Saving For College
Saving for College and 529 Plans
There are two 529 plans offered by Maryland. Both plans are worth considering, because they provide you with a reduction in your Maryland taxes. Morningstar offers additional detail about the Maryland plan. 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 also qualify you to receive a $250 - $500 grant from Maryland. However, you can't deduct your contribution to a 529 plan and also receive a grant.
If you are not going to choose one of the two Maryland plans, you'll need to choose from over 100 additional plans offered by the 49 other states. Three websites can help you narrow the field. They are:
Morningstar (Be sure not to ignore the options at the very bottom of the page.)
Saving for College (They rate plans with one to five stars)
Morningstar's Most Highly Rated plans
If your grandchild is applying for financial aid, he/she will need to complete the FAFSA form. In addition, there are 245 colleges that also require the CSSP.
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.
An interesting alternative is the Independent 529 plan which allows you to prepay your grandchild's tuition at one of 270 colleges.
This article offers reasons you might wish to use a Roth IRA to save for college.
Saving for college is an extremely complex issue. If you need additional help, these websites are an excellent place to begin your search:
Saving for College (Allows you to compare various state 529 plans)
Vanguard (Another site that allows you to compare 2-3 state 529 plans)
Another Vanugard website with a wide variety of information about 529 plans
A map showing which states offer Vanguard 529 investments
The pros and cons of all the methods to save for college (529, Coverdell,IRA, custodial accounts, savings bonds, etc.)
Similar to the item above, but not in chart form
Compares all the plans within the state you specify
NASD (An large amount of material on 529 plans and Coverdell plans, as well as others)
Financial Aid (This site has lots of information about financial aid, including calculators