Get the tax benefits and flexibility you need to save for college
- Tax-free growth potential
- Federal (and often state) tax-free withdrawals for qualified higher education expenses1,2
- Maintaining control over the account
- Making contributions without age or income restrictions
Fund your account and start investing
Get friends and family involved
- Create an investment strategy based on your specific college planning needs
- Choose from a Consider funding a 529 college savings plan and choose from our wide range of investments that may be right for you, including iShare ETF portfolios
- Access To better help you meet your college savings needs, access these Merrill Edge educational articles and resources to help you plan for college
- Put your savings on autopilot by making convenient deposits with automated bank transfers or payroll deductions into a NextGen account
Source: Merrill Edge
Boost college savings in the short-term
Families should consider saving one-third of total projected future college costs and covering the remaining two-thirds with current income and student loans. But, it can be difficult to save that much when a child is already 12 or 13 years old. Families who use a college savings calculator might get sticker shock when they realize how much they need to save in such a short time.
Instead, just save what you can. Every dollar you save is a dollar less you’ll have to borrow. Don’t let the high cost of college overwhelm you.
Families who have trouble saving at least one-third of total college costs may consider one of the following ways to boost their 529 plan savings:
- Apply for scholarships – Scholarships for middle school or high school students are sometimes awarded as 529 plan contributions, allowing students the added benefits of tax savings and compounding.
- Earn cash back for college with Upromise – Upromise is a free loyalty program that allows parents and grandparents to earn rewards by shopping online, booking travel, dining out and using the Upromise Mastercard. Rewards can be automatically swept into a linked 529 plan account.
- Enlist the help of friends and family – Anyone can contribute to a child’s college savings plan. Many 529 plans have gifting platforms that make it easy for grandparents and other loved ones to make a one-time or recurring electronic contribution.
- Make sure the child has skin in the game – Students can put a portion of their income from part-time and summer jobs into their 529 plan.
- Be realistic about financial fit. If you haven’t saved enough, your child might need to go to a less expensive college, such as an in-state public college. Public colleges provide a great quality education, often at a quarter to a third the cost of a private college.
Is A 529 Plan Or A Custodial Account Better For Your Education Savings Strategy?
529 plans and custodial accounts are two of the most common ways to save for college, but they have distinctly different benefits for families. Understanding the differences between the two savings methods is essential to choosing the right one for you and your children, so below we outline the major distinctions between the two and suggest some important considerations for those who want to open one of these accounts.