options available to you as soon as possible during your family-planning discussions.

What Is a College Savings Account?

Different states approach the college money question in different ways. Some give an actual savings account with a set amount of money in it earmarked for educational purposes only. The most common way of doing this is by opening a 529 College Savings Plan account for each newborn resident. These qualified tuition plans are either ways to save and grow money for school expenses or prepaid tuition plans. Either way, they offer tax benefits for parents and children who want to save specifically for future academic expenses.

What States Give Funding Help for College?

All of them except Wyoming. Forty-nine states and the District of Columbia offer college savings accounts. However, these only represent the opportunity to take part in a 529 plan. They are not given automatically to newborns. Interestingly enough, some states that offer them do not have the expected number of sign-ups either.

States that give college saving plans, educational grants, or other school-related money to newborns include California, Colorado, Connecticut, Maine, Nevada, New Jersey, New York, Oklahoma, Pennsylvania, Rhode Island, Utah, and more. It is important for parents to research their own states rule's and offers before they bring a new bundle of joy into the world.

Do College Savings Accounts Help?

Yes. First of all, if the state gives you money for future educational needs, it is free money you do not have to save up yourself. Since these funds are given to newborns, the amount may grow considerably with eighteen years of interest adding up. Secondly, research shows that people who receive early money focused on college attendance have a higher chance of getting there and taking advantage of the opportunity. The state-funded gift encourages both additional savings and educational dreams.

College savings accounts make a big difference in a child's ability to attend the university of their choice when they get older and graduate from high school. If you live in one of these helpful states that provides these unique accounts to newborns, it makes sense to sign up as soon as you can. Eighteen years down the road, your children will thank you for it.