Trans4mind Home Page
~ A Journey of Self-Discovery ~

Explore Article Library

Saving Money for College and 529 Plans

By Richard Keir

Wanting the best for your children doesn't always make it possible to give them the best. And when you look at the cost of four years of college, the idea of coming up with that much money monthly as your child attends college can be downright scary. One potentially useful tool is a 529 plan which allows you to not only begin to put money aside well before your child is ready for college, but also provides tax advantages.

529 plans come in two basic varieties: pre-paid tuition plans and college savings plans. While most pre-paid tuition plans are limited to paying for tuition and mandatory fees, some allow a room and board option or the use of excess tuition credits for other qualified expenses. Pre-paid tuition plans are offered for eligible public and private participating colleges and universities, generally for residents of a specific state. Most of these plans have set payment options based on the age of the prospective student and the number of years of tuition credit purchased.

The great advantage of pre-paid tuition is that you can freeze, or 'lock-in' the tuition costs. Many of the state pre-paid tuition plans are backed or guaranteed by the state, which is not the case with 529 college savings plans.

529 college savings plans may have much higher contribution limits, over $200,000, and can be used to cover any qualified higher education expense from tuition to books and even a computer, if it is required. College savings plans have no age limits and thus are available for both adults and children. There are also no residency requirements as such, but in some cases a non-resident can only purchase a plan through brokers or financial advisors.

Most investment options available in 529 college savings plans are subject to risk. You may not make a return on your investment or might even lose money. This is, of course, a risk with any market-based investment.

Earnings in 529 plans are not subject to Federal tax, nor, in most cases, state tax, as long as withdrawals are used for the eligible college expenses. Additionally some states allow residents to deduct contributions to 529 plans from state income tax returns. Usually it must be a plan sponsored by the state you live in.

However, if you take money out of a plan and don't use it for eligible educational expenses, you usually will be subject to income tax and to a 10% federal tax penalty on earnings. Planning your finances is critical to avoid ending up in a situation where you will be penalized.

All 529 plans, whether pre-paid tuition or college savings plans, have various fees and costs involved. Generally pre-paid tuition plans will have fewer fees than college savings plans. They normally charge enrollment fee and administrative fees. College savings plans can vary in the fees charged depending on your investment options. Usually there will be enrollment, annual maintenance and an asset management fee. Plans purchased through a broker may involve an additional fee which amounts to a commission for the broker and a yearly distribution fee.

With any plan you are considering, carefully check all the disclosure documents and applicable fees to be sure you really know what it's going to cost. Remember that the investment option you choose will likely affect the fees, so be clear on how that works. If you work through a broker or financial advisor also read the disclosure documents they provide or have available.

There are also discounts that may be available depending on how large an investment you make or plan to make. These are usually called 'Breakpoint Discounts' and usually apply to plans purchased through a broker or financial advisor.

States also offer direct purchase plans where you can buy from the plan's sponsor or program manager without any sales fee. Information on this type purchase can usually be obtained from the plan sponsor or program manager or on the plans website. A useful resource is the College Savings Plans Network ( which provides links to most 529 plan websites.

I'd strongly recommend that you begin at the U.S. Securities and Exchange Commission ( and read "An Introduction to 529 Plans" and use the excellent resource links provided to find out more.

A 529 pre-paid tuition or college savings plan may be just what you need to make a dream a reality, but it is a serious undertaking and the more you know the more likely you'll chose the right kind of plan for your situation and goals.

Copyright 2005 Richard Keir

About The Author
Richard Keir

As a writer and educator, both online and offline, Richard strongly supports the value of quality education, whether online or off.


Careers & Employment
Grief & Loss
Kids & Teens
Public Speaking
Self Help
Self Improvement & Motivation
Sexual Relations
Stress Management
Travel and Leisure

From our extensive site, you'll find good info on many topics using this search:

Want to renew your life?

Our online, interactive video workshops present the most effective methods of holistic personal development...
Start off with a Free Life Assessment and a Free Consultation...

Have a question about Trans4mind Training?

Frequently Asked Questions
What Are Our Fees?
Email Peter Shepherd

Support your personal development with these popular and effective hypnosis downloads...

This is our selection of favorites, but there's a session for every need! Choose from over 800 Hypnosis Downloads...
Search now on an issue that interests or concerns you...

Welcome to the New Wave in Meditation Technology

Click here to learn more about the iAwake Profound Meditation Program
The iAwake Profound Meditation Program
is a way of enhancing your meditation practice, making meditation not only easier and more enjoyable, but also more efficient and effective.
Profound Meditation provides the smoothest, deepest, richest, most profound meditation experience available anywhere...
Here is a link to a free 20-minute track from iAwake Technologies - a sample of the type of tools that will deepen your meditation immediately and help you quickly become a successful meditator. It's the opening track of iAwake's flagship product, the Profound Meditation Program, called the iAwake Experience...
Learn More and Download the iAwake Experience
We think you'll find this technology a tremendous aid on your transformative journey of becoming your best and most creative self - and you can get started today!
And here's a fantastic resource for self-education...

The World of Inspiration eLibrary

World of Inspiration
A treasure trove of personal development wisdom

Step inside. Just like a real library, there are thousands of quality eBooks presented on three "floors" and in different "rooms." To purchase your $15 Lifetime Membership to the World of Inspiration eLibrary, click the following button:

Payment is made through our secure transaction agent, PayPal.
The transaction is in the language and currency of your choice.
"I want to just say 'WOW!' This collection is probably the best money I ever spent! I've already received many times over in personal enrichment after just 9 days. I've had a past metaphysical background, but even newcomers to this material will really benefit. Thanks again." ~ J.S. (Pennsylvania, USA)
"The collection is everything which you promised. And more! A superb contribution to the good of the world. Many thanks indeed." ~ R.P. (Georgia, USA)
"Just a short note of thanks for the library. I've only had membership for several days now but I already feel this is perhaps the most interesting compilation I have yet seen. Worth far more than the price of admission. The browser linked structure works well and makes it easy to manage such a large storehouse of information. It is rarely that I find something I like as much as this or that I feel strongly enough to write a note like this." ~ P.W. (Minnesota, USA)
Copyright © 1997-2016 Trans4mind Ltd