How to save for college while accounts lose value

MADISON, Wis. — Many Americans are watching their investments dwindle.  Stocks, 401(k) accounts, and even college savings plans are taking significant hits.

One estimate shows the average 529 plan lost about 11% in the first six months of 2022.  Plans dropped from $25,395 in December of 2021 to $21,016 by mid June, according to data compiled by ISS Market Intelligence for CNBC.

Investors like Jim and Barb Buivid has seen their Edvest account, Wisconsin’s 529 college savings plan, lose value.

“When I started it last year, I put money in and it went to work right away, but now with the downturn in the markets it’s gone down a little bit,” says Jim Buivid who has plans for his three grandkids.

Edvest accounts can be used to pay tuition, room and board, books, fees, trade school, an apprenticeship, and up to $10,000 in student debt.  What an investor contributes to the account is also tax deductible.

If the beneficiary doesn’t go to college, trade school, or do an apprenticeship, the account owner can transfer the balance to another family member or use it themselves to pay off student loans or go back to school.

“You can set up an account for as little as $25 and any recurring amount that’s comfortable within your budget,” says Linda Lambert who oversees Wisconsin’s Edvest plan.

Lambert encourages investors to keep contributing.

News 3 Now sought some expert advice from financial planner Sue Peck on how much to put into a 529 plan when the markets head south.

“Figuring out what percentage is going to be comfortable, doable and ok for the parents is going to be one of the first conversations we have,” says Peck of Evolution Financial.

She advises her clients differently depending on how old the student is.  If they’re already in high school, then there’s not much time for an account to recover.  Plans for younger students look much better.

“If you are still younger or are still accumulating those assets this is a great opportunity because the market will likely go much higher than it is right now,” says Peck.

As for Jim, he plans to ride it out for his grandkids.

I’ve gone through three of the worst downturns in the market and I was one of those who was gutsy enough to leave my money in and it always came back,” he says.