As If Saving for College Didn’t Seem Daunting Enough…

Things I found really, really silly this weekend: This doomsday-sounding article from CNBC titled “529 Plans Won’t Cover the Cost Anymore.”

Quick synopsis: 529 plans (like investment vehicles everywhere and, say, the global economy) have performed poorly. College is expensive. But, unless you’re really lucky/rich, they weren’t supposed to fund an entire education anyway. Wait, some 529s offer age-based options and they certainly get you in the habit of saving for college. And, in any economy, you should be looking for scholarships and grants too.

Since this is a blog and not a policy paper, I can say the following:

Umm, duh?

Perhaps this is another case of headlines gone horribly awry, but I feel like the premise of the article is not only odd, but dangerous. Of course many families are unable to save enough in a 529 plan to fund an entire education (which makes the ‘Anymore’ in the title seem beyond goofy). Of course a student should be seeking out scholarships and any form of aid he/she can find. Of course savers should be more vigilant about their mix of investments in this market.

But why make it seem as though 529s are out of favor for half of the piece, or worse, make it seem like a family shouldn’t consider utilizing their many advantages? If I were thinking about saving for a child’s education (or my own, for that matter), I would come away utterly confused. Should I be saving more than I thought I’d have to? Are 529s good or evil? And, not being wealthy, if I probably couldn’t sock away enough in a 529 to cover the entire cost of a college education, is it worth it to use them at all? Should I even be saving for college?

The answers, though it eludes CNBC’s personal finance advice, are obvious: Yes, saving for college is more important than ever. Be aware of the states that offer progressive matches for 529 accounts. Take advantage of tax-free savings and low minimum deposits. Pay close attention to your mix of investments.

But policymakers don’t get off the hook. Free advice for them: Expand the saver’s tax credit to include 529s. Offer matches to low-income families. Offer initial deposits into accounts when opened. Mandate a super-safe investment option. Get fees under control. Give employers a tax credit for offering them to employees. Give employers a credit for automatically enrolling employees. Consider reforms that enroll families in kindergarten or at birth. Generally, reward saving and incentivize more of it.

And finally, advice to financial advice columnists/bloggers: A helpful article wouldn’t unnecessarily scare the pants off already confused and gun-shy families and students.