Best College Savings Plan

The cost of college education in America is rising at an alarming rate, and there are few signs of it slowing. Accordingly, the best option that many parents and guardians pursue is setting aside savings for their child’s degree.

Saving for college isn’t the same as traditional savings; hence there are specialized college savings accounts to serve this need. Keep reading to learn about the best way to save for college.

What Are The Best Savings Plans?

A college savings 529 plan is among the best ways to save up for a degree. It is a dedicated savings account which gives you additional tax benefits and more flexibility than traditional savings accounts.

There are dozens of college savings plans available from state government departments due to the unique federal law that permits 529 plans to operate. Every state has its own accompanying program, except Wyoming. You’ll also find plans that aren’t affiliated to any single state and can be used across the country, even internationally.

Here’s the full list of 529 College Savings plans by state:

The plan offered by your state of residence is a good starting point when selecting plans because of the income tax advantages when making contributions.

However, note that many plans also welcome participants from anyplace in the United States.

Even if the college is in another state, you can use funds from accounts in other states without any problem.

That said, here are 5 College Savings Plan that you should definitely consider:

-          Virginia 529 inVEST – This is a direct-sold plan which offers a great blend of features such as varied portfolio options, low prices, and a compelling track record. There’s no application fee or annual maintenance fee. You’ll find static and age-based portfolios alongside FDIC insurance.

-          Bright Start, Illinois – Access the largest investment options compared to any other 529 plan. The program partners with 11 different companies including T. Rowe Price and Vanguard. You can choose from 3 account types – age-based, target, and individual plans. The management fees are low and you can get started with just $25.

-          New York’s 529 – Compared to the other names in this list, NY’s 529 offers a direct-sold plan from just one funding company, Vanguard, which is known for its lowest fees. You’ll get three different investment options to choose from or design a custom plan. It is the only savings plan that allows you to migrate funds between portfolios twice a year. The maintenance fees go no higher than 0.13%, irrespective of your portfolio.

-          UESP, Utah – With 13 investment portfolios, Utah’s 529 plan has something for everyone. The funding companies include brands like Vanguard and the bond-fund mammoth PIMCO. Plus, there is no annual maintenance fee or origination fee. Even the management fees are reasonable and charge anything between 0.13% and 0.57%.

-          CollegeAdvantage, Ohio – Ohio’s CollegeAdvantage plan has no shortage of choices like most of the programs in this list. All of the plans are managed by Vanguard and Dimensional Fund Advisors. This plan has the lowest charges nationally and if you’re from Ohio you can save up to $4,000 on taxes.

How do we decide which plan is the best?

You can start a college savings plan by choosing one of two options – a direct-sold plan or an account opened through a financial advisor.

You should focus on the direct-sold options first because the latter can lead to unnecessary fees and expenses. Almost every state in the US offers a direct-sold plan. When choosing a 529 plan, consider the following benefits:

• Low maintenance and management fees
• Diverse investment portfolio
• Tax benefits
• Returns on the investment
• Track record and market rating of the plan

Bottom Line

When you intend to save money for funding a degree, it makes more sense to open a 529 student savings plan.

Use all of the above information to find and open one of the best 529 plan accounts that will meet your needs and reduce your expenditures, all while taking advantage of helpful tax benefits.