529 Savings Account Plans Hand Out Cash Tips to Help Tip the Scales in Their Favor

The recession hasn't been kind to the 529 savings account plans that many states offer. So now, here they are, trying to inject some fresh appeal into the whole idea. And they have a pretty great crowdpleaser of an idea too - it's free money. They are hoping that if they dangle enough money before families, they will tempt to enough of them to start investing with the state. And it'll be a great way for the state to come by a little extra cash.

So are they offering generous bonuses? Of course not - the states are cash-strapped. Still, in the state of Virginia, if you are a student who qualifies (with enough grades and finances), you get to put your hands on a $2000 bonus when you are ready for college. If you are a parent and you start your child's 529 savings account before his first birthday, you get an extra hundred dollars. It's the same in lots of states - Oregon, Rhode Island and others. These plans are doing so well attracting new families to the 529 fold that states all over the country are jumping in. In fact, the federal government is trying to bring in laws that make 529 plans a lot more worthwhile for everyone.

The states have other sources of motivation for doing this of course. For instance, states like Oregon have had quite a bit of bad publicity to do with how they lost a lot of their value in the stock market crash two years ago. They know that people don't really want invest with them anymore. A little $2000 tip, they hope, will tip the scales in their favor again. These are a great way too by which states can hope to clean up on the administrative fees they get to charge and also the money that's left over after they pay out whatever a college course needs for any given student. But apart from these reasons, the hope that 520 plans have a larger effect on the health of the state itself. They hope that students who graduate with the help of a 529 savings account will embark on life with less student debt. That will mean more money for better education and a better life. And that overall, contributes to the health of the state, they feel.

So should you bite when your state offers a plan like this? This certainly is a good time to get started thinking about a 529 savings account for your child. The markets look better each day, and there are many states that even offer savings account options. The administrative fees have dropped by about 10% too. In the end, you probably should pay attention to a little statistic when deciding on opening a 529 savings account for your child. Studies show that families that have 529 plan somehow end up saving a lot more for college didn't families that don't.