{"id":243148,"date":"2021-08-21T11:14:16","date_gmt":"2021-08-21T11:14:16","guid":{"rendered":"https:\/\/collegeinv.wpengine.com\/?page_id=243148"},"modified":"2025-12-01T19:33:20","modified_gmt":"2025-12-01T19:33:20","slug":"what-is-a-529-plan","status":"publish","type":"page","link":"https:\/\/www.collegeinvest.org\/what-is-a-529-plan\/","title":{"rendered":"What is a 529?"},"content":{"rendered":"

[et_pb_section fb_built=”1″ admin_label=”What is a 529 college savings plan?” module_class=”hero-section page-what-is-a-529-cvp” _builder_version=”4.16″ da_disable_devices=”off|off|off” collapsed=”off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”1_2,1_2″ _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” collapsed=”off” global_colors_info=”{}”][et_pb_column type=”1_2″ _builder_version=”4.16″ _module_preset=”default” animation_style=”slide” animation_direction=”bottom” global_colors_info=”{}”][et_pb_text admin_label=”Hero Content” module_class=”headline h1-dark” _builder_version=”4.17.3″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n

What is a 529 college savings plan?<\/h1>\n

[\/et_pb_text][\/et_pb_column][et_pb_column type=”1_2″ _builder_version=”4.16″ _module_preset=”default” animation_style=”slide” animation_direction=”right” global_colors_info=”{}”][et_pb_image src=”https:\/\/www.collegeinvest.org\/wp-content\/uploads\/2022\/08\/2U9A1613_1-sfw.jpg” alt=”A boy and a girl playing outside with a swing and puppy” title_text=”2U9A1613_1-sfw” module_class=”img-full” _builder_version=”4.17.3″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”Section Content Introduce” module_class=”section-content-introduce page-what-is-a-529-cvp” _builder_version=”4.16″ background_image=”https:\/\/www.collegeinvest.org\/wp-content\/uploads\/2021\/10\/Group@4x-1.png” da_disable_devices=”off|off|off” locked=”off” collapsed=”off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” animation_style=”slide” animation_direction=”bottom” collapsed=”off” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.17.3″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n

A CollegeInvest 529 Savings Plan<\/strong> is an educational savings account where your money grows federal and state tax-free as long as it\u2019s used for specific expenses, including tuition and room and board. Use your savings anywhere in the country at eligible colleges or trade schools and even for apprenticeships<\/a>.<\/p>\n

529\u2019s were created to encourage Parents to start saving early while their students were young, allowing the savings to increase as they grow. The affordability, flexibility and unique savings plans of 529s make them one of the best and easiest ways to save for a postsecondary education.<\/p>\n

[\/et_pb_text][et_pb_button button_url=”#section-1″ button_text=”why a 529 savings plan?” module_class=”button white btn-double” _builder_version=”4.17.3″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_button][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”Why CollegeInvest” module_class=”flexible-promo-image-left page-what-is-a-529-cvp-1″ _builder_version=”4.16″ da_disable_devices=”off|off|off” locked=”off” collapsed=”off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”1_2,1_2″ _builder_version=”4.16″ _module_preset=”default” collapsed=”off” global_colors_info=”{}”][et_pb_column type=”1_2″ _builder_version=”4.16″ _module_preset=”default” animation_style=”slide” animation_direction=”left” global_colors_info=”{}”][et_pb_image src=”https:\/\/www.collegeinvest.org\/wp-content\/uploads\/2022\/08\/2U9A7978_1-sfw.jpg” alt=”a Father building a bird house with his daughter” title_text=”2U9A7978_1-sfw” module_class=”img-full” _builder_version=”4.17.3″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][\/et_pb_column][et_pb_column type=”1_2″ _builder_version=”4.16″ _module_preset=”default” animation_style=”slide” animation_direction=”bottom” global_colors_info=”{}”][et_pb_text module_class=”h2-dark” _builder_version=”4.17.3″ _module_preset=”default” text_font_size=”18px” text_letter_spacing=”-0.25px” text_line_height=”24px” header_2_font_size=”36px” header_2_letter_spacing=”-1.2px” header_2_line_height=”42px” global_colors_info=”{}”]<\/p>\n

Why CollegeInvest<\/h2>\n

CollegeInvest is Colorado\u2019s 529 Savings Program, the only 529 plan to offer a state income tax deduction for Colorado taxpayers who make contributions to any of our plans.<\/p>\n

