Dollars For Scholars:
Help Send Your Grandchild to College and Simultaneously Reduce Your Tax Bill
Help Send Your Grandchild to College and Simultaneously Reduce Your Tax Bill
There are two 529 plans offered by Maryland. Both plans are worth considering, because they provide you with a small reduction in your Maryland income tax. You can learn more about the Maryland plan here. You can learn more about the requirements you must meet and the benefits you earn when you take a deduction on your Maryland tax return for contributions to 529 plans. Alternatively, contributing to the plan can qualify you to receive a $250 - $500 grant from Maryland. However, you can't receive a MD tax deduction for contributing to the MD 529 plan and also receive a grant.
If you are not going to choose one of the two Maryland plans, you may wish to choose from over 100 additional plans offered by the 49 other states. These websites can help you narrow the field. They are:
Saving for College (They rate 529 plans with one to five stars. These are called 5-cap ratings)
Morningstar's Most Highly Rated 529 plans
29 states offer a 529 plan that is insured by the FDIC.
This site allows you to compare various state 529 plans. Here is another site that allows you to compare 2-3 state 529 plans.
This site and this one focus specifically on issues that pertain to grandparents and 529 plans.
This site, this site, and this one offer a wide variety of information about 529 plans.
You don't have to invest in one of the 100+ 529 state plans. Instead you can open a 529 plan directly with Vanguard, Schwab, Fidelity or BlackRock.
If your grandchild is applying for financial aid, he/she will need to complete the FAFSA form. In addition, there are 400 colleges that in addition to the FAFSA also require the CSSP. This site has lots of information about financial aid, including calculators.
The Washington Post published an article that argues taking money from 529 plans for K-12 education is not as valuable as using the money for college education. You can learn more about using a 529 plan to save for K-12 education.
An interesting alternative is the Independent 529 plan which allows you to prepay your grandchild's tuition at one of 270 private colleges. You can learn more about prepaid plans. This site argues that prepaid plans are not as good choices as traditional 529 plans.
You can learn more about Coverdell plans
Here are the pros and cons of all the methods to save for college (529, Coverdell, IRA, custodial accounts, savings bonds, etc.) This is similar to the previous site, but not in chart form
This article offers reasons you might wish to use a Roth IRA to save for college. If you use a Roth IRA to save money for your grandchild's education, this site can provide you with ways to avoid hurting her chances for qualifying for financial aid.
You can use Government Savings bonds such as I bonds to save for college. This website will allow you to purchase I bonds. You can learn how to rollover the money you have saved for college in I bonds into a 529 plan.