College Savings Basics

What does 529 mean?

A 529 Plan is a savings vehicle designed specifically for education expenses. The name “529” comes from Section 529 of the federal tax code, which authorizes states to offer the plans. Earnings in 529 Plans are tax-free when they are used for Qualified Expenses.
What are the differences between a Prepaid Plan and an Investment Plan?

Investment Plans allow you to save at your own pace and are not guaranteed. Prepaid Plans lock in the cost of college with a fixed price and guarantee that you will not lose your investment. Both plan types work great together to cover a wide range of college expenses.
Do I have to be a Florida resident to start a Prepaid or Investment Plan?

Anyone 18 years of age or older (who is a U.S. citizen or legal U.S. resident with a valid Social Security number) can purchase a Prepaid Plan (parent, grandparent, aunt, etc.), or enroll in an Investment Plan, however the child or his/her parent or legal guardian must have been a Florida resident for the past 12 months. Proof of residency will be required during enrollment.
Can I enroll in both a Prepaid Plan and an Investment Plan?

Yes. Prepaid and Investment Plans work well together to cover a wide range of higher education expenses. Many families choose to enroll in both Prepaid Plans and Investment Plans to diversify their savings.
What is an Eligible Educational Institution?

An Eligible Educational Institution is an accredited postsecondary institution offering credit toward a bachelor’s degree, an associate’s degree, a graduate-level or professional degree, or another recognized postsecondary credential.

Certain proprietary institutions and postsecondary vocational institutions are also Eligible Educational Institutions. The institution must be eligible to participate in a student financial aid program under Title IV of the Higher Education Act of 1965 (20 U.S.C. Section 1088).

To check the eligibility of a school, visit FAFSA and select “School Code Search.” Or contact the school directly.
Does a 529 Plan impact financial aid eligibility?

Any non-retirement investment or savings account may affect your eligibility for financial aid. A portion of your Prepaid and Investment Plan value may be considered when evaluating student aid eligibility with the Free Application for Federal Student Aid (or FAFSA).

Up to 5.64% of parental assets can be counted, which is favorable compared to student assets, which are counted at 20%. Grandparent (or other third party) accounts for the student are no longer required to be reported and therefore no longer impact aid eligibility.

Many changes were made to the FAFSA form beginning with the 2024-2025 school year. To stay informed and learn more, visit studentaid.gov or an educational financial aid adviser.
Does having a 529 Plan impact scholarship eligibility?

In general, a 529 Plan should not affect eligibility for merit–based scholarships. Having a 529 Plan will not prevent you from receiving a Bright Futures Scholarship in Florida. In fact, if your child receives a Florida Bright Futures Scholarship and you also have a Prepaid Plan, excess funds can be used to pay for other Qualified Higher Education Expenses such as textbooks, supplies and housing.

For more information about Florida Bright Futures Scholarships, please visit the website.
Where can I find more information about saving for college using funds from a Family Empowerment Scholarship?

We have answers to a number of questions relating to the Family Empowerment Scholarship Program.
What are the estate tax benefits of 529 Plans?

Contributions to a 529 Plan are generally considered completed gifts to the student and may be contributed, up to federal gift tax limits, to a plan without being subject to federal gift tax on the contributor(s). Such contributions are not included in any contributor’s estate for federal estate tax purposes.
Can I claim a federal income tax deduction based on contributions to a 529 Plan?

Contributions to a 529 Plan do not reduce the taxable income of the contributor for federal tax purposes because they are made with after-tax dollars, much like a Roth IRA (Individual Retirement Account).
Can I claim a state income tax deduction based on contributions to a 529 Plan?

Certain states may allow contributors to deduct contributions to a 529 Plan for state income tax purposes. This does not apply in Florida because Florida does not assess a state income tax.
How can I see if I have any unclaimed refunds?

Unclaimed funds from withdrawals, refunds, and terminated Florida Prepaid College Savings Plans escheat to the Florida Prepaid College Foundation to fund scholarships for deserving students, as specified in the Program terms and conditions. If you believe that you have unclaimed funds, please contact Customer Service at 1.800.552.GRAD (4723) or via online chat.
Where can 529 Plans (Prepaid and Investment) be used?

Prepaid Plan and Investment Plan benefits may be applied to any eligible educational institution, as defined in s. 529 of the Internal Revenue Code. A list of these schools can be found using the Federal School Code Search through the U.S. Department of Education’s Federal Student Aid Office. Some schools elect not to participate and receive Title IV funding, but could still be considered an eligible educational institution. If the school you are interested in is not listed, you may contact the school’s financial aid office to determine if the school is eligible. For more information, please see the Master Contract and the Program Description and Participation Agreement.