With more than $12 billion in assets under management, we are proud to offer families one of the broadest choices of savings plans in the country. We have built a strong reputation of growth and confidence with strong investment managers and partners including Ascensus College Savings, FirstBank, Nationwide Insurance, Nuveen, TIAA Financial Services, and The Vanguard Group.<\/p>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”Section Quick Links” module_class=”headline-center page-what-is-a-529-cvp” _builder_version=”4.16″ da_disable_devices=”off|off|off” locked=”off” collapsed=”off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row module_class=”faq” _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” collapsed=”off” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text admin_label=”Headline” _builder_version=”4.17.3″ _module_preset=”default” animation_style=”slide” animation_direction=”bottom” global_colors_info=”{}”]<\/p>\n

Scroll to explore 529 College Savings, or use the links below to jump to a section you\u2019re looking for.<\/strong><\/p>\n

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\n
why a 529 savings plan?<\/a><\/div>\n
saving vs. borrowing<\/a><\/div>\n
how much should I save?<\/a><\/div>\n
how can i use my 529?<\/a><\/div>\n
benefits of saving with collegeinvest<\/a><\/div>\n
how to get started<\/a><\/div>\n
compare our 529 savings plans<\/a><\/div>\n
faqs<\/a><\/div>\n<\/div>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”Why a 529 Savings Plan?” module_class=”section-explore-529-cvp” _builder_version=”4.16″ background_enable_image=”off” da_disable_devices=”off|off|off” locked=”off” collapsed=”off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row admin_label=”Row” _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” collapsed=”off” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text admin_label=”Headline” module_id=”section-1″ module_class=”headline” _builder_version=”4.17.3″ _module_preset=”default” animation_style=”slide” animation_direction=”bottom” global_colors_info=”{}”]<\/p>\n

Why a 529 Savings Plan?<\/h2>\n

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Time is on your side<\/h3>\n

It\u2019s no surprise that college is expensive, with costs currently increasing 3-4% a year and sometimes even higher. 529s were created to give Parents incentives to start saving when their children are younger, so earnings or interest can grow with them. Possibly ahead of them.<\/p>\n

Let\u2019s say you have a newborn and you start saving $100 a month for 18 years in a simple savings account earning 1% annually in interest. In that time, you will have saved a total of $27,070 available to pay for their college expenses, as illustrated in the graphic below.<\/p>\n

Or, you could invest the same $100\/month in a CollegeInvest 529 savings plan, earning 6% a year (on average) during those 18 years. Your investment could have grown to $38,381 in total.<\/p>\n

That\u2019s a difference of $11,311<\/strong>, allowing you to cover more of your student\u2019s expenses.<\/p>\n

[\/et_pb_text][et_pb_image src=”https:\/\/www.collegeinvest.org\/wp-content\/uploads\/2021\/10\/graphic-00.svg” alt=”Horizonal bar charts of contributions and earnings showing you save more with a 529 savings plan than a simple savings account” title_text=”graphic-00″ src_tablet=”” src_phone=”https:\/\/www.collegeinvest.org\/wp-content\/uploads\/2021\/09\/Group-7.svg” src_last_edited=”on|phone” admin_label=”Image” module_class=”img-responsive” _builder_version=”4.17.3″ _module_preset=”default” animation_style=”slide” animation_direction=”bottom” global_colors_info=”{}”][\/et_pb_image][et_pb_text admin_label=”Text” _builder_version=”4.16″ _module_preset=”default” animation_style=”slide” animation_direction=”bottom” global_colors_info=”{}”]<\/p>\n

With a 529 savings plan, you also have the flexibility to change your plan twice in a calendar year. There are no limits on how many accounts you open or the number of Beneficiaries you want to save for. These benefits separate 529s from other college savings options.<\/p>\n

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Waiting costs you more<\/h3>\n

Starting as early as possible gives you a big advantage. Investing as little as $25 a month for 18 years can add up to nearly $9,600 (6% average annual return).<\/p>\n

In the example above, investing $100 a month regularly for 18 years grew to $38,381.<\/p>\n

If you hesitate to save until your student is 8 years old, the same $100 a month for 10 years (6% annually) would add up to $16,426. That\u2019s a lost opportunity of $21,955<\/strong>, and you\u2019re now likely tapping into other important income resources to make that up.<\/p>\n

You would have to save $234 a month within those 10 years to catch up, more than double the $100\/month investment.<\/p>\n

