College admission notifications are starting to arrive. With every thrilling acceptance letter comes something far less welcome: the daunting reality of what it costs.
Planning early for the cost of college can help make the reality of college sticker price a lot less overwhelming. In fact, families can begin to address the cost of college for less than they might think.
College Illinois!, the state’s only 529 prepaid tuition plan, is a great place to start. The program allows families to prepay for future college tuition at today’s contract rates—so no matter how much tuition increases by the time your child is ready to attend school, you know tuition is covered. With pricing on all contracts reduced during the 2014-15 enrollment period, some by as much as 29 percent, families can start planning for their child’s future for as little as a month.
What do you need to know when exploring options to save for college? Here’s a quick checklist to help you make an informed decision:
Understand your options. Both 529 prepaid tuition and savings plans offer great benefits, and can be used together. If you feel comfortable with investing and with risks related to future tuition growth, you may be interested in savings-type plans. If you aren’t comfortable with fluctuations in the investment markets or are concerned about future tuition rates, you might be more interested in a prepaid plan like College Illinois!.
Start early, and start with what you can afford. Getting into the habit of putting money away for college—no matter how much–is an important first step. Studies show that children with a college savings account in their name are six to seven times more likely to attend a four-year college. Getting a tax refund? Consider putting some of it towards college tuition. Starting early offers you more time for a savings plan to grow, or to pay for a prepaid tuition contract over time. Depending on when you start and what College Illinois! contract you purchase, you could have your child’s college tuition paid for while they are still in grade school.
Evaluate your needs and interests. Consider options in light of your life situation and goals. If you are getting divorced and want to ensure that a child’s tuition is paid for, then a prepaid plan can provide some security. For grandparents, purchasing College Illinois! plans can provide a legacy for their grandchildren—the opportunity to get a higher education.
Look for flexibility. With a College Illinois! prepaid plan you can purchase from one to nine semesters of college through installment or lump sum payments. And many people don’t realize that College Illinois! tuition benefits can actually be used at almost any college or university in the country.
Consider tax benefits. Illinois 529 plans offer significant state and federal tax benefits. Earnings on contributions are exempt from taxation at the federal and state level as long as they are used for qualified educational expenses, and Illinois residents get an annual tax deduction of up to ,000 for individuals or ,000 for those filing jointly.
Perhaps most important: Start talking with your children early on about college to help define their interests and goals. Talking about college with your children and implementing a plan to pay for it lets them know that education is a priority for you—and for them.
To find out more about how College Illinois! can help make college a reality for your family, visit www.collegeillinois.org. Enrollment closes June 1.