The total college tuition fee in the United States of America can go up to $26,000 for a 4-year program at a public institution. Add the cost of accommodation and other expenses to it, and the number will go up to approximately $37,000. If you’re looking for financial advisors in Illinois to help you out, there’s nothing to worry about. As it turns out, 84% of the students in public colleges received some type of financial aid between 2018 and 2019.
Before you decide on a college savings account, it’s essential to understand what it is and which types of accounts are available for you to consider. Let’s take a look:
What is a College Savings Account?
A college savings account is a tax-advantaged savings plan that encourages parents and youth to save for further degree-level education. As a part of the Internal Revenue Code, qualified tuition plans or 529 Plans were also introduced and sponsored by educational institutions and state agencies for the same reason. Let’s take a look at the different types of savings accounts available for such purposes:
Types of College Savings Accounts
When you consult financial advisors in Illinois, you will be given the following four distinct options to choose from:
1. Direct-Sold College Savings Plan
The Bright Start College Savings Program was introduced in 2000 and changed later on in 2017. This option is available for all US residents, and its maximum limit goes up to 450 thousand dollars. This is one of the most flexible options available with attractive benefits. One of its economic benefits includes tax incentives provided by the state. Additionally, this type of account has several options and portfolios to choose from.
2. The 529 Prepaid Tuition Plan
College Illinois! offers a 529 prepaid tuition plan to residents and students living in the state. You can apply for this tuition plan if you’ve been a resident in Illinois for at least 12 months. You should be 18 years or older to apply, and the restrictions state that you can’t use the benefits until three years after the contract purchase.
There are 5-year monthly, annually, and extended payment plans. However, the extended payment plans are only eligible for children in 6th grade or younger.
3. Advisor-Guided 529 Tuition Plan
The advisor-guided 529 tuition plan is available through financial advisors brokers. This program also has a vast range of options and portfolios available, including plans for static individual funds or multi-funds. Its benefits and restrictions are similar to that of direct-sold college savings plans.
National ABLE Alliance offers ABLE funds for those with disabilities who wish to pursue a college education. Currently, the program provides a limit of 15 thousand dollars a year. However, the funds can be used for anything from education to well-being and medical costs.
Financial Advisors in Illinois
Hagemann Wealth has a team of financial advisors in Illinois who can help you pick the best option for your college savings. Contact us for more information on our finance and wealth management services.
*The information provided here is for general information only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All investing involves risk including loss of principal. No strategy assures success or protects against loss. There can be no guarantee that strategies promoted will be successful and no guarantee of positive results. Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax adviser before investing.