This is a sponsored post for Florida Prepaid through Bloggin’ Mamas
Today, May 29th, is National 529 Day. It is a day set aside to raise awareness about the costs of education and how parents can prepare for those costs. Did you know that student loan debt has reached one trillion dollars nationally? That is insanely ridiculous! There is no need for that much debt when there are options such as 529 plans. You all know how I feel about student loan debt. We are in a ton of debt. I don’t want my children to start their adult lives in debt.
There are several options you can choose from in Florida. Learning about them can be overwhelming which is why I want to help you figure out which college savings plan is right for you and your family. Today I’ll be focusing on Florida Prepaid. If you need information for a different state’s prepaid college plan check out SavingForCollege.com. Even if you aren’t in Florida, you may find this information helpful!
First, let’s cover the basics of 529 savings plans. They were named after section 529 of the Internal Revenue Code and are designed to encourage saving for future higher education expenses of a designated beneficiary (i.e. your child). Many states offer 529 savings plan options, such as Florida Prepaid.
In Florida, you have two options under section 529. You can choose to participate in the Florida Prepaid Plan or a 529 investment. Both have pros and cons. It took multiple discussions for our family to figure out which plan to set up for our children.
Here is a quick breakdown of the options. This information came from several reliable sources including my trusted certified financial planner. You can find more in-depth information on each plan on the Florida Prepaid website.
Florida Prepaid Plan
Florida Prepaid is the largest, longest running and most successful prepaid program in the nation. There are five different types of Prepaid Plans, and they can only be purchased during Open Enrollment (which usually runs from Oct.-Feb.).
This plan is pretty pricey. It requires a large percentage down as well as monthly fixed payments (as high as $500) until the child reaches the age of 18. Prices depend on the age of the child when you sign up. Pricing is not available yet for this year. However, you can get more information once it’s available by joining the mailing list here.
In prior years the sticker price became very expensive, however last year some of the plans dropped as much as 50%. If you’ve been putting off the purchase of a Florida Prepaid college plan because of the price, now is the time to buy.
The biggest pro to this plan is that you can be 100% certain that college tuition for a state school in Florida will be covered.
The con is that the full cost of tuition for a private or out of state school will not be completely covered. However, if your child decides to go to a private or out of state school, he or she can use the money nationwide.
The Florida 529 Savings Plan
The Florida 529 Savings Plan is an investment option that can be started at anytime and only requires a $25 initial deposit to open. The funds in a Florida 529 Savings Plan can be used for any qualified higher educational expense, including tuition, room & board, textbooks, graduate school and much more. There are 11 investment options that let you invest in any way you feel comfortable. From more aggressive to more conservative options, and with age-based and fully customized approaches, you have as much control as you want over how much you invest and where it’s invested. And as the years go by, you’re free to change contribution amounts and how they are allocated at any time.
The biggest pro of this plan is that it overs more flexibility, yet less certainty. This is the plan that we chose for our children. We’ve asked family members to contribute to it for birthdays and Christmas instead of buying toys.
When should you start planning?
It’s never too early or too late to start saving! That being said, don’t forget to take care of your personal finances as well. My financial planner suggests funding your Roth IRA while making contributions to the 529 plan. A Roth IRA can also be used tax free to pay for college, but doesn’t offer the certainty that comes with Florida Prepaid and other 529 plans.
Here is an infographic to simplify matters for you.
This post was sponsored by Florida Prepaid College Board to raise awareness about college savings and the Florida 529 Savings Plan.
Have you started saving?