After days of drops at Wall Street, many people are concerned about the impact on their 401K and college saving accounts, also known as 529’s.
The markets lost more than $6 trillion since President Donald Trump announced his global tariffs last thursday.
At the University Of San Francisco, it’s that time of year when parents and perspective students are touring campus and of course, they’re thinking about how to pay for it.
“My dad’s a mechanic, right? He doesn’t have like a massive 401k, but it’s something he’s been building for a long time. And he opens it, and it’s down, and he’s freaking out,” said south San Jose resident Paxton Burke.
New Mexico resident Becky Fink said her family isn’t planning on paying for her son’s college tuition with a 529, which she says it a bit of a relief, because those accounts have taken a pretty big hit over the last few days.
University of San Francisco Professor Ludwig Chincarini said some parents have good reason to be concerned.
“It all depends on when you need the money for the 529. So you may need the money sooner, so you’re more scared about taking a dip now,” he said.
According to the National Association of State Treasurers, 529 college savings accounts are one of the most popular ways Americans are saving for higher education.
As of last summer, there were 16.8 million 529 accounts, which provide some tax benefits but also fluctuate with the markets. Those accounts contained more than half a trillion dollars in assets.
It’s not yet clear how big a hit those accounts have taken. In the past three trading daysBut experts say it’s going to be significant.
Chincarini said that unfortunately with these 529 accounts, parents hoping to finance their children’s education, don’t really have a whole lot of options right now.”
“529s, a lot of times you don’t have the choice of what investment to make,” he said. “So, you really have to just stick it through. And, things will get better, I do believe that.”
Chincarini believes markets could rebound if individual countries are willing to create new trade agreements with the U.S
Vietnam is among the countries that has signaled a willingness to do that. The question for parents is how much will the lose before that happens.
Source: NBC Bay Area