Skilled laborers are needed across the nation. The shortage has affected overall construction costs and the recovery from Hurricane Ian, among many other localized issues. Increasing the number of vocational school graduates and providing resources to fund these programs may be a long-term solution.
A June 2022 assessment conducted by Indeed found that the average cost of trade school ranges from $3,674 to $15,923, which is more affordable than a traditional four-year degree program, but may still be a barrier for many Americans looking to develop trained labor skills.
Aside from grants and loans, 529 savings plans are an additional option to help students pay for trade or vocational programs, according to an October 2022 press release from the Education Trust Board of New Mexico, the organization that administers the state of New Mexico’s 529 education savings plan. A 529 plan is a state-funded savings plan that offers tax advantages and an opportunity to save for future education costs.
There are two types of 529 plans: prepaid tuition plans and education savings plans.
Under a prepaid tuition plan, the saver or account holder can purchase credits at the current rate for a beneficiary’s future use toward tuition. The contractual terms will vary by state, but most enforce a residency requirement and do not allow the funds to be applied toward room and board.
An education savings plan allows a saver to manage an investment account, including various mutual funds or exchange-traded fund portfolios, to fund the beneficiary’s future qualified higher education expenses. This includes tuition, fees and room and board, up to $10,000 per year.
According to the Education Trust Board of New Mexico, there is no required minimum contribution amount and savers have flexibility in how often they add to the account.
The demand for skilled workers will continue to grow. According to September 2022 data from the U.S. Bureau of Labor Statistics, the demand for construction laborers and electricians is projected to grow by 7% between 2022 and 2030. With no signs of slowing down, saving for trade school may be a promising option for those looking to invest in their or a loved one’s future.