Saving for College in Alaska With the Alaska 529 Plan

College is one of the largest expenses many families face. Tuition, fees, housing and travel, which can be significant for Alaska students attending school out of state, add up quickly. Starting a dedicated savings plan early gives your money more time to grow.

Alaska families have a state-sponsored option designed for this goal: the Alaska 529 plan, administered through the University of Alaska. Understanding how it works can help you add college savings to your wealth plan.

How the Alaska 529 plan works

A 529 plan is an investment account designed for education expenses. Contributions are invested, often in age-based portfolios that become more conservative as your child gets closer to college. Earnings grow free of federal income tax, and withdrawals are tax-free when used for qualified expenses such as tuition, fees, books and certain housing costs.

Because Alaska has no state income tax, there is no state tax deduction to consider, so comparing investment options and fees is especially important. Funds can generally be used at eligible colleges, universities and trade schools across the country.

Directing even part of each year's PFD into college savings can add up to a meaningful sum.

Using your PFD and other tips

One unique advantage for Alaska families is the ability to direct part or all of a child's Permanent Fund Dividend into an Alaska 529 account when applying for the dividend. Doing this every year, starting when a child is young, can build a meaningful college fund with very little effort.

Add automatic monthly contributions when your budget allows, and invite grandparents and relatives to contribute for birthdays and holidays. Scholarships and in-state tuition at University of Alaska campuses can also reduce the total cost.

Most importantly, balance college savings with your own retirement. Students can borrow for school, but there are no loans for retirement, so a balanced plan keeps both goals moving forward.

The advisors at Wealth Success Zone help Alaska families build college savings into a plan for lasting success. Contact us for a free wealth review.