Saving for college is a challenge to every Parent, and most families have more than one child in the home. Start early. Increase your contributions when you have the chance. Ask family and friends to contribute on special holidays.<\/p>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”Flexible Promo Vertical Image” module_id=”section-2″ module_class=”section-promo-vertical-image” _builder_version=”4.16″ background_image=”https:\/\/www.collegeinvest.org\/wp-content\/uploads\/2021\/08\/sidebar-remove-line.png” height_tablet=”” height_phone=”” height_last_edited=”on|desktop” custom_margin=”||||false|false” da_disable_devices=”off|off|off” locked=”off” collapsed=”off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”1_2,1_2″ _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” collapsed=”off” global_colors_info=”{}”][et_pb_column type=”1_2″ _builder_version=”4.16″ _module_preset=”default” animation_style=”slide” animation_direction=”bottom” global_colors_info=”{}”][et_pb_text admin_label=”Content” module_class=”content” _builder_version=”4.17.3″ _module_preset=”default” text_font=”||||||||” text_text_color=”#FFFFFF” text_font_size=”18px” text_letter_spacing=”-0.5px” text_line_height=”28px” header_text_color=”#FFFFFF” header_2_text_color=”#FFFFFF” header_2_font_size=”36px” header_2_letter_spacing=”-1.2px” header_2_line_height=”42px” header_3_text_color=”#FFFFFF” background_layout=”dark” animation_direction=”bottom” global_colors_info=”{}”]<\/p>\n

Saving versus Borrowing<\/h2>\n

The Federal Reserve reported that of the 54% of college attendees who borrowed to pay for higher education expenses in 2020 borrowed more than $37,500 on average. The earlier you can start, the less you may need to borrow. Fact is, borrowing can cost you nearly twice as much as investing with a CollegeInvest 529.<\/p>\n

In the example to the right, saving $100 a month for 18 years in a CollegeInvest savings plan could grow to $38,381<\/strong> at 6% annual return.<\/p>\n

To borrow that same amount, you would need to pay $385 a month for 10 years at the current federal student loan rate of 3.73%. That\u2019s a total of $46,042<\/strong> out of pocket, more than DOUBLE<\/strong> your contributions to the 529 savings plan.<\/p>\n

[\/et_pb_text][\/et_pb_column][et_pb_column type=”1_2″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_image src=”https:\/\/www.collegeinvest.org\/wp-content\/uploads\/2021\/10\/graphic-01.svg” alt=” Legislative Update” title_text=”graphic-01″ src_tablet=”” src_phone=”https:\/\/www.collegeinvest.org\/wp-content\/uploads\/2021\/09\/SavingvsBorrowing-Graphic-Mobile@2x.png” src_last_edited=”on|phone” admin_label=”Image” module_class=”img-responsive” _builder_version=”4.16″ _module_preset=”default” custom_margin=”||||false|false” animation_direction=”right” global_colors_info=”{}”][\/et_pb_image][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”Flexible Promo Image Left” module_id=”section-3″ module_class=”flexible-promo-image-left page-what-is-a-529-cvp” _builder_version=”4.16″ da_disable_devices=”off|off|off” locked=”off” collapsed=”off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”1_2,1_2″ _builder_version=”4.16″ _module_preset=”default” collapsed=”off” global_colors_info=”{}”][et_pb_column type=”1_2″ _builder_version=”4.16″ _module_preset=”default” animation_style=”slide” animation_direction=”left” global_colors_info=”{}”][et_pb_image src=”https:\/\/www.collegeinvest.org\/wp-content\/uploads\/2022\/08\/2U9A9026_1-sfw.jpg” alt=”A mom watching her daughter paint on their kitchen counter” title_text=”2U9A9026_1-sfw” _builder_version=”4.17.3″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][\/et_pb_column][et_pb_column type=”1_2″ _builder_version=”4.16″ _module_preset=”default” animation_style=”slide” animation_direction=”bottom” global_colors_info=”{}”][et_pb_text module_class=”h2-dark” _builder_version=”4.17.3″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n

How much should I save?<\/h2>\n

It\u2019s estimated the average cost of a public four year college (in-state) in 2020 was about $114,000 (4 years). A public two year community college was about $54,300. If your child is currently one year old and would likely go on to school at age 18, either choice is likely to cost 2.5 times the 2020 average. These are daunting numbers for the average family.<\/p>\n

A generally recommended savings goal for families is to target 30-40% of the anticipated costs. You should consider other sources to cover the remaining costs, including things like scholarships and grants, retirement or other investment savings, contributions from grandparents<\/a> and other relatives, or even the student\u2019s own savings or work income.<\/p>\n

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How Can I Use My 529?<\/h2>\n

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the qualified expenses of a 529<\/h3>\n

\"\"<\/p>\n

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Non-Qualified Expenses<\/h3>\n

Any expense that is not considered a qualified education expense.<\/span>
\nThese are some of the most asked-about expenses that are <\/span>NOT<\/b> eligible:<\/span><\/p>\n