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529s Promote a ‘Culture of Saving’

February 19, 2015

Next week, the House of Representatives will take up Rep. Lynn Jenkins’s (R-KS) bill to strengthen and expand the use of 529 college savings plans. And two recent articles make a key point in their favor: 529s promote what one writer calls “a culture of saving.”

In The Week, Michael Brendan Dougherty uses an example from his own life to illustrate the benefits of 529s. When he was in high school, he says, “my college dreams were completely dependent on receiving Pell grants, a generous financial package, a generous scholarship, and student loans, which I, as a financially illiterate 18-year-old, did not understand.”

But now, thanks to 529s, Dougherty argues the next generation will have more control over their future:

Opening up a 529 account for my recently born daughter would be one of the primary experiences of upward mobility for me. Perhaps she wouldn’t have to be so dependent on the generosity of institutions, or on public money. Or at least she wouldn’t face student loan debt. This is an attitude of paying it forward.

Susan Tompor in the Detroit Free Press, meanwhile, runs some numbers to show how saving helps families get ahead. For instance, theaverage cost of attending a public university for in-state students—for one year alone—was over $18,000 last year. Tompor adds:

But having $18,000 in a 529 to cover some bills means fewer student loans. Assuming a 10-year repayment term, $18,000 in loans would require total payments of $22,000 to $28,000, depending on the interest rate, said Mark Kantrowitz, a college debt expert and senior vice president and publisher for

So, in short, 529s are right both on the policy and on the principle. Promoting a culture of saving is one and the same as promoting a culture of upward mobility.