Illinois – 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.
Illinois has its own state-operated 529 plan called Bright Start College Savings Program. It is important to note that your child does not have to go to a IL 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!
Illinois 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 Illinois as well. Illinois's higher education costs rose by 28.2% in just the last 10 years, ranking as the 35th highest state.
The table below shows the average one-year costs last year (2022) for different types of Illinois 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 IL rose 11% (ranked 41st in the US), while a 2-year or trade school increased their tuition by 18 percent.
529 Tax Benefits for Illinois Residents
Illinois offers tax benefits and deductions when savings are put into your child's 529 savings plan.
|For single filers:||$10,000/yr|
|For joint filers:||$20,000/yr|
Best 529 Plans in Illinois
Illinois has two 529 college savings plans, as well as a prepaid tuition program. The direct-sold Bright Start College Savings Program and the Bright Directions Advisor-Guided 529 College Savings Program are managed by Union Bank & Trust. In November 2017 the Bright Start Advisor program was folded into Bright Directions. CollegeIlinois!, the state’s prepaid tuition program, is available only to Illinois residents.
|State Plan Name:||Bright Start College Savings Program|
|Maximum Contribution:||up to $450,000 per designated beneficiary; the balance continues to accrue earnings|
|Fees:||No maintenance fees, but the investment portfolio you choose will charge a fee against your investment of either 0.10% or 0.38%, depending on the fund.|
Illinois 529 Plan Statistics
There are 426,705 registered schools in Illinois with a total value of $12,649,024,840. That is an average of $29,643 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!