So, is college the right choice? There are plenty of factors to consider.
It depends on what people want to do with their lives, especially in the science, technology, engineering, and math fields, can translate to a higher salary.
Even though it may cost a lot, CBS Money Editor Aimee Picchi said getting a degree is generally a pretty good investment.
“Overall, research after research shows that college is the best way to a solid financial future,” said Picchi. “The typical grad, for instance, between 25 years old to 64, earns about $127,000 a year.”
Picchi added that those who don’t have a college degree earn about $61,000 a year.
“But that’s you know, you’re going to earn possibly twice as much if you have a college degree,” she said. “This is probably your biggest investment aside from buying a house.”
Students are encouraged to weigh the financial outcomes when choosing majors.
But, in case you missed it last week, there’s an alternative route for parents to save without taxes.
The route is known as a 529 college savings plan.
Every state offers the plan and they’re usually protected from federal and state taxes.
Fees and expenses can vary widely, so it’s important to read the fine print.
No matter the state, there’s no tax due when students use money for qualified education expenses.
Additionally, last year’s Secure Act 2.0 made it possible for unused 529 funds to be transferred to a Roth IRA account, without any taxes or penalties.
The new rule takes effect in 2024 and there are some basic requirements to know:
- the 529 account must have existed for at least 15 years
- you can only transfer a lifetime maximum of $35,000
- transfers are subject to annual Roth IRA contribution limits
