College Savings

Every family's situation is different, and therefore each family's approach to savings 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.  The family lives in Indiana, and wants to start saving early for their children's college education. 

Savings Plan Options:

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 nearly 300 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 and meals, books and other Qualified Higher Education Expenses.  The family might also consider opening a Private College 529 Plan to lock in tuition prices at any of the private colleges that participate 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 prices from the Private College 529 plan.

For more information on:

  • Private College 529 Plan, please visit the Private College 529 website.
  • Private College 529 Refund/Rollover policy, please visit the Private College 529 FAQs page.
  • Indiana 529 Plans, please visit the Indiana Education Savings Authority site.

Scenario 2: 

Family B Profile: Mom, Dad, two children ages 16 & 18.  Family resides in Illinois and their oldest child was just admitted to their top choice school - a private college that participates in the Private College 529 Plan.  Family B has a high income and many assets, however they do 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 nearly 300 participating schools.

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 and meals, 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.  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.

For more information on:

  • Private College 529 Plan, please visit the Private College 529 website.
  • Illinois 529 Savings Plans, please visit the Illinois State Treasurer's website.

Scenario 3: 

Family A Profile: Grandma wants to start a 529 Plan for each of her four 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 nearly 300 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 nor 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.

For more information on: