# Five Reasons to Start Saving Early for Higher Education
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-03-22
Category: LIFESTYLE
Category URL: https://financedigest.com/category/lifestyle
Meta Title: 5 Reasons to Open a 529 College Savings Account Early
Meta Description: Discover why opening a 529 college savings account early can lead to more growth, tax benefits, easy setup, family contributions, and peace of mind.
URL: https://financedigest.com/five-reasons-to-start-saving-early-for-higher-educationhtml

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_By_ **_Patricia Roberts_** _, Chief Operating Officer at_ [_Gift of College, Inc.,_](http://giftofcollege.com/)

One of the most substantial financial challenges that parents will face is preparing for their children’s higher education expenses and for that reason, opening a 529 college savings account before a child arrives or soon thereafter is something parents or grandparents may look back on with appreciation for years to come. Since the beneficiary on a 529 account can be changed at any time to a member of the family of the original beneficiary without tax consequences, a parent or other relative can open an account, name themselves as both account owner and beneficiary and then, change the beneficiary once the child arrives and has a social security number.

There are many reasons to start saving early. Here are five of the primary ones:

**1\. The power of compounding**

The earlier parents or others can [open a college savings account for a child’s future](https://www.financedigest.com/the-future-of-open-finance.html "The Future of Open Finance"), the more time there will be for contributions to compound and grow.

**2\. Valuable tax benefits**

Unlike taxable investments, earnings on [529 accounts are not taxed as they grow in value](https://www.financedigest.com/iris-acquisition-enables-accountants-to-add-greater-value-to-their-clients.html "IRIS acquisition enables accountants to add greater value to their clients") and are never taxed when withdrawn to pay for a wide range of higher education expenses (well beyond traditional college). Also, 35 states and the District of Columbia offer an annual [tax deduction or credit for contributions to 529 college savings plan accounts](https://www.financedigest.com/uk-drops-plan-to-tax-sovereign-wealth-funds.html "UK drops plan to tax sovereign wealth funds").

**3\. Easy to get started**

It takes very little time and [money to begin saving](https://www.financedigest.com/how-to-save-money-on-business-tripsabroad.html "How to save money on business trips abroad") for post-secondary education. Many 529 accounts can be opened with $25 (or even less) and often in under 15 minutes. Investors can open a 529 account directly with a state 529 [plan or can open an account with the support of a financial](https://www.financedigest.com/best-guide-to-build-a-personal-financial-plan.html "Best Guide to Build a Personal Financial Plan") professional if they have one. While initial minimum contributions are low, [investors can accumulate over $400,000 per beneficiary in many plans](https://www.financedigest.com/german-investor-kuehne-does-not-plan-to-further-boost-lufthansa-stake-faz.html "German investor Kuehne does not plan to further boost Lufthansa stake – FAZ").

**4\. [Friends and family](https://www.financedigest.com/generation-y-relying-on-friends-and-family-to-pay-their-energy-bills.html "Generation Y relying on friends and family to pay their energy bills") can begin to contribute**

As soon as a 529 college [savings account](https://www.financedigest.com/wyelands-bank-launches-market-leading-savings-account-to-support-trade-industrial-growth-and-job-creation.html "Wyelands Bank launches market-leading savings account to support trade, industrial growth and job creation") is opened, parents can begin inviting others to contribute for upcoming celebrations rather than giving gifts that are quickly outgrown in size or usefulness. Most 529 [plans have easy-to-use gifting tools that enable invitations to be sent by account](https://www.financedigest.com/about-mgo-llp.html "Fast growing Accounting Firm Relies on Budget Maestro for Strategic Financial Planning") owners to those who may be interested in contributing. Creating a circle of support for a child’s education is a great tradition to begin. After all, between birth and college, friends and [family will have 18 birthdays and at least 18 holidays](https://www.financedigest.com/adventurous-families-choose-the-uk-for-holidays-and-investments-as-brexit-approaches.html "Adventurous families choose the UK for holidays AND investments as Brexit approaches") (if you count only one per year) when they will likely want to give a gift to the child — and these amounts can add up over time.

**5\. Peace of Mind**

New parents understandably have a lot else on their minds and on their plates, establishing a 529 account early in their child’s life for future education can create peace of mind about what may likely be one of their [most significant investments](https://www.businessinsider.com/personal-finance/most-expensive-things-americans-will-pay-for-2019-8) as a family. Any amount [saved will be that much less that a child will need](https://www.financedigest.com/how-much-do-i-need-to-save-for-retirement.html "How much do I need to save for retirement?") to borrow and repay with interest.

_By way of background, as a financial services professional and expert in [preparing for post-secondary educational](https://www.financedigest.com/1-in-3-adults-dont-believe-school-education-prepared-them-for-adult-life.html "1 in 3 adults don’t believe school education prepared them for adult life") expenses, I have helped tens of thousands of parents avoid millions of dollars in student loan debt over the past 24 years. I have also helped a growing number of employers offer 529 benefits and tax-free [student loan](https://www.financedigest.com/student-loans-hurting-workers-ability-to-save-for-retirement.html "STUDENT LOANS HURTING WORKERS’ ABILITY TO SAVE FOR RETIREMENT") assistance to alleviate the stress that employees often feel with respect to higher education costs._

**_About Author:_**

_I am Chief Operating Officer at_ [_Gift of College, Inc.,_](http://giftofcollege.com/) _author of_ [_Route 529: A Parents Guide to Saving for College and Career Training with 529 Plans_](https://www.amazon.com/dp/B08L2L8HYH) _, and the proud mom of a son who graduated debt-free from college in June 2021 as a result of my beginning to save when he was an infant. I’m on a mission to educate others about the [value of planning](https://www.financedigest.com/funeral-plan-investments-four-times-better-value-than-a-cash-isa.html "Funeral plan investments FOUR TIMES better value than a cash ISA") ahead.  My expertise has been featured in various publications including_

_Forbes_ _,_ _Parents_ _, and many others, on_ [_CNBC_](https://www.cnbc.com/2021/05/26/savvy-mom-leveraged-529-plans-to-give-son-debt-free-college-education.html) _,_ [_ABC-7 NY_](https://abc7ny.com/college-savings-how-to-save-for-tips-529-plan/10752387/) _, the_ _LIST TV_ _and podcasts like_ [_SO Money_](https://podcast.farnoosh.tv/episode/patricia-roberts/) _. Here is a link to my_ _LinkedIn profile_ _._


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