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Saving for College
2021-2022 Average Cost of Full-time 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
In-State
$27,930 / year
Out-of-State
$53,973 / year
LANE COMMUNITY COLLEGE
In-state
$17,724 / year
Out-of-State
$23,340 / year
BUSHNELL UNIVERSITY
In-State
$42,650 / year
Out-of-State
$42,650 / year
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 $1300 of unearned income is tax-free and the next $1250 is taxed at the child’s tax rate. Unearned income of more than $2300 will be taxed at the parent's rate (2024)
Up to a $340 Oregon state tax credit (2023)
State Tax Benefits
State Tax Benefits
State Tax Benefits
None
None
Contribution Limits
$400,000 and up (varies by state)
Contribution Limits
Contribution Limits
Unlimited
Unlimited, but gift tax may apply
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 (now $340) for joint filers.
Oregon Residents
may qualify for up to a
$340 Tax Credit
for making contributions to this account in 2023
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.
Advantages of 529 College Savings Plans
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.
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)?
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
Transportation & Travel
*More than $10,000 in Student Loan Repayment (see the Secure Act)
General Electronics & Cell Phone Plans
Sports & Fitness Club Memberships
What Expenses Don't Qualify Under a 529 Plan?
Recapture provisions may 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.
*The Secure 2.0 Act allows for 529 plan funds to be rolled into Roth IRAs beginning in 2024
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.