The cost of college just keeps climbing, so it’s never too early to start planning for how you will pay for it.

And if you think your highly gifted student athlete or academic prodigy will win a full ride so you don’t have to save, you should know that the odds are not in your favor. Sure, there is a lot of private and school-funded aid, but it’s stretched among so many students that it’s not enough for most families.

The 2019-2020 Free Application for Federal Student Aid (FAFSA) is now available, allowing students and their parents to fill out the form they hope will lead to money to pay for college. But in most cases, the aid won’t come close to covering the cost of four years of tuition, fees, room and board.

While it’s definitely still worth it to submit the FAFSA form, families have to do more. They’ve got to save if they want to eliminate or greatly reduce reliance on student loans.

Just take in this number: $1.53 trillion dollars.

That’s how much there was in outstanding student loans for the second quarter of 2018, according to the Federal Reserve. Compare this with the $487 billion in student debt during the same period in 2006.

So, if you’re financially able, filling the gap between federal need-based aid and scholarships will have to come from savings. And one way to do this is to put money in a 529 college-savings plan.

Under a 529, earnings are not subject to federal tax – and generally state tax – if they are used for such qualified education expenses as tuition, fees, books, and room and board.

More families are saving in 529 plans. Two years ago, the most popular way to save for college was a regular savings account, according to a survey by T. Rowe Price. Now 44 percent of parents surveyed by the financial company said they are using a 529 account in 2018, moving it to the top way to save for college. Total investments in this savings vehicle reached a record $328.9 billion in the first six months of 2018, according to the nonprofit College Savings Plans Network (CSPN). The average account balance hit a high of $24,153.

Back in 1999, Joseph Hurley was working as a tax CPA in Rochester, New York. The law authorizing 529 plans was just a few years old. Hurley and his wife, Ginny, opened 529 accounts in 34 states for their two children. It was their way of researching how they worked. Their research led to a web site – savingforcollege.com – and a self-published book about the plans. The 12th edition of the book is now out.

For this month’s Color of Money Book Club, I’m recommending “Savingforcollege.com’s Complete Guide to 529 Plans” by Hurley, Kathyrn Flynn and Matthew Toner.

At the start, the authors make an excellent case for why a 529 plan makes sense. Here’s why:

• Everyone can participate without regard to age or income.

• Account holders can accumulate a great deal of money in the account – hundreds of thousands of dollars depending on state limits.

• Parents don’t give up control of the money.

• Many states offer tax deductions for contributions to a 529.

• As of 2018, the Tax Cuts and Jobs Act allows up to $10,000 in annual qualified expenses for tuition at an elementary or secondary public, private, or religious school.

“No other tax-advantaged program provides the combination of benefits 529 plans offer,” the authors write.

You don’t have to read this book straight through. Pick you points of interest. For example, if you have a disabled child, you definitely need to read the chapter on 529 ABLE accounts. In order to qualify for public assistance, families couldn’t save much money. But the Achieving a Better Life Experience (ABLE) Act of 2014 allowed states to create a tax-advantaged savings program for eligible people with disabilities.

There are so many myths about 529 plans, and the authors debunk them throughout the book: No, your child is not limited to an in-state school; and, no, money in a 529 plan does not significantly impact eligibility for federal financial aid.

It’s not a question of whether you need to save for your child’s college education, it’s how. Invest some time in learning how a 529 plan works.

I’m hosting an online discussion about 529 plans at noon Eastern time on Oct. 25. My guest will be Mark Kantrowitz, publisher and vice president for Savingforcollege.com.

Michelle Singletary is a columnist for The Washington Post. Readers may contact her at:

michelle.singletary@washpost.com

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