Q&A with Treasurer David McRae | Why College Savings MS may be the perfect destination for your Child Tax Credit payments
I’ll be honest: the last thing on my kids’ minds right now is school. They are taking in every ounce of summer they can, and I wouldn’t change that for the world. But by the time summer ends, they’ll be a grade level higher – and a step closer to college. Are you ready? For most families, the answer is: Not even close!
This summer, however, I’m hopeful many families can use their federal Child Tax Credit payments to begin making progress toward their college savings goals. How? Well, we answer that question – and more! – below.
Q: What is the Child Tax Credit payment?
A: The latest federal COVID relief package expanded the Child Tax Credit and made it so a portion of that credit would be paid before Tax Day. As such, beginning July 15, families will receive $300 per month for a child under six and $250 per month for a child under 18. To qualify for the full credit, families had to have made less than $150,000 in 2020 as a married couple or $75,000 as a single parent.
Q: Will I get these payments forever?
A: No. The first payments will be issued July 15 and will go out every month after that until December 2021.
Q: If I want to use these payments to save for college, how much would that cost?
A: Just $25 will get you started with a Mississippi 529 plan.
Q: Do I have to be a parent to start an account?
A: No! Just about any Mississippi resident can, including grandparents, aunts and uncles, and even family friends.
Q: There are two different types of plays in which I can invest, right? What’s the difference?
A: Yes, there are two plans: MACS and MPACT. A MACS account is just like a savings account. You can contribute as much or as little as you’d like. You then get to earn interest on anything you invest. These plans are also very flexible. You can use them for tuition, room and board, and even books. A lot of people don’t realize you can also use them for elementary and secondary school tuition or even an apprenticeship program. MPACT on the other hand, lets you lock in today’s tuition rates and protect your family from any future hikes. You then get set up with a payment plan, so by the time your child goes to college, it’s all prepaid.
Q: When do you recommend families start investing in a college savings plan?
A: As with most things, the earlier the better. My kids are 5, 6, and 10, and we have started plans for each of them.
Q: How do I learn more about a college savings plan?
A: You can visit our website, Treasury.MS.gov/CollegeSavings, or give us a call at (601) 359-3600.
I hope you found this short Q&A helpful! Please don’t hesitate to let our team know if we can answer any other questions.