Energy costs are up. Inflation is at 40-year highs. Interest rates are on the rise. And yet, there has never been a better time for Alaskans to start saving for higher education, because there is never a better time to start than now. That’s right — despite all the grim economic news, Alaskans can and should take steps now to set aside money for college, trade school, vocational training, or whatever postsecondary education is desired.
Research shows that even relatively modest investments in a young person’s education savings can increase their chances of pursuing higher education and graduating. In fact, children with $500 or more saved for college are three times more likely to enroll, and four times more likely to graduate. That trend is proved out in the data for low- to moderate-income children, too. Every dollar counts, and even a small amount saved creates expectations that can help launch someone into a college career.
Despite those encouraging statistics, far too many families are delaying and not saving, or not saving nearly enough. A “2019 College Savings: Lessons Learned” study showed that 42% of parents wished they had started saving for college earlier, and 22% wished they had researched more options. Here in Alaska, where every resident receives a Permanent Fund dividend, only about 2% of applicants choose to automatically invest part or all the annual windfall for future education expenses. This is a huge, missed opportunity.
In Anchorage, more than 70% of business owners surveyed reported that availability of a skilled workforce was a top barrier to business growth, according to Anchorage Economic Development Corp.’s 2021 Business Confidence Index. Alaska employers need to cultivate the next generation of leaders, and they are actively looking for recent graduates of applicable programs who fit those roles. Education has always been a smart investment in a child’s future, but right now, thanks to Alaska 529, the return on investment, as it relates to future employment, is a particularly good bet. I invite employers to participate in a solution to workforce shortages by offering Alaska 529′s payroll direct deposit program as an employee benefit.
Alaska 529 offers two of the most generous education savings incentive programs in the country. Launched just recently, the Dash to Save and Dash to Save More programs offer unique benefits not found elsewhere in the U.S. Specifically, the first 5,000 qualifying new Alaska 529 accounts opened this year with a minimum investment of $25 will be gifted an additional $250. Alaska 529 will also pitch in up to $100 annually to accounts with automatic monthly contributions and/or payroll direct deposits. This adds up to $350 in possible benefits, which quickly gets Alaskans close to that magical $500 threshold that research shows make a measurable difference in encouraging students to attend and graduate from college.
Alaska 529 accounts grow in a tax-advantaged environment, and offer convenient, age-based investment options, where portfolios become more conservative as a child approaches post-secondary education. Static investment options (that keep the same allocation over time), are also available, including the UA Portfolio that offers a tuition value guarantee if used at the University of Alaska.
When is the right time to start saving? Whether your student is an infant or a teen, the best time to start saving for future education is right now. Alaska 529 offers unique and generous benefits that can help families build their accounts and inspire young people to pursue education after high school, earn a higher standard of living, and build Alaska’s future.
The bottom line is, it’s always better late than never, a little goes a long way, and something is better than nothing. We owe it to the next generation to get started now.
Lael Oldmixon is the program director for Alaska 529 and UA Scholars.