As you prepare to send your student to college, you’re more than likely feeling the financial pinch—and for good reason. Expect to pay $9,410 annually, according to The College Board, for tuition and fees at a public four-year college. Whether your child is in diapers or in driver’s ed, you can curb rising tuition prices. Remember, the sooner you begin saving, the better. Even modest savings can add up over time.
Consider a 529 Plan
A 529 plan is an indispensable tool to help pay for your child’s or grandchild’s education—offering a unique combination of benefits unmatched in the college savings world.
There are two types of 529 plans—college savings plans and prepaid tuition plans. Though each is governed under Section 529 of the Internal Revenue Code (hence the name "529" plans), college savings plans and prepaid tuition plans are very different college savings vehicles.
1. A College Savings Plan is a tax-advantaged college savings vehicle that lets you save money for college in an individual investment account. If your investment portfolio performs well, you reap the rewards—and vice versa.
With a college savings plan, you can:
The average saver utilizing a 529 college savings plan has saved $20.975, according to the College Savings Plans Network—a record high for the savings tool.
2. A Prepaid Tuition Plan is a tax-advantaged college savings vehicle that lets you pay tuition expenses at participating colleges at today's prices for use in the future. You are guaranteed a minimum rate of return. Prepaid tuition plans can be run either by states or colleges. For state-run plans, you prepay tuition at one or more state colleges; for college-run plans, you prepay tuition at the participating college(s).
With a prepaid tuition plan, be aware:
College planning is only one component of your financial picture. Prioritizing various financial goals—from college expenses to financial preservation and retirement is important.
Talk with the financial planning professionals at Busey Investment Services to determine the best plan for your unique financial situation. Contact us today, call 1.800.67 | Busey or visit busey.com today.
*Note: Investors should carefully consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. More information about 529 college savings plans is available in the issuer's official statement, which should be read carefully before investing. Also, before investing, consult a tax advisor and consider whether your state offers a 529 college savings plan that provides residents with favorable state tax benefits.
Investing involves risk and you may incur a profit or loss regardless of strategy selected. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision. You should discuss any tax or legal matters with the appropriate professional.
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC, and are not insured by bank insurance, the FDIC or any other government agency, are not deposits or obligations of the bank, are not guaranteed by the bank, and are subject to risks, including the possible loss of principal. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc. Busey Bank, Busey Wealth Management, and Busey Investment Services are not registered broker/dealers and are independent of Raymond James Financial Services.
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