Interested in helping a grandchild, relative or friend to save for college? That’s wonderful. The gift of a college education is one of the most worthwhile and lasting presents you can bestow on someone you care about. For the more than 25 years, the Florida Prepaid College Board has been here to help individuals just like you to plan, prepare for and present the next generation with the knowledge they’ll need throughout their lives. In fact, the very first Florida Prepaid College Plans ever issued were a gift to former Florida Governor Bob Martinez’s twin granddaughters, so you find yourself in very good company indeed.
One thing is for certain, education pays. Today, individuals with a bachelor’s degree earn an average of $23,700 more a year than those with only a high school diploma. In fact, a recent Georgetown University study estimates that a student with a bachelor’s degree can earn $1.6 million more in their lifetime than a student with only a high school diploma. It’s also projected that by 2020, 65% of jobs in Florida will require postsecondary education.
Figuring out where to start when it comes to saving for college can sometimes be intimidating. So let’s start with the basics. You can help someone save for college any way you choose. However, there are some distinct advantages of using what are commonly referred to as “529 Plans” to save for college.
The name “529 Plans” comes from Section 529 of the IRS code. Designed specifically for college savings, earnings on 529 plans are tax-free as long as they are spent on qualified higher education expenses (e.g., tuition, fees, books, housing). There are two types of 529 Plans – Savings and Prepaid, and we offer both types of plans. It’s also okay to own both types of plans.
With our Florida 529 Savings Plan, college savings goals and contribution amounts are flexible. You can contribute to an existing account for a family member or friend, or you can open an account for them yourself. An individual can have multiple Florida 529 Savings Plan accounts.
With this plan, there are 11 investment options to choose from – one of which is an age-based option that automatically allocates and diversifies contributions based on the age of the individual, such as a grandchild, who will benefit from the plan. So don’t worry, one does not have to be an expert investor to choose the Florida 529 Savings Plan, and our website has much more information on our different investment options. One thing important to note is that with the Florida 529 Savings Plan the value of the savings is subject to market fluctuations.
With our Florida Prepaid College Plan, future tuition and fees are paid for at the current plan price. There are five plans to choose from, and all of our Prepaid Plans are guaranteed by the State of Florida. You can contribute to an existing account or you may be able to open one yourself. The child or grandchild who will benefit from the plan or their parent/legal guardian must be a Florida resident. And unlike the Savings Plan, the child or grandchild may only have one account. Here are several other key features of the plans:
The short answer is to start saving now with a Florida 529 Savings Plan and/or a Florida Prepaid College Plan. Our Florida 529 Savings Plan has been ranked among the best performing college savings plans by both Morningstar and SavingforCollege.com. Also, our Florida Prepaid College Program is the largest, most successful and longest-running prepaid program in the nation.
No matter what you decide to do, know that when you help someone save for college, you are helping set this special person in your life up for success in the future.