Delaware – Saving For College in 2023
As parents, grandparents and students, we know college is coming and that we're somehow going to have to pay for it someday. Fortunately, we have many options available to us, including savings bonds, the stock market and 529 plans. Starting a 529 account now is always the best option, no matter how old you (or your child) is. While playing the stock market may yield higher returns on your investment, placing your money into a 529 plan allows it to grow in a tax-free environment. One study even found that when the federal tax benefits were taken into consideration, 529 plans outperformed their benchmarks in every category.
Delaware has its own state-operated 529 plan called Delaware College Investment Plan. It is important to note that your child does not have to go to a DE college or university to use this savings account. 529 plan funds can be used at any accredited college or university across the nation, including some K-12 private schools!
Delaware College Costs & Trends
Colleges and universities across the United States experienced increased operating costs of 2.5% in 2019. This most recent inflation figure was down slightly from the 2.9 percent increase in 2018 and 3.4 percent increase in 2017. These costs are forwarded directly to students in the form of higher tuition and living expenses. As these costs steadily rise every year, parents are investigating how to help offset these future higher education costs.
These rising costs are hitting closer to home in Delaware as well. Delaware's higher education costs rose by 32.8% in just the last 10 years, ranking as the 29th highest state.
The table below shows the average one-year costs last year (2022) for different types of Delaware colleges and universities.
|Ownership||Degree||Schools||Public Out-of-State Tuition||Public In-State Tuition||Median Debt||Total Annual In-State Cost|
These costs rise every year. Rising tuition is a major driver of these increased higher education costs. Tuition at a 4-year university in DE rose 16% (ranked 25th in the US), while a 2-year or trade school increased their tuition by 15 percent.
529 Tax Benefits for Delaware Residents
Delaware offers tax benefits and deductions when savings are put into your child's 529 savings plan.
Unfortunately, Delaware does not offer any tax benefits for socking away funds in a 529 account for your child. Thankfully, DE residents can open an account in any other state that lets them.
Best 529 Plans in Delaware
The Delaware College Investment Plan is managed by Fidelity Investments. Three sets of age-based and two static investment options are available in this 529 plan. Age-based portfolios invest in actively-managed Fidelity mutual funds, actively-managed mutual funds that are a combination of Fidelity and Third Party funds, and and a third option invests in Fidelity index funds. Two static options invest in actively-managed or index funds. A bank savings option is also available.
|State Plan Name:||Delaware College Investment Plan|
|Maximum Contribution:||up to $350,000 in account balances per beneficiary|
|Fees:||0.05% to 1.16% asset management fee, depending on your investment plan|
Delaware 529 Plan Statistics
There are 21,831 registered schools in Delaware with a total value of $685,819,784. That is an average of $31,415 per account. Unfortunately, 529 plans are not widely used... a 2018 study by Edward Jones found that only 29 percent of Americans were even aware that 529 savings plans exist!