18,000 College SAVE accounts and climbing!
North Dakota residents are saving $2 million per month for college through College SAVE accounts. That’s a great deal of progress over the $575,000 in savings per month from five years ago. There are also more College SAVE accounts. In 2011, there were only 5,300 accounts in the state. Today, that number has grown to over 18,000 accounts.
Many residents have also benefited from the state’s two grant programs offered through Bank of North Dakota, North Dakota Matching Grant and Children FIRST. Nearly 8,000 grants and more than $2 million have been awarded to North Dakota residents for their College SAVE accounts.
The potential for College SAVE growth is high. North Dakota has 52,302 households with children under the age of 18. Of these, one in seven is currently saving through College SAVE, the only program offering North Dakota residents grant opportunities to increase a college savings account by as much as $1,100.
If a family receives the Children FIRST grant and all three years of ND Matching Grants during the first three years of a child’s life, the $1,100 in grants and the family’s own contributions of $1,100 will grow to $5,091 by age 18. This assumes a five percent average rate of return and no additional contributions to the College SAVE account. The family could grow the balance to nearly $12,000 if they contribute $25 a month between ages four and 18.
College SAVE is administered by Bank of North Dakota, the only state-owned bank in the country. Bank of North Dakota is committed to helping the state’s residents achieve their higher education goals.
To promote the growth of education opportunities for young North Dakota residents, College SAVE and Bank of North Dakota recognize May 29 as National 529 Day.
National 529 Day
Recognizing May 29 as 529 Day allows for a special opportunity to increase awareness about saving for college.
In North Dakota, 529 Day is a month-long celebration, culminating in early June. In May, North Dakota residents may register to receive one of five $529 scholarships to either start or be added to a College SAVE account. To register, visit collegesave4u.com.
On June 3, Bank of North Dakota will sponsor 529 Day at the Sertoma Superslide Amusement Park from noon-5 p.m. This event is free of charge and open to the community.
The College SAVE advantages
College SAVE is a 529 plan that allows earnings to grow federal and state tax-free as long as they are used for qualified higher education expenses at private or public colleges and universities, in-state or out-of-state. The name 529 comes from the section of IRS code which created the plan.
North Dakota taxpayers can deduct up to $5,000 ($10,000 if married, filing jointly) from their North Dakota state taxable income for their College SAVE contributions.* Contributors do not have to be the account owner to take advantage of this tax deduction.
The federal annual gift tax exclusion is $14,000 if filing single ($28,000 if married, filing jointly). Contributors may make up to a $70,000 ($140,000 if married, filing jointly) contribution, free of the gift tax if they elect to take that amount into account proportionately over five years.
Free money through grant programs
The state of North Dakota is committed to assisting families plan for the college expenses of their children. The state’s two grant programs have helped many residents increase their college savings accounts.
Children FIRST: Every North Dakota newborn receives $200 in an account if the account is opened by the child’s first birthday and the $200 is matched with contributions.
Matching Grant Program: The North Dakota Matching Grant Program gives up to $300 for residents earning less than $80,000 annually ($120,000 if married, filing jointly) for one year. A child can receive up to two more contributions of $300 per year for two consecutive years if the account holder earns less than $60,000 ($80,000 if married, filing jointly). Four out of five North Dakota families qualify for the first year of matching grants.
Low account starting costs
North Dakota residents can open an account for as little as $25. To receive the grants, contributions to match the grant amount must be made in the specified time.
*Rollovers from another state’s 529 plan are not considered eligible for the state income tax deduction.