Institute

Saving for College

 

Average Cost of Attendance

 

SOURCE: U.S. Department of Education National Center for Education Statistics survey.

We all know college expenses are out of control,

but we don't all have a plan for how to address the costs.

Here is where financial plan comes in.

 

UNIVERSITY OF OREGON

 

$27,366 / year

(in-state)

$50,946 / year

(out of state)

LANE COMMUNITY COLLEGE

$17,724 / year

(in-state)

$23,340 / year

(out of state)

BUSHNELL UNIVERSITY

$42,650 / year

(in-state)

$42,650 / year

(out of state)

Which College Savings Approach is right for you?

529 College Savings Plans
Whole Life Insurance

Federal Tax Benefits

Tax-free withdrawals for qualified expenses

Tax-free policy loans

Federal Tax Benefits

Federal Tax Benefits

Custodial Accounts (UGMA/UTMA)

First $1100 of unearned income is tax-free and the next $1100 is taxed at the child’s tax rate. Unearned income of more than $2200 will be taxed at the parent's rate

Up to a $300 Oregon state tax credit

State Tax Benefits

State Tax Benefits

State Tax Benefits

None

None

Contribution Limits

$350,000 and up (varies by state)

Contribution Limits

Contribution Limits

Unlimited

Unlimited

Anyone

Who can contribute

Who can contribute

Policy Holder

Anyone

Who can contribute

Usage of funds

Qualified educational expenses

Usage of funds

Usage of funds

No limits

Wide use

Considered an asset of the parent equating to substantially lower EFC requirements

FAFSA Considerations

FAFSA Considerations

FAFSA Considerations

Not considered an asset for FAFSA, but may be for school specific financial aid.

Considered an asset of the child, equating to substantially higher EFC requirements

Disability

Can transfer to an ABLE account

Option Waiver of Premium Rider

None

Disability

Disability

529 College Savings Plan

The 529 College Savings Plan is designed to help families save and invest money in a tax-deferred vehicle to pay for college expenses such as:

Tuition

Housing

Supplies

Technology

Which 529 Plan is right for you?

Oregon College Saves
MFS
(Via a Financial Advisor)

Minimum Contributions

Initially $25, $5 for subsequent

Initially $250, no minimum for subsequent 

Minimum Contributions

Minimum Contributions

Out of State Plan

Varies

None

Upfront Sales Charge

Upfront Sales Charge

Upfront Sales Charge

Class A Shares: Yes

Class C Shares: No

Varies

Total Asset-Based Expense Ratio

0.25% - 0.72%

Total Asset-Based Expense Ratio

Total Asset-Based Expense Ratio

Class A: 0.67% - 1.34%

Class C: 0.78% - 2.09%

Varies

Yes

State Tax Credit Eligibility

State Tax Credit Eligibility

State Tax Credit Eligibility

Yes

No

Federal Tax Benefits

Yes

Federal Tax Benefits

Federal Tax Benefits

Yes

Yes

Starting on January 1st 2020,

Oregon changed to a new "progressive" credit system which allows for a maximum of $300 per joint filers.

Oregon Residents

may qualify for up to a 

$300 Tax Credit

for making contributions to this account

*The minimum initial contribution is $250 per fund/account, waived if you set up an auto investment plan. There is no minimum for additional contributions.

This is how it can work!

Contributions made to an Oregon 529 College Savings Plan may allow you to qualify for a tax credit! To see how this works, take a look at the visual to the right. Whether you're a parent, grandparent, friend, aunt, or any other contributor to a 529 plan, you could potentially be receiving tax credits for your contributions. All while helping a student save for college - and their future.

Federal Tax Advantages 

 

Withdrawals for specific higher education related expenses are tax free.

Unlimited Participation 

 

Anyone can open an account, regardless of income-level or relationship.

High Contribution Limits 

 

Most plans have lifetime contribution limits of $350,000 and up (limits vary by state).

Flexibility 

 

You can change the beneficiary to a qualified family member anytime.

Professional Money Management 

 

Professionally designed and managed investment portfolios that shift as your child ages.

Accelerated Gifting 

 

529 savings plans offer an estate planning advantage in the form of accelerated gifting.

Wide Use of Funds 

 

 Private elementary through high school tuition. You can withdraw up to $10,000 per year to pay for private school tuition. 

Transfer to ABLE account 

 

Able accounts are tax-advantaged and can be used for disability-related expenses before age 26.

Advantages of 529 College Savings Plans

Age Based Investment Options

We take the stress out of investing by using age based investment options - as your child ages, assets are automatically transferred into more conservative funds. This allows you to mitigate your level of risk as your child approaches college age.

529 Current Impact on FAFSA

Are 529 Plans counted as assets on the Free Application for Federal Student Aid (FAFSA)?

A 529 Plan is considered an asset by FAFSA.

529 Plans owned by the student or parent are considered assets on the FAFSA, however, these assets are considered "parental assets." About the first $10,000 of parental assets fall under the asset protection allowance and will not be counted on the Expected Family Contribution (EFC) section. 

 

For those assets that exceed the allowance, the student's aid package may be reduced up to a maximum of 5.64% of the assets value.

The following items do not qualify as education expenses under the 529 College Savings Plans.

Insurance 
Student Loan Repayment 
Transportation & Travel 
General Electronics & Cell Phone Plans 
Sports & Fitness Club Memberships 
School Notebook

What Expenses Don't Qualify Under a 529 Plan? 

Note: Recapture provisions apply. If you withdrew funds for non-qualified expenses from your Oregon College Savings Plan account and you claimed a tax benefit for that year’s contribution, the state of Oregon will recapture any Oregon State income tax benefits that you had accrued on the principal portion of that withdrawal.

What if you can't or don't use the money for your kid's qualifying higher education expenses?

Private School Tuition

You can withdraw up to $10,000 per year to pay for private elementary through high school tuition.

Transfer to ABLE Account 

Able accounts are tax-advantaged and can be used for disability-related expenses before age 26.

Transfer within the family 

You can transfer the account to a qualified family member.

Just spend it 

There is a 10% tax penalty on non-qualifying expenses, you will be taxed on growth, and be subject to recapture provisions.

 

Don't wait until your kid is about to graduate to start talking about how you are going to pay for college - Start Planning Today!

Have Questions?

TODD MANN FINANCIAL SERVICES INC. 
1840 5th St. Springfield, OR 97477.  

(O) 541-583-0093

Todd@ToddMannFinancialServices.com

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TODD MANN FINANCIAL SERVICES INC. 
1840 5th St. Springfield, OR 97477  |  (O) 541-583-0093  |  Todd@ToddMannFinancialServices.com

Investment advice is offered through Belpointe Asset Management, LLC. Insurance and annuity products may be offered through D.H. Hill Securities, LLLP. Securities are offered through D.H. Hill Securities, LLLP, Member FINRA/SIPC. D.H. Hill Securities, LLLP, Todd Mann Financial Services Inc., and Belpointe Asset Management, LLC are not affiliated entities. Todd Mann Financial Services Inc. is currently insurance licensed in the states of Oregon, New Jersey, and Wisconsin.

Insurance and annuity products may be offered through D.H. Hill Securities, LLLP. 

 

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