Ohio – 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.
Ohio has its own state-operated 529 plan called Ohio CollegeAdvantage 529 Savings Plan. It is important to note that your child does not have to go to a OH 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!
Ohio 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 Ohio as well. Ohio's higher education costs rose by 5.2% in just the last 10 years, ranking as the 50th highest state.
The table below shows the average one-year costs last year (2022) for different types of Ohio colleges and universities.
| Ownership | Degree | Schools | Public Out-of-State Tuition | Public In-State Tuition | Median Debt | Total Annual In-State Cost |
|---|---|---|---|---|---|---|
| Private | 2 year | 114 | $13,740 | $13,694 | $13,959 | $16,792 |
| Private | 4 year | 83 | $27,358 | $27,358 | $24,631 | $22,231 |
| Public | 2 year | 79 | $8,681 | $4,391 | $12,626 | $10,486 |
| Public | 4 year | 31 | $18,099 | $7,783 | $23,508 | $14,259 |
These costs rise every year. Rising tuition is a major driver of these increased higher education costs. Tuition at a 4-year university in OH rose 12% (ranked 40th in the US), while a 2-year or trade school increased their tuition by 8 percent.
529 Tax Benefits for Ohio Residents
Ohio offers tax benefits and deductions when savings are put into your child's 529 savings plan.
| For single filers: | $4,000/yr per beneficiary |
|---|---|
| For joint filers: | $4,000/yr per beneficiary |
Best 529 Plans in Ohio
Ohio operates two 529 college savings plans. Ohio’s 529 Plan, CollegeAdvantage, is available to residents of any state and offers 3 age-based options and 5 risk-based options using Vanguard funds, a college enrollment-based option and 13 static investment options using Vanguard and DFA funds, and 2 types of FDIC-insured deposit accounts through Fifth Third Bank. The BlackRock CollegeAdvantage Advisor 529 plan is advisor-sold and features BlackRock funds in its age-based and asset-allocation options along with individual-fund options from iShares and a variety of mutual fund families. Ohio also operates a prepaid tuition/guaranteed savings plan (Guaranteed Savings Fund) that was closed to new enrollments in 2003.
| State Plan Name: | Ohio CollegeAdvantage 529 Savings Plan |
|---|---|
| Minimum Contribution: | $25 |
| Maximum Contribution: | up to $462,000 maximum contribution for a single beneficiary. |
| Fees: | 0.18% to 0.55% asset management fee, depending on portfolio |
Ohio 529 Plan Statistics
There are 642,166 registered schools in Ohio with a total value of $12,448,913,801. That is an average of $19,386 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!