Grow Your Savings for College with a 529 Plan or Prepaid Tuition
For more information about 529 plans, here are links to enroll directly and calculators:
• Get the 529 lowdown from Uncle Sam here.
• Each quarter, Savingforcollege.com ranks 529 plans from best to worst, based on one-year and three-year investment performance.
• FinAid.org rates plans twice, once for state residents and once for nonresidents.
• Scrutinize a 529 plan's underlying funds with Morningstar's 529 Plan Finder, which includes ratings on the funds and detailed performance data. Morningstar also publishes an annual study of the best and worst 529 plans, as well as tips on managing your plan.
• Another clearinghouse for 529 information is the College Savings Plan Network, which includes a tool that allows you to compare plans by feature, such as fees or state tax benefits.
• For information, calculators, comparison tools—and even podcasts—focused on independent plans, check out Independent 529 Plan. This site's glossary addresses all the technicalities, such as who qualifies as a "family member."
• The Investment Company Institute includes a checklist in its Guide to Understanding 529 Plans.
Reader Comments
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what is the cost for students from africa?
@bernard Zweig
A more productive comment might have directed readers to www.savingforcollege.com, which is not affiliated with any sales organization like the New York Life link you included. There you can actually compare 529 plans.
The site www.collegesavings.org is managed by the College Savings Plan Network, a consortium of 529 sponsors and providers not dissimilar to the mutual fund marketplace's ICI. It is also a valuable resource for comparing 529s without a sales pitch.
Downsides of 529 Savings Plans
There are some important downsides which you failed to mention. Withdrawals are reduced by education tax credits, scholarships, grants, ans Stafford loans, which can cause the 529 withdrawal to be taxable.
Also, since many of these plans are allocated toward a more conservative allocation as the student gets closer to college, will the parent be withdrawing money at a loss?
I feel it is the worst short term investment for HS families since the likelihood of recovering the fees and expenses of your plan before the first withdrawal will not happen.
There are better options to the 529 Savings plans.
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