Paying for college is one of the biggest financial goals many families face, and it is a goal with a fixed deadline. Tuition, fees, housing and books add up quickly, and student loans can follow graduates for years. Starting early gives your savings the time it needs to grow.
New Jersey families have a state-sponsored option designed for exactly this purpose: NJBEST, the New Jersey 529 college savings plan. Understanding how it works can help you build college savings into your overall plan for the future.
How NJBEST works
NJBEST is an investment account for education expenses. Your contributions are invested in your choice of portfolios, including age-based options that become more conservative as your child gets closer to college. Earnings grow free of federal and New Jersey income tax, and withdrawals are tax-free when used for qualified expenses such as tuition, fees, books and certain housing costs.
New Jersey taxpayers with household income under a set threshold may also deduct contributions on their state income tax return, up to an annual limit. In addition, NJBEST account balances are generally not counted when New Jersey determines eligibility for state-funded student aid, which can make saving even more worthwhile.
Every dollar saved for college today is a dollar your child will not have to borrow tomorrow.
The NJBEST Scholarship and practical tips
Families who save in NJBEST over time may qualify for the NJBEST Scholarship, a one-time award for students who attend an eligible New Jersey college or university. The amount depends on how long the account has been open and how much has been contributed, so starting early can increase the benefit.
Automate a monthly contribution, even a small one, and raise it as your income grows. Invite grandparents and relatives to contribute for birthdays and holidays, and look into New Jersey Tuition Aid Grants and other scholarships that can lower the total cost.
Most importantly, keep your own retirement on track. Students can borrow for school, but there are no loans for retirement, so a balanced plan keeps both goals moving forward together.
The advisors at Finance Future Zone help New Jersey families build college savings into a clear plan for the future. Contact us for a free future planning review.
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