5 Things You Need to Know About the Florida 529 Savings Plan
If a prepaid tuition plan and a 529 Savings Plan were movie characters, the prepaid plan would be that Type A, rigid rule follower who stays laser focused on a single task. The 529 Savings Plan would be the more adventurous explorer – the one who wants fewer rules and more flexibility.
They both get the job of college savings done, but by different paths.
Prepaid tuition plans, including the five offered by the Florida Prepaid College Board, cover tuition and most specified fees for a post-secondary institution. When a family starts a Florida Prepaid Plan, the monthly payment rate is set and predictable, and the plan is guaranteed by the State of Florida. What the Prepaid Plans cover, and what you save, is like a strict playbook that guarantees your child a college tuition fund when the time comes.
With a Florida 529 Savings Plan, the path to saving for your child’s college education has more potential turns — and you set the pace of that savings journey. But the 529 Savings Plan can bring you to the same destination as the Prepaid Plan: a seat at Johnny’s college graduation. These plans are becoming more popular among families. In 2015, the average amount in a 529 Savings Plan was $20,190, or double the amount in 2008, according to the College Savings Plans Network.
As we get closer to 529 College Savings Day on May 29, 2016, and the final days to enter the Florida 529 Savings Plan Scholarship Program, we thought we would share five things to know about the Florida 529 Savings Plan:
- Opening a Florida 529 Savings Plan is free: Now, for the first time ever, the Florida Prepaid College Board has removed the minimum contribution to open a Florida 529 Savings Plan, opening the door for more families to save for college. We made this change to encourage families to start saving, ideally contributing regularly to their Plan in amounts their budgets can afford.
- You can use a 529 Savings Plan in some surprising, non-traditional places: An eligible institution is defined as a college, university, vocational school or postsecondary institution eligible to participate in federal student aid programs administered by the U.S. Department of Education. According to U.S. News, examples of “nontraditional” eligible institutions include the Le Cordon Bleu College of Culinary Arts; the commercial diving program CDA Technical Institute in Jacksonville, Florida; and the Chicago Theological Seminary. You can also use your savings for graduate school, eligible online colleges and even some international institutions.
- A 529 Savings Plan covers much more than just tuition: The Florida 529 Savings Plan also covers fees, housing and books. A family can contribute as much and as often as desired, and accounts can be opened at any time.
- A 529 Savings Plan does have limitations on what it covers: Oh, wouldn’t it be nice if the Plan could cover every little expense incurred during a student’s tenure on campus? Sure. But keep in mind that the Plan can’t cover things like sporting events, transportation, insurance, and electronics like smartphones. Computers and related equipment are covered IF they are used primarily by the beneficiary during any of the years that the beneficiary is enrolled at an eligible institution. But tablets and electronics used for entertainment, for example, are not covered.
- The Florida 529 Savings Plan is an investment plan, but we make the choices easy. There are 11 investment options that let you invest how you feel most comfortable. One popular option is an age-based/years to enrollment portfolio that becomes more conservative as the beneficiary gets closer to college enrollment. And you can easily change contribution amounts and how they are allocated at any time.
Take some time to learn more about the Florida 529 Savings Plan at www.myfloridaprepaid.com. And through May 29, 2016, enter to win one of 10 scholarships at http://www.florida529SavingsPlanScholarship.com/.