If a Prepaid 529 Plan and an Investment 529 Plan were movie characters, the Prepaid Plan would be that Type A, rigid rule follower who stays laser-focused on a single task. The Investment 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 Plans cover tuition and most specified fees for a postsecondary institution. When a family starts a 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 an Investment 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 Investment Plan can bring you to the same destination as the Prepaid Plan: a seat at Johnny’s college graduation. These plans are continue to grow in popularity among Florida families. The Florida Investment 529 Plan has more than 154,000 active accounts with a market value of more than $1.3 billion.
5 Fast Facts About Investment Plans:
- Opening an Investment Plan is free. There is no fee to enroll, and the plan is known for having among the lowest investment manager fees in the nation.
- You can use an Investment Plan in some surprisingly, nontraditional 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. 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.
- An Investment Plan covers much more than just tuition. The Investment 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.
- An Investment 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, 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. New legislation will allow funds to be used for some transportation expenses in the future.
- The Investment Plan lets you choose from three investment strategies, simple (set it and forget it) to more customizable intermediate or advanced options. More than 80% of new families choose the simple Enrollment Year Portfolio option that automatically adjusts to be more conservative as a child approaches college age.
Since 1988, Florida Prepaid’s goal has been to help make saving for college affordable and attainable for all Florida families. You can now build your perfect college savings strategy in minutes.
