At a time when student debt is at the forefront of the public consciousness, top news media outlets have been seeking out expert advice on the state of student loans. David Adefeso, founder of Sootchy, recently lent his insight on this important topic to an article in Forbes, one of the top business magazines in the world.
You can view the full article here.
Adefeso, long a proponent of 529 plans, reiterated his belief that this powerful financial tool can help families minimize student debt, especially with the support of the federal government. Whether or not the Biden administration provides far-reaching student loan forgiveness to graduates around the country, Adefeso pointed out that simply improving the effectiveness of 529 plans could allow the government to aid families without a sharp and immediate downturn in tax revenue.
One of Adefeso’s suggestions for the improvement of 529 plans involved “creating an additional incentive [to save] by making them tax-deductible and allowing employers to deduct employees’ 529 plan matches.” Such a change could greatly enhance the financial benefits of 529 plans. “It will also give parents an incentive to save,” Adefeso noted.
This shift in tax policy would essentially divert tax dollars from the federal coffers to investment accounts dedicated to covering education expenses. Further incentivizing employers, in particular, could lead to much more substantial yearly contributions to 529 plans, since tax deductions would eliminate any financial downside to giving to employees’ accounts. Companies that do so would thereby make themselves more attractive to potential applicants without losing a dime in the process.
Student loan forgiveness at scale may be unlikely for the time being, but a more measured response – improvements to 529 plans – may be more likely in the short term.
About Sootchy
Sootchy is a revolutionary app making it easier than ever for families to save for higher education. Individuals can open a 529 plan with Sootchy, fund it, receive gifts, enjoy tax benefits, and watch their investments grow over time. Friends and family can easily contribute to your child’s 529 plan, and thanks to this investment tool, your child can graduate from college debt-free.
Download Sootchy to join the growing movement of parents, grandparents, and friends who are helping the children in their lives avoid crippling college debt.
