College Savings

Every family's situation is different, and therefore each family's savings approach will be different.  The following scenarios illustrate how various savings plans can be combined to meet a family's needs.  

Scenario 1: 

Family A Profile: Mom, Dad, two children ages 1 & 3.  Mom is currently employed by the University of Notre Dame and receives the grandfathered education benefit.  Mom and Dad are ND Alum who aspire that their children will also go to ND.

Savings Plan Options:

Education Benefit Offers (Grandfathered): 100% tuition benefit at Notre Dame if the children go to Notre Dame, St. Mary's, or Holy Cross. Up to 50% of Notre Dame's tuition to be used at another qualifying institution.

Indiana 529 Plan Offers: A state income tax credit of 20% of contributions to their CollegeChoice 529 account, up to $1,000 credit/year.

Private College 529 Plan Offers: Pre-paid tuition for over 270 participating schools

Potential Savings Plan Approach:

Family A might consider opening an Indiana 529 Plan to receive the tax credit and use that account to save for room, board, books and other Qualified Higher Education Expenses.  The family might also consider opening a Private College 529 Plan to lock in tuition in case their children do not go to Notre Dame, but another private college that participates in the Private College 529 Plan.  By combining both plans, Family A receives the tax benefit from the Indiana 529 plan, and the locked-in tuition from the Private College 529 plan.

Please note that if Family A's children do attend Notre Dame, the funds invested in the Private College 529 Plan can be rolled over into the Indiana 529 Plan to be used for room and board, or other qualified higher education expenses.  

 

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Scenario 2: 

Family B Profile: Mom, Dad, two children ages 16 & 18.  Family resides in Illinois and the oldest child just got admitted to Notre Dame and the University of Chicago.  Family B has a high income and many assets, however it does not have any college savings plans.

Savings Plan Options:  

Illinois 529 Plan Offers: A state income tax deduction of contributions up to $10,000 ($20,000 if married).

Private College 529 Plan Offers: Pre-paid tuition for over 270 participating schools including Notre Dame and the University of Chicago.

Potential Savings Plan Approach:

Family B might consider opening an Illinois 529 Plan to receive the tax deduction and use that account to pay for room, board, books and other Qualified Higher Education Expenses.  The Illinois 529 plan does not have a minimum amount of time that the funds need to be invested before withdrawal for qualified expenses.  The family might also consider opening a Private College 529 Plan to lock in their child's senior year tuition at either Notre Dame or University of Chicago.  By combining both plans, Family B receives the tax benefit from the Illinois 529 plan, and the locked-in tuition from the Private College 529 plan.

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Scenario 3: 

Family A Profile: Grandma wants to start a 529 Plan for each of her 2 grandchildren.  She lives in Indiana, and her grandchildren live in Illinois.

Savings Plan Options:  

Illinois 529 Plan Offers: A state income tax deduction of contributions up to $10,000 ($20,000 if married).

Indiana 529 Plan Offers: A state income tax credit of 20% of contributions to their CollegeChoice 529 account, up to $1,000 credit/year.

Private College 529 Plan Offers: Pre-paid tuition for over 270 participating schools

Potential Savings Plan Approach:

Grandma needs to consider whether she wants to be the account owner and control the account, or if she would rather "gift" the money to her child to establish the account for her grandchild.  

  1. If she is the account owner and decides to open an Indiana 529 Plan, she is eligible to receive the state income tax credit.  
  2. If she gifts the money to her child and her child opens the account, her child is eligible to receive the Illinois state income tax deduction.  
  3. If Grandma decides to open an Illinois 529 plan and remain the account owner, neither her or her child will receive any income tax benefits.
  4. If Grandma decides to open a Private College 529 Plan, she would be forgoing the state income tax benefits, but she would be prepaying tuition.

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