PENNSYLVANIA — As the third round of Child Tax Credit payments hit bank accounts across the commonwealth tomorrow, a new report in the Pittsburgh Post Gazette shows that middle class parents across Pennsylvania are using the extra income to boost their children’s college savings accounts. The child tax credit, which was included in President Biden’s American Rescue Plan, has provided parents with a unique opportunity to build up their college savings fund, the Post Gazette reported.

Pittsburgh Post Gazette: Parents are taking advantage of the child tax credit to shore up college savings 

The majority of parents — 58%— in an annual survey by the Washington, D.C.-based College Savings Foundation said they plan to use part or all of the $250 to $300 per child payments they began receiving in July from the federal government to help their children save for higher education.

“The message is clear that families are prioritizing savings for their children’s higher education, and are taking advantage of the child tax credit to do so through 529s,” said Vivian Tsai, chair of the College Savings Foundation, a trade group for 529 plan program managers, state sponsors and financial services firms that manage 529 accounts.

However, 74% of parents are actively putting money aside to cut or eliminate the amount their kids will need to borrow for college; and 34% of parents have already saved more than $10,000 per child.

“It’s a very positive trend for parents to choose savings as their far and away primary way of funding higher education,” Ms. Tsai said.

As of June, the College Savings Foundation reported 15.3 million individual 529 college savings and prepaid plans in the U.S., with a total of $464 billion in assets families have set aside for future higher education expenses.

The child tax credit that was included in the American Rescue Plan has provided parents with a unique opportunity to build up a college savings fund.

The monthly payments — representing an advance on half of the taxpayer’s expected 2021 credit amount — would come out to six monthly payments of $250 a month for each child age 6 to 17; and $300 a month per child under age 6.